1 T h e F U T U R E o f P R I N T PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA

T h e F U T U R E o f P R I N T 2 Why We’re Here Today n Present n Challenges n A Recovery? n Past n Future n Linked to Advertising n Present n Challenges n A Recovery? n Past n Future n Linked to Advertising

T h e F U T U R E o f P R I N T 3 is the largest, most powerful independent media management company in the world

T h e F U T U R E o f P R I N T 4 (1) Includes promotion, interactive, direct marketing, product exposure IM Leads in Every Category $2,392 $1,516 $347 $2,527 $1,971 $910 $424 National Broadcast Cable Spot TV Outdoor Print Other (1) Radio ($000’s)

T h e F U T U R E o f P R I N T 5 Blue Chip Clients COMMUNICATION/ ENTERTAINMENT TECHNOLOGYQSRPHARMACEUTICALRETAIL PACKAGED GOODSFINANCIAL

T h e F U T U R E o f P R I N T 6 Print is an Important Medium n A dedicated team of 15 top print professionals n Six senior negotiators n 100+ account assignments n Negotiate on an ongoing basis n titles (national and regional) n All categories n All publishing companies n Continuous contact with key publishers n A dedicated team of 15 top print professionals n Six senior negotiators n 100+ account assignments n Negotiate on an ongoing basis n titles (national and regional) n All categories n All publishing companies n Continuous contact with key publishers

T h e F U T U R E o f P R I N T 7 Print Billings Source: Advertising Age “Agency Report” 4/22/02 #1

T h e F U T U R E o f P R I N T 8 Print Remains a Viable & Vital Medium n True power of magazines stems from the relationship each magazine has with its readers n Magazine readers continue to spend an average of 45 minutes reading each issue* n Magazines continue to garner the highest consumer involvement vs. TV and the internet** n True power of magazines stems from the relationship each magazine has with its readers n Magazine readers continue to spend an average of 45 minutes reading each issue* n Magazines continue to garner the highest consumer involvement vs. TV and the internet** * Source: MRI/Spring 2002 / ** Source: Nov/01 MagNet Study

9 P R I N T > Present

T h e F U T U R E o f P R I N T 10 Source: MEDIAWEEK, Feb. 3, 2003 / Source: New York Times, Jan. 14, 2003 / Source: National Directory of Magazines 2002 Print Recovery n In 2002, 239 new consumer magazines launched n In 2003, the MPA indicates that 700+ new consumer magazines are in review n Total overall magazine circulation has held it’s own n Ad pages in December grew 10.7% following November’s 6.9% increase n In 2002, 239 new consumer magazines launched n In 2003, the MPA indicates that 700+ new consumer magazines are in review n Total overall magazine circulation has held it’s own n Ad pages in December grew 10.7% following November’s 6.9% increase

T h e F U T U R E o f P R I N T 11 Print – Stable Share n Stable share mix for last 5 years 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 Q1 98 Q2 98 Q3 98 Q4 98 Q1 99 Q2 99 Q3 99 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 National Newspapers Newspapers Magazines Q4 03

T h e F U T U R E o f P R I N T 12 Continuing Challenges n Declining newsstand sales n Weak direct mail performance n Stagnant subscription prices n Flat circulation growth n Changing ABC rule n Advertising recession n Declining newsstand sales n Weak direct mail performance n Stagnant subscription prices n Flat circulation growth n Changing ABC rule n Advertising recession

13 P R I N T > Past

T h e F U T U R E o f P R I N T Advertising Industry Overall Ad Spending: Considerably Guarded n Another tough year for advertising n Advertising pages declined n Erosion in newspaper circulation n Print ad spending decreased n New sense of economic pragmatism: – Publishing companies shut down publications – Launched fewer magazines Overall Ad Spending: Considerably Guarded n Another tough year for advertising n Advertising pages declined n Erosion in newspaper circulation n Print ad spending decreased n New sense of economic pragmatism: – Publishing companies shut down publications – Launched fewer magazines

T h e F U T U R E o f P R I N T 15 Business Titles… Hardest Hit n Some key titles backslid to pre-1995 ad page levels -40% -39% -38% -37% -36% -35% -34% -33% -32% -31% Business WeekForbesFortuneInc. Decline in Pages Source: PIB

T h e F U T U R E o f P R I N T 16 Print Spending +.8%ALL Consumer Magazines 2.4% General Consumer/NO Business %change 1-3Q 02 over 1-3Q 01 Source: CMR

T h e F U T U R E o f P R I N T 17 Celebrity Magazines Showed… Vulnerability Has Rosie, ‘Queen of Nice’ become the ‘Queen of Mean’? Has ‘that’s a good thing’ Martha done a ‘bad’ thing by possibly involving herself in insider trading? And what happens when the ‘Queen of Talk’ Oprah stops talking in 2006? Has Rosie, ‘Queen of Nice’ become the ‘Queen of Mean’? Has ‘that’s a good thing’ Martha done a ‘bad’ thing by possibly involving herself in insider trading? And what happens when the ‘Queen of Talk’ Oprah stops talking in 2006?

T h e F U T U R E o f P R I N T 18 Media Companies Responded By… Advertising... Source: CMR (2002 year end spend figures not yet available) Time, Inc. +13%$3,798K$3,367K Meredith +58%$31,197K$19,763K Condé Nast +51%$33,937K$22,460K +92%$34,367K$17,897K Hearst % Change ’01 vs ’

T h e F U T U R E o f P R I N T 19 Media Companies Responded By… n Selling magazine brand/logo merchandise n Better Homes & Gardens’ garden products n Popular Mechanics tools n House Beautiful paints n Expanding sponsorships n Conferences (Business Week CEO Summit) n Events (Rolling Stone/Rock & Roll Hall of Fame) n Exhibitions (New Yorker Book Festival) n Custom Publishing n Estimated at $1 billion in revenue (Home Depot Book Series) n Selling magazine brand/logo merchandise n Better Homes & Gardens’ garden products n Popular Mechanics tools n House Beautiful paints n Expanding sponsorships n Conferences (Business Week CEO Summit) n Events (Rolling Stone/Rock & Roll Hall of Fame) n Exhibitions (New Yorker Book Festival) n Custom Publishing n Estimated at $1 billion in revenue (Home Depot Book Series)

20 P R I N T > Future

T h e F U T U R E o f P R I N T 21 Forecasted Predictions n Ad spend increase predicted for U.S. in 2003 n Forecasters predict a resumption of growth in advertising spending in 2003* n Robert J. Coen, SVP/Forecasting Director, Universal McCann, NY (5%) n John Perriss, Chief Executive, ZenithOptimedia, London (1.9%) n If predictions are realized (5%) they could exceed the U.S.’s ad spend record, achieved in 2000 n Ad spend increase predicted for U.S. in 2003 n Forecasters predict a resumption of growth in advertising spending in 2003* n Robert J. Coen, SVP/Forecasting Director, Universal McCann, NY (5%) n John Perriss, Chief Executive, ZenithOptimedia, London (1.9%) n If predictions are realized (5%) they could exceed the U.S.’s ad spend record, achieved in 2000 * Source: The New York Times, Dec. 10, 2002

T h e F U T U R E o f P R I N T 22 IM Predictions: Measuring Ad Spending Trends n Gross Domestic Product (GDP) n Consumer Confidence n Gross Domestic Product (GDP) n Consumer Confidence

T h e F U T U R E o f P R I N T 23 Ad Spending & GDP n Ad spending continues to closely correlate to the GDP Total Ad Change YoYGDP Change YoY -15% -10% -5% 0% 5% 10% 15% E2002E -1% 0% 1% 2% 3% 4% 5% Correlation = 0.78

T h e F U T U R E o f P R I N T 24 Ad Spending & Consumer Confidence -15% -10% -5% 0% 5% 10% 15% Year-Over-Year Change in Ad Spending -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% Year-Over-Year Change in Confidence Advertising Confidence

T h e F U T U R E o f P R I N T 25 Modest Turnaround n Continued modest improvement is expected for the U.S. and worldwide advertising in 2003 n Gradual improvement in the economy n Relative improvement in ad activities n Continued modest improvement is expected for the U.S. and worldwide advertising in 2003 n Gradual improvement in the economy n Relative improvement in ad activities

T h e F U T U R E o f P R I N T 26 Modest Turnaround n If the business titles start rebounding, a cascade effect may result… n Financial advertisers may increase ad spending which may in turn fuel an increase in corporate ad campaigns which could further strengthen an economic recovery n If the business titles start rebounding, a cascade effect may result… n Financial advertisers may increase ad spending which may in turn fuel an increase in corporate ad campaigns which could further strengthen an economic recovery

T h e F U T U R E o f P R I N T 27 What This Means... n Strategies become more important n As budgets tighten, it is very difficult to justify any expenditure if the program is not on strategy and does not deliver significant return n New area driving growth n Especially in Spanish-language media n Newspapers repurpose themselves n To capture a younger audience n Combat declining readerships n Strategies become more important n As budgets tighten, it is very difficult to justify any expenditure if the program is not on strategy and does not deliver significant return n New area driving growth n Especially in Spanish-language media n Newspapers repurpose themselves n To capture a younger audience n Combat declining readerships

T h e F U T U R E o f P R I N T 28 What This Means... n Demand for magazines in 2003 is currently estimated to rise 4% over 2002 n Any revisions to this are likely to be downwards given current economic outlook n The need for increased magazine ad revenue will be further underscored by increased out-of-pocket expenses n Postage, circulation, distribution, paper/production n The results: 2003 will continue to be a very competitive and negotiable marketplace… n Demand for magazines in 2003 is currently estimated to rise 4% over 2002 n Any revisions to this are likely to be downwards given current economic outlook n The need for increased magazine ad revenue will be further underscored by increased out-of-pocket expenses n Postage, circulation, distribution, paper/production n The results: 2003 will continue to be a very competitive and negotiable marketplace…

T h e F U T U R E o f P R I N T 29 Summary n Print remains a viable & vital medium n Despite the proliferation of media options, Print has held its own n Re-strategizing becomes more important n Magazines will continue to expand their revenue stream opportunities n Ad spend increase predicted for this year n Print remains a viable & vital medium n Despite the proliferation of media options, Print has held its own n Re-strategizing becomes more important n Magazines will continue to expand their revenue stream opportunities n Ad spend increase predicted for this year

30 T h e F U T U R E o f P R I N T PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA