Report nd Quarter Release - Johannesburg 13 August 2014

General SA Media Inflation Ibis Media have recently released the 2014 Q1 Media inflation data. Overall we see a 7.4% increase in rates over Print rate inflation was recorded at 4.29%....but the “devil” is in the detail. The compound effect of circulation declines has resulted in Print MIW inflation reaching 9.72% and a significant 12.34% for B2B inflation. CIW radio rate inflation was highest at 14.32% year on year! The lack of performance data for many platforms make more meaningful analysis impossible.

Second Screen Success – opens opportunities to press ? South Africans are actually using their phones while "watching" TV. Over 80% of South Africans surveyed saying they're on their phones, tablets and laptops during the primetime TV hours of 5-8pm. Clearly, users are integrating new technology into more traditional media consumption, rather than choosing one or the other. Both is better ! The advice for continued success of social media should be considered for all platforms, and in particular print.

International Newspapers' decline not due to the rise of the internet, says US professor. (Sources: Chicago Booth/Science20/American Economic Review)Chicago BoothScience20American Economic Review Most people assume that newsprint newspapers are dying at the hands of the internet. But a US economics professor will have none of it. According to a study by Chicago university's Matthew Gentzkow, "Trading dollars for dollars: the price of attention online and offline", the assumption is based on three false premises. Here goes:"Trading dollars for dollars: the price of attention online and offline" Fallacy one: Online advertising revenues are naturally lower than print revenues, so traditional media must adopt a less profitable business model that cannot support paying real reporters. "This perception that online ads are cheaper to buy is all about people quoting things in units that are not comparable to each other. Several different studies already have shown that people spend more time with newspapers and magazines than the average monthly visitor online, which makes looking at these rates as analogous, incorrect.

By comparing the amount of time people actually see an ad, Gentzkow finds that the span of attention for similar consumers is actually higher online. Fallacy two: The web has made the advertising market more competitive, which has driven down rates and, in turn, revenues. That, says Gentzkow, just isn't so. Fallacy three: The net is responsible for the demise of the newspaper industry. No, writes Gentzkow, the popularity of papers had already significantly diminished between 1980 and 1995, well before the internet age. And, he finds, sales of papers have dropped at roughly the same rate ever since. He concludes: "People have not stopped reading newspapers because of the internet." Comment: While the new technology may not be wholly responsible for the decline in newspaper circulation, I have little doubt that high level of print industry “digital phobia”, publisher conservatism and procrastination, and the general lack of marketing effort by print, have all contributed to the current situation.

Rule Amendments effective 1st January 2014: PDF Replica Editions: Paid Circulation – circulation is counted when payment is received. Bulk sales – The publisher must prove distribution in terms of a list provided by the purchaser – limited to 10% of total paid circulation. Free bulk distribution is excluded.

Membership Statistics:

Sector size ranked by circulation – Quarter :

Overall Economic Perspective Comment: Real GDP reduced by 0.6% quarter on quarter. The largest declines were in Mining & Quarrying, and Manufacturing. Retail sales increased by 1.8% in the 3 months ended May compared to the prior year. The main increase was in Retailers in Textiles, Clothing & Footwear.

4 Year Total Newspaper Circulation Trend by Quarter: Comment: Total Newspaper circulation decreased by 175,000 compared to the previous quarter

4 Year Category Trend by Quarter: Daily Newspapers Comment: Circulation has declined annually by 4.2% since 2010, equivalent to 271,000 copies. However, Q2 declined 4.7%, compared to Q1.

4 Year Trend Analysis by Language Daily Newspapers Comment: English titles have declined by 3.9% annually (182, 000 copies) over the period. Afrikaans titles have declined by 7.1% annually (95,000 copies) over the period. Vernacular titles have increased by 1.4% (6,000 copies) over the period

4 Year Trend Analysis: Coastal vs Inland Daily Newspapers Comment: Inland circulation declined annually by 4.1% (169,000 copies) over the period. Coastal circulation declined annually by 4.5% (103,000 copies) over the period.

Titles Showing Largest Growth Daily Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Daily Dispatch ,69% ,87% 2Herald, The ,29% ,62%

Titles Showing Largest Decline Daily Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Cape Argus ,39% ,79% 2Cape Times ,20% ,48% 3Son (Daily) ,64% ,17%

4 Year Category Trend by Quarter: Weekly Newspapers Comment: Weekly newspapers reflect an erratic performance. Q2, however, declined by a further 35,000 copies compared to Q1.

Titles Showing Largest Decline Weekly Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Motorsport World ,84% ,69% 2 Ilanga ,31% ,88% 3 Mail & Guardian ,88% ,64%

4 Year Category Trend by Quarter: Weekend Newspapers Comment: Circulation has declined annually by 5.6% (542,000 copies) over the period. Q2, however, declined by 4.1% (74,000 copies) compared to Q1.

4 Year Trend Analysis by Language: Weekend Newspapers Comment: English titles have declined annually by 5.6% (391,000 copies) over the period. Afrikaans titles have declined annually by 8.9% (223,000 copies) over the period. Vernacular titles have grown annually by 11.5% (71,000 copies) over the period

Titles Showing Largest Growth Weekend Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Saturday Dispatch ,07% ,15% 2Sunday Sun ,78% ,64%

Titles Showing Largest Decline Weekend Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Sunday World ,33% ,11% 2Ilanga Langesonto ,48% ,18% 3 Beeld, Saturday ,90% ,35%

4 Year Category Trend by Quarter: Local Newspapers Comment: Local Newspapers have declined by 3.2% (68,000 copies) over the period. Q2 declined by 5.2% (23,000 copies) compared to Q1.

Titles Showing Largest Growth Local Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Review Midweek ,86% ,83% 2Grocotts Mail ,23% ,14% 3African Reporter ,13% ,25%

Titles Showing Largest Decline Local Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1The Courier ,56% ,86% 2Rustenburg Herald ,74% ,22% 3Standerton Advertiser ,53% ,04%

4 Year Category Trend by Quarter: Hybrid Newspapers Comment: Circulation shows a dramatic decline as a result of The Times moving to Daily Newspapers in Q4,2013.

4 Year Category Trend by Quarter: Free Newspapers Comment: Distribution has increased annually by 6.1% (1,339,000 copies) over the period. Q2 remained static compared to Q1.

Titles Showing Largest Growth Free Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Northern Eyethu ,90% ,00% 2Midvaal Ster ,82% ,28% 3Eden Express ,09% ,02% 4Ilembe Eyethu ,82% ,00%

Titles Showing Largest Decline Free Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Makhado Review ,10% ,49% 2 Veereniging Ster ,31% ,99% 3 Rekord Central/Sentraal ,41% ,00% 4 Express ,13% ,00%

4 Year Magazine Circulation by Quarter Comment: Total magazines declined by 63,000 copies over the previous quarter. Consumer magazines increased by 0.4% (35,000 copies) over the previous quarter

4 Year Category Trend by Quarter: Consumer Magazines Comment: Circulation declined annually by 1.7% (456,000 copies) over the period, although the decline has reversed in Q2 compared to the previous 6 quarters

Titles Showing Largest Growth Consumer Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Green Home (Six monthly) ,26% 2Finweek ,55% ,93% 3Modern Athlete ,20% ,84%

Titles Showing Largest Decline Consumer Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Tech-Smart Magazine ,44% ,28% 2 HQ Pony ,34% ,00% 3 Today's Child ,80% ,14%

4 Year Category Trend by Quarter: Consumer Magazines - Home Comment: Circulation has declined by 25,000 copies over the period, Q2, however, increased by 17,000 copies compared to Q1.

4 Year Category Trend by Quarter: Consumer Magazines - Sport and Hobby Comment: Circulation declined annually by 3.4% (68,000 copies) over the period. Q2 remained static compared to Q1.

4 Year Category Trend by Quarter: Consumer Magazines - Travel Comment: Circulation increased annually by 31.3% (333,000 copies) over the period, fluctuating considerably as a result of biennial reporting titles. Q2 increased by 64,000 copies compared to Q1, mainly because of new entrants.

4 Year Category Trend by Quarter: Consumer Magazines – Woman’s General Comment: Circulation declined by 2.8% annually (190,000 copies) over the period. Q2 remained static compared to Q1.

4 Year Category Trend by Quarter: Business to Business Magazines Comment: Circulation has remained static over the period. Q2, however, increased by 21,000 copies compared to Q1.

Titles Showing Largest Growth Business to Business Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Pedmed (Six monthly) ,48% 2 MIMS Guide to OTC Products (Annual) ,69% 3Debate (Annual) ,68% 4Public Sector Manager ,52% ,67%

Titles Showing Largest Decline Business to Business Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Impumelelo SA's Top Empowerment Co. (Annual) ,12% 2RISKsa ,57% ,94% 3 South Africa's Top Performing Companies. (Annual) ,34% 4 My Office (formerly Shop-SA) ,83% ,13%

4 Year Category Trend by Quarter: B2B Magazines – Hospitality, Catering and Tourism Comment: Circulation declined annually by 8% (31,000 copies) over the period. Q2 has remained static compared to Q1.

4 Year Category Trend by Quarter: Custom Magazines Comment: Circulation declined annually by 1.6% (843,000 copies) over the period. Q2 declined by 60,000 copies compared to Q1.

Titles Showing Largest Growth Custom Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 The SA Journal of Epidemoilogy & Infection (SAJEI) (Annual) ,31% 2Mercedes (Annual) ,95% 3 SA Franchise Warehouse. (Six- Monthly) ,91% 4TFG Escapes ,82% ,35%

Titles Showing Largest Decline Custom Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Q-One Student Diary (Annual) ,55% 2 Strategic Marketing Magazine (Six monthly) ,30% 3 Furniture City Club (Annual) ,98%

4 Year Category Trend by Quarter: Custom Magazines – Entertainment Comment: Circulation declined annually by 2.4% (296,000 copies) over the period. However, Q2 increased by 9% (37,000 copies) compared to Q1.

4 Year Category Trend by Quarter: Custom Magazines – Retail Comment: Circulation declined annually by 3.3% (969,000 copies) over the period. Q2 declined by 195,000 copies compared to Q1.

4 Year Category Trend by Quarter: Free Magazines Comment: Circulation declined annually by 18% over the period. Q2 decreased by 11.4% (60,000 copies) compared to Q1.

Observations: There is little doubt that our economy still faces significant economic challenges during The declining GDP growth, coupled to the growing labour issues, means that both publishers and purchasers will be cash strapped for the foreseeable future. In terms of membership we’ve recorded an 8% growth since March this year, this growth coming from Consumer Magazines. Daily Press: In reality more depressed than the numbers reveal. Although the circulation has dropped 4.7%, we’ve seen growth by major titles in the “distribution below 50%” of the cover price category. This component is now 5 times larger than PMIE distribution, which is concerning. Weekly Press: Also in decline but a small category. Marketing / promotional experiments by M&G resulting in an immediate decline, have since been corrected.

Weekend Press: While the category has dropped by a further 4.1% on Q1, it’s concerning to see that Afrikaans tiles are generally declining twice as fast over the period. We again see the appearance of distribution at less than 50% of the cover price by certain titles, to soften circulation declines. This element, in some instances, makes up 10% of the total circulation. Local Newspapers: While down due to the numeric weight of titles in decline, several titles continue to show strong growth, e.g. Review Midweek +33% (albeit off a small base) and larger titles such as African Reporter which produced a +12% growth. Free Newspapers: The growth continues. Consumer Magazines: The category decline appears to have reversed over the past six months….but there’s still a great deal of red ink around plus we’re seeing a disturbing growth in distribution below 50% of the cover price.

The Q report reveal now that almost 5% of total consumer magazine paid circulation comes from distribution at less than 50% (on average) of the title cover price. On closer investigation this development is being driven mainly by one publisher across several categories. Business 2 Business: Growing. Custom Magazines: Despite appearing to turn the corner in Q1, this category has slipped slightly. That said there is still strong growth coming particularly from annuals. Store titles generally follow the health of the retail sector. Free Magazine: Declined overall by 11%.

In conclusion: There is a real need for leadership in print, and a renewed effort by newspapers, in particular, to invest in their own future, and to compete with new technologies. Improved content, strong marketing efforts and perhaps the adoption of several of the known digital marketing strategies, could turn the trend around. Doing nothing, however, rarely produces a change in fortune! One thing is clear from my perspective, and it’s that the solution won’t be found in further distribution at less than 50% of the cover price. Marketers and decision makers should take account of such tactics in their negotiations. As quoted in my introduction, the decline in press circulation started well before new technologies established themselves, so the issue is not competition, it’s relevance…and that can be addressed if we invest in understanding the problem.

Thank you.

Your ABC - Transparency you can see -