1. Optimum Distribution Formula What is the probability of selling the next copy distributed? How much did it cost to distribute/produce that copy?

2. Variables Affecting Title Economics Publisher Discount Retailer Discount Cover Price Sales Variability from Issue to Issue Operational Costs (Metro) Average Cost per Unit: $0.21 Variable Cost per Unit: $0.14 How Much Does it Cost to Distribute One More Unit? $0.14 (Marginal Cost)

3. Marginal Revenue per Copy Marginal Efficiency $ Optimum Distribution Formula

4. Marginal Cost per Copy $ Marginal Efficiency Optimum Distribution Formula Marginal Revenue per Copy

5. Marginal Loss Breakeven Point $ Marginal Efficiency Optimum Distribution Formula Marginal Profit

6. A Lower Cover Price Requires a Higher Efficiency

7. A Higher Retailer Discount Requires a Higher Efficiency

8. A Higher Publisher Discount Allows a Lower Efficiency

9. Higher Operating Costs (Metro) Require a Higher Efficiency

10. Disparity Between ANC and Publisher Economics ANC Gross Profit ANC Variable Cost Publisher Gross Profit Publisher Variable Cost

11. Disparity Between ANC and Publisher Economics The difference between ANC’s profit maximization point and the publisher’s represents ANC’s leverage

12. Variable Costs Distribution$0.11 / Copy Distributed Returns$0.03 / Copy Returned Gross Profit per Copy Sold Discount from Publisher 43% Discount to Retailer-26% Gross Margin% 17% Cover Price $3.50 Gross Margin $3.50 * 17% = $0.60 Motor Trend Optimum Distribution Formula

13. Marginal Revenue = Marginal Cost Gross Profit * Efficiency = Distribution Cost + Return Cost * (1-Efficiency) $0.60 * Efficiency = $0.11 + $0.03 * (1-Efficiency) $0.60 Efficiency = $0.11 + $0.03 - $0.03Efficiency $0.63 Efficiency = $0.14 Efficiency = $0.14 / $0.63 Optimum Marginal Efficiency = 22% Motor Trend Optimum Distribution Formula

15. Motor Trend 10 Copy Average Accounts

16. Motor Trend 10 Copy Average Accounts

17. Motor Trend 10 Copy Average Accounts

20. Motor Trend Optimum Distribution Formula

21. Motor Trend Optimum Distribution Formula

22. Motor Trend Net Impact