1. Newsstand Challenges Steve Burbridge SVP Sales and Logistics - West

2. Newsstand Challenges  There are a number of challenges facing the single copy portion of the magazine business. Among the most important are:  Profitability of the wholesalers,  Challenges from other commodities, and  Sluggish unit sales (is flat the new up?) leading to a push for increased profitability/productivity from retailers

3. 3 Wholesale Landscape Has Changed  Willingness to cut discounts or withhold incentives to retailers  Refusing to distribute products due to cover price and/or discount (e.g., Bauer’s Cocktail)  Confronting publishers over low cover prices on existing, high unit volume titles (e.g., OK)  Cutting titles to be distributed based upon efficiency, discount, etc.  Moving to once/week delivery and geo-routing  Reviewing delivery methodology (hybrid of truck and DSD via 3 rd party carriers such as UPS and FedEx)  Reviewing pre-weekend and galley delivery approach

4. Key Retailer Themes  Checkout racks  Threats from other CPG companies as well as the retailers themselves  Wrigley going after Over-the-Belt for gum/mints only  Soda Coolers at more than every third checkout  Gift Cards  Self-scan roll-outs  Other merchandise such as Slim Jims  Retailers reducing the # of checkouts for magazines and/or going to lower profile racks

5. Key Retailer Themes  Rack Charges  Traditional $22.28 per pocket moved to $25.00 as of 3/3/08  Large retailers seeking - and getting – SBT (scan-based trading)  All retailers are looking for margin improvement and are seeking it from Wholesalers AND Publishers  Retailers looking to reduce their authorized lists and go to more full-faced mainlines

6. Gum/Mints Over-the-Belt  Wrigley’s acquisition of such brands as Lifesavers and Altoids has them pushing retailers to dedicate space OTB for gum and mints at the expense of magazines  Bill Wrigley Jr. making account calls on retailers’ senior management teams

7. Soda Coolers  Acquisitions such as Glaceau (Vitamin Water) by Coke, as well as a retailer’s desire to increase gross margin from Private Label water, are driving retailer to place their own coolers at more lanes to try to capture sale in this stagnant category  Funding from Coke and Pepsi as well as the high GM from water (60% or more) is driving this push

8. Other Commodities Persona l finance product s plus… …gum / mints OTB. The worst of all worlds?

9. Self-Scan  Self-scan continues to rollout at retail with new configurations and new players  Magazine community working to “actively” merchandise this space

10. Front-end Configuration  The impact of other commodities, self-scan, coolers, etc., lead to a major loss in real estate UScan Traditional c/out Cigarette c/out Express UScan Express Traditional c/out = magazine fixturing = other products = coolers = possible opportunities (very limited pockets)

11. Mainline Initiatives  Retailers starting to take back control over mainlines as well  “Wholesaler-controlled”  Source of inefficiency  Best Practices include:  Planograming some portion of mainline  e.g., Wal*Mart, Target, CVS, Walgreens, Safeway, etc.  More full-faced product  Demographic clustering / Limiting # of SKU’s  Space-to-sales by segment  Signage Source: TWRSM Research

12. Other Retailer Themes  Scan-based Trading  SBT can be a good thing for the category as it reduces check-in and check-out time. However, high shrink rates and the cost of absorbing store-level inventory can lead to less profitability to wholesalers  Growth of store perimeter and kiosks impacting display  As “fresh” becomes more important, retailers grow produce, bakery, etc. that forces mainline space to become smaller  Retailers adding in-store kiosks and services – Starbucks, etc., - “squeezes” the front-end and results in less merchandising space at checkout  Little to no growth in traditional retail outlets  Most growth at retail coming from chains with no magazine programs (such as Kohl’s, Trader Joe’s, etc.) or those with small programs (Walgreens, Target, etc.)

13. The Future  No traditional checkouts?  RFID  Handheld scanners  WWWD/WWTD  What Will Wal*Mart Do? / What Will Target Do?  What else?