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									                                            Newspaper Industry Review
                                                            News and Insights
                          Vol. 1, No. 2 – Second Quarter ’09 – Issued: September 21, 2009

This report provides an overview of the current advertising environment relative to newspapers, as well as
news and insights on the advertising in dustry as a whole. As discussed in our Q1 ‗09 review, media
advertising faces significant challenges from the economic downturn that confronts advertisers, agencies
and all consumers. While the recession shows signs of abating, it has increased pressure on all media
companies to improve their competitive positions.

Yes, many media observers suggest that traditional media (―legacy media‖) will continue to experienc e
challenges, but newspapers still have some good news to report – es pecially as it relates to community,
weekly and other publications. And many major market daily newspapers have successfully created value
for both cons umers and advertisers wit h both the print ed page and online content. Importantly, publishers
recognize that there are successful models in the industry that can be expanded upon to improve
profitability and ensure their survival/relevance for the many years to come.

Ad Spending Top Line
About 80% of newspaper revenue comes from advertising, and the Newspaper Association of America
expects those sales to drop 9.7% in 2009 to $34.2 billion - after falling 16.5% in 2008. To put these
declines in context, it is not just the newspaper industry that is being hit with a revenue down-t urn. In fact,
for the first half of ‗09, all media spending fell approximately 14%. Broadcast TV, often considered
―bulletproof‖ by media budgeting/buying ex ecutives, suffered declines of 27% for spot TV and 4% for
national TV in the first half of the year. Import antly, while newspapers overall have experienced double-
digit declines, the decreases by category vary – e.g., the financial category ad spend for newspapers fell
just 7%.

Total Advertising
                                Total National
                                TV (Netw ork/
TIME PERIOD/$(Millions)          Cable/Synd)     Magazine    New spaper   Spot TV   Internet    Radio Hispanic Media   Outdoor      B2B       Total
1ST QUARTER 2008                      11,877        5,861         5,900     4,068    2,483      2,186           936       917     1,031     35,259
1st QUARTER 2009                      11,497        4,654         4,397     2,964    2,574      1,601           845       783       763     30,077
Percent Change                         -3.2%      -20.6%        -25.5%    -27.1%      3.7%     -26.8%         -9.7%    -14.6%    -26.0%     -14.7%
                                Total National
                                TV (Netw ork/
TIME PERIOD/$(Millions)          Cable/Synd)     Magazine    New spaper   Spot TV   Internet    Radio Hispanic Media   Outdoor      B2B       Total
2ND QUARTER 2008                    12,036.1      6,854.7       5,912.2   3,700.5   2,476.5    2,599.3       1,055.7   1,061.0   1,002.3   36,698.2
2ND QUARTER 2009                    11,391.8      5,396.4       4,474.0   2,740.7   3,138.6    1,992.4        907.3      881.3    724.0    31,646.3
Percent Change                         -5.4%      -21.3%        -24.3%    -25.9%     26.7%     -23.3%        -14.1%    -16.9%    -27.8%     -13.8%
                                Total National
                                TV (Netw ork/
                                 Cable/Synd)     Magazine    New spaper   Spot TV   Internet    Radio Hispanic Media   Outdoor      B2B       Total
First Half 2008                     23,913.1     12,715.6      11,812.2   7,768.4   4,959.3    4,785.4       1,991.9   1,978.5   2,033.2   71,957.7
First Half 2009                     22,888.8     10,050.2       8,870.6   5,704.7   5,712.2    3,593.1       1,752.6   1,664.4   1,487.2   61,723.7
Percent Change                         -4.3%      -21.0%        -24.9%    -26.6%     15.2%     -24.9%        -12.0%    -15.9%    -26.9%     -14.2%
Source: TNS Adspender
                                                             2.7% 2.4%


                                             9.3%                                       37.1%



  Total National TV (Network/ Cable/Synd)     Magazine      Newspaper    Spot TV   Internet     Radio   Hispanic Media   Outdoor   B2B

What’s New?
Trends in newspaper audience have been reported by both syndicated and proprietary researc h. Clearly,
a larger percentage of consumers continue to rely on newspapers for a wide variety of reasons, many of
which are information seeking and/ or action oriented.

MRI Audience trends
While there continues to be a slight erosion in Newspaper readership, nearly 60% of adults still regularly
read a newspaper – over 131 million adults.

                                                                                                  -6.3% vs Spring ‗05

Source: Mediamark Res earch (Spring ‘09)
Scarborough Research Audience Update
Scarborough‘s most current dat a shows that newspapers reac h 70% of all U.S. adults over the course of
week (5 daily editions and 1 Sunday edition). Not e that Scarborough bases its data on the top 75 markets
and the data can be projected nationally. Scarborough 2009 Release 1

Newspapers: Print/Online (World Assoc. of Newspaper Power of Print Conf., Barcelona)
In the United States, the combined print and online newspaper audience grew 8%. Moreover, 52% of online
news paper readers said they spent the same amount of time as they did previously on newspaper content,
and 35% said they spent more time. 81% of online newspaper readers said they‘ve also read the printed
edition of the newspaper in the same week. (Source: MediaDailyNew s, 8/10/09)

Spring MRI data confirms this trend. While there has been slight erosion on print readership since spring
2005, online readership to measured news paper sites (NY Times, WSJ and USA Today) has increased
nearly 42%, and combined print and online audiences have grown 21%.

MORI Research, announced by the Newspaper Association of America
Another source corroborates the level of news paper readership. According to early dat a from MORI
Research, announced by the Newspaper Association of America, 59% of adults identify newspapers as
the medium they use for planning, shopping and purchase decisions, making newspapers the leading
advertising medium cited by consumers for these activities. (Source: Mediadailynews, 6/10/09)

In a series entitled "American Consumer Insights," early results indicated:

       73% of adults regularly or occasionally read newspaper inserts
       82% have been spurred to action by a newspaper insert in the past month
The 82% of thos e surveyed said that said they "took action" as a result of newspaper advertising:

        Clipping a coupon (61%)
        Buying something (50%)
        Visiting Web sites to learn more (33%)
        Trying somet hing for the first time (27%)

Preliminary data also reveals that other media trailed well behind newspapers as the primary medium for
checking advertising. The closest competitor, the Internet, trailed newspapers by 20 percentage points,
direct mail gained a 14% response in the survey, and television was cited by only 8% of respondents.

New Paradigm – Paid Content Online

This trend in inc reas ed readership is largely due to the success newspaper publishers have had i n
migrating content to their online versions, as well as expanding their owners hip of online properties.
According to a recent article in Advertising Age (5/4/09), Gannett, for example, the nation's biggest
publisher wit h 85 dailies, has acquired a half dozen startups and taken stakes in several ot hers that will
contribut e meaningfully to the $1 billion in digital revenue it expects to collect in 2009. Additionally, many
news papers are experimenting with paid subscriptions to their online properties. "There are signs that
traditional media are sensibly starting to put more emphasis on subscription-based models. That, more
than simply scrapping over a limited pool of ad dollars, increasingly looks like the future." (Heard on the
Street, The Wall Street Journal, 5/18/09) Further proof of the industry‘s commitment to solve their
financial problems, 170 daily newspapers have signed on to a new organization established by indus try
leaders,, designed to find solutions to this issue ―by creating a platform of flexible
hybrid models for paid cont ent that maximizes online advertising revenue while creating a new revenue
stream from readers.‖

Newspapers Reach Key Opinion Leaders
Optimists spend more time with newspapers than any other medium, and they probably recycle their
news papers, too. They 're 51% more likely to go out of their way to purchase recycled goods (compared to
average US), 34% more likely to drive a luxury car and 30% more likely to have bought four or more PCs
in the past two years. Dynamic people rank as the largest group of newspaper readers, followed by
leaders. "Essentially what you're seeing here is what TV doesn't have, newspapers do, '' said John
Durant, Mindset manager-product development. The strong-leadership group, described as people with
strong decision-making skills and a preference to include everyone, read newspapers. (Source: Advertising
Age, 5/4/09)

Recent News on Newspaper Readership within Hispanic Market
Alloy Access, in partnership with Excend Consulting Services, in a recent Hispanic Newspaper Audience
study, says that young and educated consumers (usually known for usage of digital media) report
continued readership and engagement with the His panic print medium. 57% of respondents who read a
Hispanic newspaper are under the age of 35.
Greg Anthony, SVP, Alloy Access "The Hispanic community... is proving their weight (sic) as a segment
of influential consumers, with an estimated $951 billion in spending power... ". Of the 1,030 respondents
in the top five states measured for Hispanic population:

            -    82% read Hispanic publications and reported sharing their copy with at least one other
            -    26% of readers share their paper with at least four others.
            -    74% of Hispanic newspaper readers have read three or more of the last five issues
            -    53% have been reading their favorite Hispanic newspaper for three or more years

Newspapers in the News

Seattle – Times Retains Circulation from Post-Intelligencer
In March, Hearst folded the 146-year-old S eattle Post-Intelligencer as a print newspaper and continued
with a much smaller staff online. The Web site says it has 3.7 million readers. When the Seattle Post -
Intelligencer ceased publishing a print edition and went online-only, rival The Seattle Times was able to
transfer all P-I subscribers to The Times, thanks to a joint operating agreement that had existed between
the two papers. Subscribers were free to cancel their Seattle Times subscript ion, but few did, and as
those subscriptions have expired, 84% have renewed - sending The Times circulation up 30% to
260,000, from about 200,000. (Source: Editor & Publisher).

Philadelphia – Financial Struggles Continue
Philadelphia Newspapers, LLC, publisher of the Philadelphia Inquirer, Philadelphia Daily News and other
publications, including, announc ed that it is voluntarily restructuring its debt under Chapt er 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the E astern District of
Pennsylvania. The company will continue the normal operations of its newspapers, magazines and online
businesses without interruption during the debt-restructuring proc ess. The Metro Philadelphia newspaper
and its U.S. affiliates were sold June 1 for $2 million to Seabay Media Holdings. The three newspapers
claim a combined daily circulation of 590, 000 and 1.2 million readers, m any of which pick up the
news papers at transit stops. (Source: Editor & Publisher)

San Francisco - Improvements in Reproduction/Editorial Innovations
The San Francisco Chronicle has launched a new double page weather spread in its Sunday edition in
collaboration with the Weat her Underground. The Hearst Corporation-owned newspaper recently
announced that it was to become the nation's first high -definition news paper thanks to new state-of-the-
art presses. Weather Underground was chosen to develop a new weath er service that takes advantage of
the presses' reproduction quality and color capabilities, displaying the Bay Area's diverse microclimates
using det ailed maps, graphs and diagrams. (Source: Marketw ire, 7/22/09)

New York, Los Angeles, Dallas - ESPN Plans Websites to Challenge Nwsprs/TV
With local sports coverage online, ESPN is poised to muscle into the space newspapers and TV have left
open. ―As beleaguered newspapers and television stations across the country shed report ers and pull
back on coverage, sports powerhouse ESPN is aiming to hit into the yawning gap.‖ On Monday, ESPN
announced that it would launch localized websites in Los Angeles, New York and Dallas within a year to
showcase sports teams, including the Dodgers and Lakers, which draw legions of loyal fans. The rollout
follows a successful pilot project in Chicago, which has generated a robust online audience in less than
four months of operation. (Source: mediapost, 7/21/09)
Chicago – Ownership Changes In the Works for Both Major Newspapers
Chicago Tribune Co. Chairman and CEO Sam Zell "is ready to walk away from the company," giving up
his claims to a 40% stake in the Chicago media giant he took private in December 2007 only to take it into
bankruptcy a year later, according to a report Tuesday in the New York Post. For it‘s online properties,
Tribune Co.‗s Tribune Media Group has created a blog network of about 70 local blogs on Chic ago -area
interests, anchored by the Chicago Tribune. The network,, is the first in a series o f blog
networks the Tribune Media Group hopes will help increase its online footprint and expand its market
share in Chicago. On a separate note … the Chic ago Sun-Times just announced that STMG Holdings,
led by Chicago businessman James C. Ty ree, has entered into a ―stalking horse‖ purc hase agreement for
all Sun-Times Media Group properties. (Chicago Sun Times press release 9-8-09)

Cincinnati – A Newspaper “Doing it Right”
Cincinnati Enquirer was identified as one of the 10 newspapers that E&P identifi ed as ―doing it right‖. On
New Year's E ve 2007, the Cincinnati joint operating agreement died a rare natural death as it reached the
end of its term. But then the surviving paper, Gannett Co.'s Cincinnati Enquirer, accomplished something
even rarer: It not only grew its circulation to match the JOA 's combined total — it kept the subscribers.
With four years to plan for its post-JOA era, the Enquirer targeted key geographic areas, especially
across the Ohio River in northern Kentucky where the former Cincinnati Post still had a stronghold. In
2008, overall Enquirer circ was up 2% in a year when other metros were recording double-digit declines,
and northern Kentucky circ jumped 9.3%. A year later, the newspaper is retaining more than 80% of
subscribers, and total circ is back to year 2000 levels. (Source: Editor & Publisher)

St. Louis – An All-Star Effect on Page Views
St Louis – St. Louis Post Dispatch: Total revenue for the parent of the St. Louis Post -Dispatch fell 20.5%
to $203.8 million on advertising sales that tumbled 24. 3%. But, online performance hit new record levels
for Major League Baseball All-Star Game; site had 2. 7 million page views on Monday, its highest one-day
total since launching in the mid-1990s. (Source: Editor & Publisher)

Detroit – In Transition, but Unique Online Visits Up
At the end of March ‗09, the Detroit Media Part nership stopped home delivery of the Detroit News and the
Detroit Free Press on Mondays, Tuesdays, Wednesdays, and Saturdays. Newsstand copies, however,
are still available seven days a week, plus home delivery via the U.S. Mail. But in April ‗09, traffic at the
Detroit Free Press ( shot up 74% year-over-y ear to 1. 5 million unique visitors, according to
Nielsen … and at the Detroit News site, unique visitors for April were up 32% to 1 million. (Source: Editor &
Current Trends and Industry Forecasts
The following contains recent consumer trend information relative to consumer spending/couponing, as
well as a listing of some of the segments and sub-segments that the communications industry forecasts
to grow or to shrink over the next five years.

Trend: Consumers Impacted by Recession/Coupon Usage Up (BigRe search 8/09)
The recession has impacted consumer behavior in many ways – savings rates are up, but so is coupon
usage as the following reflects. In the past year, coupon usage has increa sed by 6% as a result of gas
price fluctuation … and undoubtedly, the economy in general.

Source: BigResearch 8/09

Additionally, a new study by Platform-A and IRI (Information Resources Inc.) of 36, 000 panelists on
trends in consumer couponing shows that more than 90 million consumers (78% of retail shoppers)
currently use newspaper coupons, with nearly one out of every four of the newspaper coupon clippe rs
likely to be at least 65 years old. It also revealed that nearly four out of every 10 shoppers, a total of 40
million consumers, would be very likely to use coupons accessed online.

Trend: Newspaper Website Traffic on the Upswing (BizReport-Re search 9/3/09)

Not only are consumers visiting websites, this report finds that newspaper website visitors are more likely
to take action based on an ad seen. Nielsen researchers found that 82% of adults who saw an ad on a
news paper site or in a newspaper 'took action' based on that ad. What actions are consumers taking?
They are clipping coupons, making purchases or visiting websites for more information.

Researchers found that more than 70 million unique visitors landed on newspaper websites in June 2009.
That is nearly 36% of the total US online audience. Not only are cons umers visiting newspaper hubs, they
are devouring content there.

Here are some numbers from the report:

• Newspaper visitors generated 3.5 billion page views in June
• Newspaper visitors spent 2.7 billion minutes browsing newspaper sites
• More than 590 million online sessions found consumers on newspaper websites
So, while many marketers are avoiding newspaper advertising, the smart money is on keeping
news paper ads - especially online ads - in the marketing budget for the foreseeable fut ure

Forecast: Newspaper Advertising Will Rise (S ource: Mediapost, 7/9/09)
Pull back on those newspaper industry obituaries – the category may start seeing signs of improvement
as soon as next year, according to a report issued this morning by Borrell Associates, the Williamsburg,
Va.-based research firm. Contrary to most forecasts, Borrell predicts that newspaper revenue will begin
rising again next year, up 2.4 percent, and by 2014 the industry will have re bounded 8.7 percent over this
year‘s figures, to just over $39 billion. The figures do not include online revenue, which Borrell includes in
the overall internet category. It‘s not a huge uptick, but it‘s significant for an industry that has seen ad
revenue tumble by a third since 2001. Borrell cites five reasons for the uptick, including the fact that while
news papers were the first medium really hurt by the rise in web advertising, the industry has also had the
most time to adjust to this change and learn from it. Borrell also predicts that community and suburban
papers will fuel the ad revenue growth, as will the rising economy overall, better integration bet ween web
and print ad pros pects, and smarter selling by newspaper executives.

Forecast: Traditional Media Will Remain Challenged (Source: Veroni s Suhler
Stevenson, 8/3/ 09; PricewaterhouseCoopers 6/09)
According to their 8/3/09 press release, Veronis Suhler Stevenson, the private equity firm, predicts that
traditional advertising sectors will remain challenged. Their forecast showed that the current economic
cycle has accelerated long developing trends away from mass market image advertising and toward
individualized, technology enabled access to information and ent ertainment.

Among "traditional‖ media, magazines seem poised for the second biggest hit, topped only by
news papers. From 2009 through 2013, consumer -magazine ad spending in the U.S. will slide fall at a
compound annual rate of 0.9%. That will be faster than all the competition except news papers, according
to the PricewaterhouseCoopers Global Entertainment and Media Outlook, published in June. TV
advertising, the closest other declining medium, will sink 0.6%, according to the forecast, while radio
holds flat, out-of-home advertising grows 2.5%, the internet and mobile segment climbs 6.3% and video-
game advertising jumps 12. 9%.

                                             What is Growing?
    Internet Media                                     Word-of-Mouth Marketing
    Profe ssional Information                          Subscription Television
    Busine ss Information                              Mobile Advertising and Content
    Education                                          Videogames
    Direct Marketing                                   Busine ss-to-Busine ss e-Media
    Event Marketing                                    Tradeshow s
    Public Relations                                   Digital Out-of-Home
                                            What is Shrinking?
    Newspapers                                        Yellow Pages
    Consumer Magazines                                Busine ss to Busine ss Magazines
    Broadca st Television                             Home Video
    Radio                                             Recorded Music
    Traditional Out of Home                           Traditional Consumer Books
Newspaper Insights
Clearly, the economic downturn has impacted all industries, especially advertising. And forecasts for
media rebounds and/or continued challenges, especially with newspapers, are subject to debate and vital
market conditions. Nonetheless, the newspaper medium continues to evolve and positions itself for
changing consumer demands and real-time economic challenges.

      The combined print and online newspaper audience figures for many newspapers are increasing,
       not decreasing, and the perc entage of readers that consumer bot h media products in the same
       week remains high.
      Publishers are incorporating new business models for success, including a shift t o paid online
       news content which many industry leaders predict will increase the ―value‖ of the newspaper‘s
       editorial product.
      It is anticipated that newspapers that successfully charge for their online content will see their
       pricing for online advertising rise through the increased value.
      Innovation will rule the day within the industry - printing technology, alternative circulation models,
       mobile feeds, union concessions, reorganized newsrooms are all predicted for this evolution.
      Newspaper companies are seeking to either acquire or partner with other local media vehicles to
       strengthen their brand positions within local markets.
      And, change/evolution will be the ―constant‖ within the industry as publishers continue to solidify
       their brands as they enter the remaining mont hs of 2009 and head into a new year.
Links to Select Background Articles

From Media Post

Under-35 Hi spanic Age Group Engages With Hi spanic New spapers rticle&art_aid=103962

Newspapers Still Send Consumers To The Store rticle&art_aid=111339

A Ca se for Print over Hamburgers rticle&art_aid=107454

Young Coupon Clippers Looking Online rticle&art_aid=103505

From Adweek

Online Brands Use Offline Ads _display/news/agency/e3id499f8aa1018de8318bc17705265119c

From Editor & Publi sher

Steve Outing: The Future of News from Aspen's Rarefied Air vnu_content_id=1004005

Newspapers That Do it Right Reaches Deals for Style, Biz Content

Newspaper Website "Time Spent" Increase s - Slightly

Boca Raton New s Folds

Report: Zell Giving Up Warrants for 40% Tribune Co. Stake

For a complete list of background articles, contact SVP/Sales and Marketing Deborah Armstrong
mailto:darmstrong@mss-mail.comby email or at 203-849-5853.

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