It’s SecularThere’s InelasticityGet Transactional

2005 2006 2007 2008 2009 20100

10

20

30

40

50

Newspaper Industry Advertising Revenues

It’s Secular

$24.8

$34.7

$42.2

$46.6

$47.4

BIL

LIO

NS

OF D

OLLA

RS

YEAR

Source: Newspaper Association of America

-1.7% -

9.4%

-17.7%

-28.6%-10%?

It’s Secular

Newspapers / Mags

Yellow Pages

Other

Billboards

Radio

Television

Direct Mail

Internet

(1000) (500) 0 500 1000

Budgets continue to shift out of print and into Internet…

Ad share shift (in bps) from 2 years ago to two years from now

920

60

50

0

0

(40)

(210)

(770)

Source: Morgan Stanley Research

same

There’s Inelasticity

7-Day Subscription Elasticity

40%

less

more

-12%

VO

LUM

E

PRICE

There’s Inelasticity

• Prior to the home delivery price increase, we strategically began to down size our TDMN audience. – Eliminated all outbound telemarketing for new starts– Eliminated all “Billed/Prepaid” new starts through any

pressure channel– Introduced mobile handheld technology in all pressure

channels and accepted EZpay only starts from all vendors.– Reduced all consumer facing discounts to 15%; increased

save discounts to 25%.

There’s Inelasticity• In May of 2009 TDMN increased NDM 7-day rates 43% and

ONDM rates 100%. Below are 4 critical factors to consider prior to pricing:

1. Dramatically reduced churn as the result of acquisition changes made in fall of 2008. Overall churn reduced 34% (from 61% to 41% in 7 months).

2. Engaged the Modeller's in an exhaustive pricing study to determine “pricing cliffs” and the impact content has on a consumers willingness to pay and a consumer perception of value.

3. Launched a live market pricing test with 1,500 subscribers 3 months prior to the market wide pricing. In the live market test we tested 3 unique rates and measured attrition results on the 3-rates.

4. In conjunction with the price increase we increased price to all new subscribers from $30.00 to $33.95. 19% of the current TDMN base is on the “new” subscriber pricing schedule. We did this to reduce attrition in future price increases.

Impact of Price on Quality Audience

TDMN March '06 Sept '06 March '07 Sept '07 March '08 Sept '08 March '09 Sept '09 Feb '10% Change

March '06 - Feb '10

Tier One 45.4% 46.4% 46.5% 46.3% 46.4% 47.8% 47.9% 48.2% 49.1% 3.7%Tier Two 28.5% 28.3% 27.9% 27.5% 27.3% 27.3% 27.2% 32.0% 32.1% 3.6%

Tier Three 15.3% 14.8% 14.3% 13.8% 13.5% 13.5% 12.4% 13.3% 12.8% -2.5%Tier Four 10.8% 10.4% 11.3% 12.4% 12.8% 12.4% 12.5% 6.5% 6.0% -4.8%

Total 100% 100% 100% 100% 100% 101% 100% 100% 100% 0%

There’s Inelasticity

• Do the math:

100,000 subscribers x $3.00/per week x 52 weeks = $15,600,000 88,000 subscribers x $4.20/per week x 52 weeks = $19,219,000

Circulation Revenue = + $3.6 million / + 23%

There’s Inelasticity

p 8

• It’s rarely about price alone, though almost always about Value for the Price

• Let content drive circulation revenue – it’s quite possible that over the years we’ve “cut to the quick” and inadvertently helped readers become more price sensitive

• Marcom is Queen, but Content is King– Marketing communications that point out all the great

things you’ve done, are doing, and plan to do can help reduce elasticity/defection

– A blend of real changes and improvements in content and letting people know about them is best

There’s Inelasticity

p 9

• Now is the time to put good, solid content back in your news products because it improves brand image and equity, reduces churn, improves elasticity and can be a significant source of increased incremental revenue.

– Hire more writers and staff– Focus on the right type and amounts of content readers want

most– Charge the right people the right amount for it– Deliver it in the right platform that readers want

There’s Inlasticity

• Your newspaper price is the consumer’s baseline

• Consumers will expect to pay less for digital distribution

• Emerging subscription revenue opportunities in e-editions, e-books, e-pads & apps

• Comment: Industry move to “paid at any price” is a mistake. Devalues the product.

Get transactional

Get Transactional

• Do the math:

10 million PV’s/month x

$10 CPM x

3 ad units per page x

100% sellout =

$3.6 million per year

ROI

Targetability

Price

Reach

Relationship w/ Sales Rep

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Respondents continue to focus on targetability and ROI

in directing ad dollars

Get transactional

21%

Source: Morgan Stanley Research

57%

58%

72%

84%

Most important factors in local

ad buying

*More than one factor could be chosen as #1

Other

Yellow Pages

Billboards

Radio

Direct Mail

Television

Newspapers / Mags

Internet

0% 10% 20% 30% 40%

Of the mediums you use, which is the most ef-fective?

Get transactional

39%

Source: Morgan Stanley Research

27%

26%

21%

14%

9%

6%

4%

Get transactional

• Inventory is exploding

• Consumer purchases less volatile than ad spend

• ROI

• CPM’s under pressure

• Ad dollars moving online

What’s Ahead?

• Mobile

• Preprints going digital

• Right content on each device for every customer. And GET PAID!

• Reorganize