Media Market EvolutionMarket Facts Update - December 2016

2016At the end of 2015 we had the confirmation that the media market was back on a growing trend, with +6% vs. 2014 and reaching an estimated net of €332 Mio.

In spring we viewed 2016 as the year when the market will consolidate its consistent growth with a similar development as in 2015. But the evolution

during the year made us realize that, in fact, the market growth will surpass our forecast, being expected to reach €366 Mio (+10% vs. 2015).

For 2017, our current estimation is that the market will continue the upward trend with a 6% growth vs. 2016, at an estimated net value of €389 Mio.

ROMANIA 2016

TOTAL (Mil €) TV Print Radio OOH Internet

In 2016, the market growth was driven by a spectacular increase of the advertisers TV invest-ments, resulting in +13% vs. 2015, from €212 Mio to €240 Mio.

Nevertheless, TV is not the only growing media, Online and Radio will also increase by the end of this year. OOH will stay flat in terms of advertising

investments, while Print will be the only medium to drop.

Digital is expected to grow from €57 Mio to €64 Mio (+12% vs. 2015) and Radio is estimated to reach €20 Mio from €19 Mio (+5% vs. 2015) – both in line with our early 2016 predictions. OOH will keep flat vs. 2015 at €28 Mio, while Print will drop by 10% vs. 2015, from €16 Mio to €14 Mio.

2012 303 193 22 19 29 412013 305 193 19 19 28 462014 313 198 17 18 28 512015 332 212 16 19 28 572016 est 366 240 14 20 28 642017 est 389 252 13 22 29 74

0

50

100

150

200

250

300

350

400

450 366

240

14 20 2864

Source: Initiative

Total net Ad-spend by medium (Million €) - Estimation

Total (Mil €) TV Print Radio OOH Internet

Source: Initiative

est 2017

est 2016

2015

2014

2013

2012

65% 19% 7% 6% 3%

65% 18% 8% 6% 4%

64% 17% 8% 6% 5%

63% 16% 9% 6% 6%

63% 15% 9% 6% 6%

64% 14% 10% 6% 6%

Market share in 2013-2017 (net ad-spend by medium)

TV Internet OOH Radio Print

For Television, 2016 was a “wow” year, with an estimated 13% growth, at €240 Mio by the end of the year. The total TV market inventory grew by 5% in terms of sold GRP’s vs. 2015 and the avg. CPP is expected to show an inflation of 8% to 10%.

In order to solve the sold out situation in autumn, CME and INTACT released at the beginning of October special sales policies, both claiming for additional surcharges on premium programs. This action and the seasonal boost of audiences resulted in a lower loading in November for PRO TV and Antena 1 in Off Prime Time intervals, whereas both of them continued to be sold out in Prime Time.

PRO TV, Antena 1 and Kanal D remain leaders in terms of audience share, they even consolidated their position, especially in Prime Time : PRO TV - 24.7%, Antena 1 - 15.6% and Kanal D - 9.8% (2016 YTD). October and November performance was significant in Prime Time, 25.6% for PRO TV, 19.8% for Antena 1, and 9.9% for Kanal D.

In 2016 Digi Group had a dynamic performance evolution, overtaking Prima Broadcasting Group and is going up on 4th place in the TV media groups share ranking. Talent shows continued to dominate TV programming, „Romanian got talent” „Voice of Romania” „Visuri la Cheie” broadcasted by Pro TV, and „ Game of Chefs” broadcasted by Antena 1, being the most watched.

Digital media channels maintain an increased trend, with +12% vs 2015. All Google properties will continue growing, with Search remaining best conversion touchpoint. Display will continue to drop due to a strong market focus towards audi-ence planning vs. site by site planning. Facebook will keep the most aggressive trend ( currently 8.8 mil Romanian internet users use the social media channel).

OOH market is expected a flat investment level evolution in 2016. The most significant event is Euromedia taking over the financial and operation-al management of Affichage – now, the two suppli-ers function as one entity totaling an estimate of 45% of the total OOH market.

Radio advertising revenues increased by 5% vs. 2015. The Radio channels audience performance (daily reach) reconfirmed as leaders Kiss FM at urban level and Radio ZU in Bucharest.

Print market continues its downtrend, with more publishers closing print titles: Evenimentul zilei closed Saturday issues, Burda no longer releases Esquire magazine, Ring free tabloid was closed on Jul 1st, and Adevarul Holding operated major changes in almost all departments.

Market Essentials

Initiative’s forecast for 2017 is that the media market will continue to grow by 6% vs. 2016, reaching €389 Mio. TV is expected to grow by 5% (from €240 Mio to €252 Mio), Online by 14% (from €64 Mio to €74 Mio), Radio by 7% (from €20 Mio to €22 Mio) and OOH is estimated growth by 4%, after several years of flat investment (from €28 Mio to €29 Mio). Print will continue to drop by an estimat-ed 10% (from €14 Mio to €13 Mio).

The TV market will continue to increase in 2017 by 5% in terms of revenues, in accordance with an estimated flat rating and no additional budgets which are generated by cyclical events such as elections and sports (football, Olympic Games).TV cost inflation will remain strong in 2017, forecasting a different background than we were used to – lower ad breaks loading level and lower level of inventory sold to the market.

Pro TV will continue to be the TV market engine, with best audience and shows, followed by Antena 1 which is fighting to reduce the gap to the leader and is likely to gain audience due to new HD trans-missions and very good performance of its talent shows, especially „ Game of Chefs”.

Digital channels will continue growing, driven by Google and Facebook. A significant increase is also expected for Programmatic, but still low vs poten-tial and buzz. We expect to see more and better used data segmentation together with access to serving technology.

OOH: December 2016 will bring the Parliamentary elections, with a strong possibility for changes in the 2017 market share structure – new vendors might emerge and additional exits could appear.In 2017 the highest investments are expected from Retail’s aggressive expansion, FMCG and last but not least from a very tough competition between Mall Developers.

Radio market is expected to grow steadily, as radio stations will try to gain new audience by expanding their networks and implementing new attractive programs with VIP from other media channels.

Print: despite the integrated media packages, events partnerships, special projects, tailor-made supplements and unconventional formats, the decreasing trend will not stop, being severely affected by a problematic distribution.

2017 Media Market Predictions

According to MAGNA Inflation Report released this November, the global trend is of significant TV infla-tion for Free TV (+6.4%), and is reflected also at regional levels such as Europe (+6%) and CEE (+9%). In the most mature markets TV inflation is driven by declining linear audiences & Ratings, leading to shortage of supply, fragmentation of viewing habits or the emergency of digital and OTT platforms

Because of the critical mass reached by digital media spend in most markets, growth rates will gradually slowdown in the following years (+12.5% in 2017), although digital will remain by far the fastest-growing media category. In 2016, digital represents 36% of total advertising budgets, nearly matching TV’s format-leading 37% share. As previously forecast by MAGNA, digital will then surpass TV and become the largest advertising category in 2017.

Global Media Forecast