1. The 7th International Symposium on Online Journalism April 7-8, 2006 The School of Journalism at the University of Texas at Austin

2. Audience and Business Models: Will the Online News Industry be Able to Finance Quality Journalism? Gary Meo SVP, Print & Internet Services Scarborough Research

3. Agenda  Brief Scarborough overview  Printed newspaper readership trend  Newspaper web site audience – size and composition  Newspaper company economics  Things to think about....

4. Scarborough Research  Local market syndicated study  Measures retail behavior, media usage, demographics and lifestyle  Ratings service for the newspaper industry  80 local markets measured plus the total U.S.  Two phase methodology  Telephone interview, mailed product booklet and TV diary  130+ newspaper subscribers and 500+ advertising agencies

5. Average-Issue Newspaper Readership Both daily and Sunday newspaper readership continues to erode at a slow and steady pace. Source: Scarborough Research Top 50 Markets, 1998-2005

6. We are talking about Readership, not Circulation  Circulation  Number of newspapers sold  Audited by the Audit Bureau of Circulations  Readership/audience  Number of adults who read the newspaper  Measured by survey research

7. Newspapers have pioneered the digital world

8. In November 2005, newspaper websites...  reached an all-time high of 55 million users  30% increase over November 2004  30% of all active internet users visited newspaper websites in November 2005  unique visitors to newspaper Web sites jumped 21% from January 2005 to December 2005, and page views increased by 43% over that same period  11 of the top 25 national news and information Web sites are newspaper sites Nielsen Net//Ratings

9. Houston Chronicle Extends Its Reach Into the Houston Market with chron.com 55% 63% Base: 3,939,303 Adults Source: 2005 Scarborough Report, Houston DMA Daily Cume – 5 Issues Sunday Cume – 4 Issues

10. If Chron.com was a radio station, it would be the number one radio station in Houston during morning drive Base = Houston Arbitron Metro Area (3,805,620 adults) Stations Ranked on Cumulative Morning Drive Reach Sources: Scarborough Research, Sep ‘04 - Feb ’05 (Current Six Months) The past 7 day audience of Chron.com, compared to the weekly cumulative reach of the top five radio stations during morning drive.

11. Print and Online are Complementary Houston DMA Source: Scarborough Research, Mar ‘04 - Feb ‘05 Daily Houston Chronicle Visited Chron.com Avg-Issue Audience Past 30 Days Men10798 Women94102 Age 18-4978111 Age 25-4980119 Age 35-4995133 Age 50+14280 Less than High School Grad4117 High School Grad8462 Some College111112 College Graduate146176 Post Graduate148209 HHI<$25,0007232 HHI $25,000 - $49,9998473 HHI $50,000 - $74,99993110 HHI $75,000+134155

12. ... And with audience comes advertising revenue  Advertising revenue for general market newspaper web sites is expected to reach $2.5 billion in 2006  Newspaper web site revenue will comprise 5% of total newspaper revenue  Newspaper web sites reach affluent, upscale and young audiences Source: Newspaper Association of America

13. Newspaper Revenue by Type Source: NAA

14. Newspaper Advertising Revenue by Type Source: NAA

15. Things to think about...  McClatchy buys Knight Ridder for $4.5 billion (32 dailies and internet businesses)  In 1998, McClatchy bought the Minneapolis Star-Tribune for $1.4 billion  Washington Post to cut 80 editorial jobs, 9% of its newsroom  Debt ratings for the New York Times Company, Tribune and Scripps have been put under review by Moody's Investors Service, with an eye to downgrades.  Merrill Lynch downgrades Dow Jones from "neutral" to "sell“ on fears of slower than anticipated revenue growth  Block Communications, owner of The Toledo Blade and Pittsburgh Post-Gazette, will close its five-person D.C. bureau, which has operated out of the National Press Building since 1927  In September, the E.W Scripps-owned Cincinnati Enquirer gave buyouts to 15 staffers, decreasing the newsroom from 80 to the current 65. If another five are lost through buyouts, that would mean a 25% reduction in staff since last fall.

16. Things to think about...  The New York Times launches “Times Select” providing access to specific content for a fee ($49.95 a year) and boasts 135,000 subscribers in its first two months.  The St. Petersburg Times has begun offering free private-party classified ads. Individuals can sell personal merchandise through free ads online and in print. Ads may be renewed one time for free and sellers can purchase upgrades to enhance their ads.  The Associated Press and MSN launched the AP Online Video Network providing 40 video clips per day covering national, international, technology, business, and entertainment news.  U.S. newspapers begin to introduce podcasting and vodcasting to reach young people through digital channels.  The Newspaper Association of America reported that total newspaper advertising revenue grew 1.4% in Q4 2005, largely due to spending online. Print advertising revenue was up 0.4% compared to the same period the previous year while online advertising jumped 32.5%.  At the World Economic Forum in Switzerland, New York Times Company Chairman and Publisher, Arthur Sulzberger Jr., said its online product, NYTimes.com, has moved from "ancillary" to being "core" to the company's future.

17. gmeo@scarborough.com www.scarborough.com

18. The 7th International Symposium on Online Journalism April 7-8, 2006 The School of Journalism at the University of Texas at Austin