2011 Report rd Quarter Release - Johannesburg 14 November 2011

Introduction: General Up-date: General Up-date: Economic Outlook.Economic Outlook. Global economic climate remains precariously balanced. Global economic climate remains precariously balanced. Impact of Euro zone “bail-out or bankrupt” debates cause uncertainty within in emerging markets such as ours. Impact of Euro zone “bail-out or bankrupt” debates cause uncertainty within in emerging markets such as ours First Glance2012 First Glance It’s never been truer that tomorrow will be less like yesterday than ever before! It’s never been truer that tomorrow will be less like yesterday than ever before! We’re expecting 2012 to be the toughest year in memory. We’re expecting 2012 to be the toughest year in memory. Client budgets are not keeping pace with rate inflation.Client budgets are not keeping pace with rate inflation. Media owner discounts are declining generally…”closing gaps”.Media owner discounts are declining generally…”closing gaps”. Media owner audiences are declining and increasingly more fragmented.Media owner audiences are declining and increasingly more fragmented. Landscape is changing rapidly ; 20% of radio listenership via cell phone!Landscape is changing rapidly ; 20% of radio listenership via cell phone! The currency for decision making is under threat.The currency for decision making is under threat. Media owners have generally lost the art of selling.Media owners have generally lost the art of selling.

Local Up-date: Local Up-date: Media Inflation Up-date Jan – June 2011Media Inflation Up-date Jan – June 2011 While total rate inflation is currently running at 8.7%, print tracks 2% less at 6.7%. Despite this the % performance remains poor and hence the MIW Index is constant at 13%. B2B index has declined from 10.5% Community and Weeklies have marginally improved. Daily Newspapers inflation remains almost 5 time higher than overall MIW inflation despite reduced rate inflation.

Television is becoming more cost efficient due to lowering rates (FTA) and growing performance. Pay TV has marginally higher MIW inflation. Radio. % Performance has slowed (CIW in particular) while rate inflation has held. Still modest MIW index. Cinema. Improving as decline in audience slows while rates drop. Still delivers high MIW inflation.

International Up-date: International Up-date: Print fights back!Print fights back! 2011/12 MPA Fact book launched recently aggressively promotes prints by identifying 10 key facts. 2011/12 MPA Fact book launched recently aggressively promotes prints by identifying 10 key facts. Available via free down load or via app. Available via free down load or via app. Ten trends…proven Ten trends…proven 1.Magazine audiences getting stronger in the under 35 year group. 2.Magazines more engaging than any other platform. 3.Advertising content is considered valuable by readers. 4.Magazines build reach faster than TV ! 5.Magazines build trust. 6.Magazine readers influence others to buy products. 7.Digital magazines (editions) more effective in prompting purchase. 8.Magazines more influential in initiating digital search. 9.Magazine audiences expanding more and faster into the digital arena. 10.Magazines improve ROI.

Global ad expenditure continues to grow despite stock market turmoil…October 2011 Global ad expenditure is forecast to grow 3.6% in 2011 after a modest slowdown in expenditure growth towards the end of the year Growth forecast for 2012 remains a reassuring 5.3% This picture is consistent with a history of ad market growth after many previous stock market shocks, assuming the world economy does not deteriorate dramatically Developing markets to increase their share of the global ad market from 31.0% in 2010 to 34.9% in 2013 Internet the fastest-growing medium between 2010 and 2013 (14.6% a year) Television to contribute most new ad dollars (46% of total)

Rule Amendments effective 1st July 2011: 1. Addition to the definition of ‘Subscriptions’ – ‘Where combined titles are offered, the individual titles must be available at different prices’. 2. Sales by a Reseller – will be able to be claimed as paid circulation under certain circumstances. 3. Mailed copies of B2B magazines must be posted on or before the 7 th of the month following the month of issue. 4. In respect of weekly newspapers, application for exclusion may be made regarding organized stayaways etc., provided the loss exceeds 15% of the average of 2 comparative weeks.

Membership Statistics: 31 December 2010AdmissionsRemovals30 September 2011 Magazines Consumer Business to Business Custom Free Magazines Newspapers Daily Weekly Weekend Community Hybrid Free Newspapers Advertising Brochures Total ABC Members

SECTOR SIZE RANKED BY AVERAGE CIRCULATION – Quarter : POSITIONSECTORCIRCULATION NUMBER OF PUBLICATIONSAVERAGE 1Custom Magazines12,101, ,486 2Consumer Magazines6,773, ,952 3Free Newspapers5,899, ,100 4Advertising Brochures2,827, ,442 5Weekend Newspapers2,408, ,188 6Daily Newspapers1,700, ,387 7B2B Magazines1,124, ,502 8Weekly Newspapers699, ,298 9Community Press471,763597,996 10Free Magazines350, ,931 11Hybrid Newspapers152,280438,070 TOTAL34,509, ,279

Approach Approach a) Track Print performance against GDP and Retail Sales b) Trend Analysis: YOY c) Compare Category Circulation Composition YOY Large & Growing Small & declining d) Scatter graph Evolutionary, familiar but better: Evolutionary, familiar but better: Recognizes state of economy / retail sales.Recognizes state of economy / retail sales. 4 year category trends.4 year category trends. YOY category composition comparison – to see where the shifts are coming from.YOY category composition comparison – to see where the shifts are coming from. Familiar scatter graph – but with defining titles.Familiar scatter graph – but with defining titles.

Overall Economic Perspective Comment: Retail sales for the 3 months ended August 2011, reflect an increase of 4.1%, compared to The largest increase was in ‘Retailers in textiles, clothing, footwear, and leather goods’. Retail sales for the 3 months ended August 2011, reflect an increase of 4.1%, compared to The largest increase was in ‘Retailers in textiles, clothing, footwear, and leather goods’. GDP increased by 1.3% in the second quarter. The main contributors were: General Government Services, Finance, Real Estate and Business services. Manufacturing Industry showed the largest decline. GDP increased by 1.3% in the second quarter. The main contributors were: General Government Services, Finance, Real Estate and Business services. Manufacturing Industry showed the largest decline.

Newspaper Performance Relative to Economic Measures. Comment: Total newspaper circulation increased by 135,000 copies over the previous quarter, attributable to Free and Weekly newspapers. Total newspaper circulation increased by 135,000 copies over the previous quarter, attributable to Free and Weekly newspapers.

Trend Analysis – Total Circulation: Daily Newspapers Comment: The rate of decline has slowed. The rate of decline has slowed. 72,000 (5.1%) fewer newspapers sold than in the same quarter last year. 72,000 (5.1%) fewer newspapers sold than in the same quarter last year. 24,000 (1.7%) fewer than the previous quarter. 24,000 (1.7%) fewer than the previous quarter.

Q.3 – Composition Comparison: Daily Newspapers Comment: Copy Sales declined by 6%. Some PMIE above 50% of cover price was replaced by PMIE below 50% of cover price.

Trend Analysis – by language: Daily Newspapers Comment: When compared to the prior year English titles decreased by 7%, and Afrikaans titles by 4.3%. Vernacular titles showed an encouraging increase of 9.3%. When compared to the prior year English titles decreased by 7%, and Afrikaans titles by 4.3%. Vernacular titles showed an encouraging increase of 9.3%.

Daily Newspapers ranked by Copy Sales: Comment: 10 titles decreased circulation, while 4 increased circulation, and 4 remained static. There has been no change in the ranking. RankingPublication Name Copy Sales >50% % Change on Prior Year 1 Daily Sun374, % 2 Isolezwe105, % 3 Son (Daily)103, % 4 Sowetan86, % 5 Star, The58, % 6 Citizen, The (Daily)51, %

Q.3 – Year on Year Analysis: Daily Newspapers Comment: Isolezwe (9.3) and Beeld (4.7%) reflected the largest increases. Daily News suffered the largest percentage decline (-14.7%) while Daily Sun suffered the largest numerical decline (-36,700 copies).

Trend Analysis – Total Circulation: Weekly Newspapers Comment: Total circulation reflects a dramatic increase of 20%, improving the increase reflected in the previous quarter.

Q.3 – Composition Comparison: Weekly Newspapers Comment: Copy Sales increased by a significant 18.7%, amounting to 88,000 copies!

Weekly Newspapers ranked by Copy Sales: Comment: The overall increase in circulation was directly attributable to the significant increase in circulation of the 2 largest titles. RankingPublication Name Copy Sales >50% 2011 % Change on Prior Year 1 Soccer Laduma345, % 2 Ilanga135, % 3 Mail & Guardian35, %

Q.3 – Year on Year Analysis: Weekly Newspapers Comment: Soccer Laduma grew a substantial 30.7%, while Ilanga (16.5%) and Mail and Guardian (10.8%) grew significantly. Umafrika declined by 23.4%

Trend Analysis – Total Circulation: Weekend Newspapers Comment: Circulation declined by 3.2% (70,000 copies) over the prior year, and by 2% (44,000) over the previous quarter. Circulation declined by 3.2% (70,000 copies) over the prior year, and by 2% (44,000) over the previous quarter. 17 titles declined, 4 increased, and 2 remained static. 17 titles declined, 4 increased, and 2 remained static.

Q.3 – Composition: Weekend Newspapers Comment: Copy sales declined by 4% (68,000 copies). Encouragingly, Subscriptions increased by 7% (29,000 copies). Copy sales declined by 4% (68,000 copies). Encouragingly, Subscriptions increased by 7% (29,000 copies). Both PMIE and Third Party Bulk sales declined. Both PMIE and Third Party Bulk sales declined.

Trend Analysis – by language: Weekend Newspapers Comment: English titles declined by 4.6% (70,000 copies), while Afrikaans titles declined by 3% (16,000 copies) English titles declined by 4.6% (70,000 copies), while Afrikaans titles declined by 3% (16,000 copies) Vernacular titles increased by 10.8% (16,000 copies). Vernacular titles increased by 10.8% (16,000 copies).

Weekend Newspapers ranked by Copy Sales: Comment: Of the 6 largest titles only Ilanga Langesonto showed growth. There has been no change in the ranking. RankingPublication Name Copy Sales >50% % Change on Prior Year 1Sunday Times253, % 2Sunday Sun220, % 3Rapport215, % 4City Press155, % 5Sunday World127, % 6Ilanga Langesonto85, %

Q.3 – Year on Year Analysis: Weekend Newspapers Comment: Isilezwe ngeSonto grew a significant 15.8%, while Beeld (6.6%) and Ilanga Langesonto (6.5%) showed creditable increases. Isilezwe ngeSonto grew a significant 15.8%, while Beeld (6.6%) and Ilanga Langesonto (6.5%) showed creditable increases. Weekend Argus (-10.7%) and Pretoria News (-10%) showed the largest declines. Weekend Argus (-10.7%) and Pretoria News (-10%) showed the largest declines.

Trend Analysis – Total Circulation: Community Newspapers Comment: Stable performance with little growth. Stable performance with little growth.

Trend Analysis – Total Circulation: Free Newspapers Comment: Whilst total circulation increased by 10.8% (561,000 copies) because of new entrants, real circulation increased by 1.6% (83,000 copies). Whilst total circulation increased by 10.8% (561,000 copies) because of new entrants, real circulation increased by 1.6% (83,000 copies).

Q.3 – Composition Comparison: Hybrid Newspapers Comment: The Times grew paid circulation significantly, both Copy Sales (172%, 24,400 copies) and Subscriptions (37.6%, 27,764 copies). The Times grew paid circulation significantly, both Copy Sales (172%, 24,400 copies) and Subscriptions (37.6%, 27,764 copies).

Magazine Performance Relative to Economic Measures. Comment: Total circulation declined significantly, resulting from the loss of 2 titles from the ABC data. Vuk’uzenzele, a free government title resigned, prior to converting to a newspaper. Vodaworld magazine did not publish during the year, although has since restarted under a new publisher.

Trend Analysis – Total Circulation: Consumer Magazines Comment: Whilst total circulation increased by 7.3% because of new entrants, real circulation declined by 3.7% (215,000 copies). Whilst total circulation increased by 7.3% because of new entrants, real circulation declined by 3.7% (215,000 copies).

Q.3 – Composition: Consumer Magazines Comment: Whilst Copy Sales remained static, Subscriptions declined a disappointing 16%! Whilst Copy Sales remained static, Subscriptions declined a disappointing 16%! Free circulation increased by 61.5%, mainly because of new free circulating titles. Free circulation increased by 61.5%, mainly because of new free circulating titles.

Q.3 – Year on Year Analysis Comment: The category declined by 5.5%. The category declined by 5.5%. The Thinker increased by 42%, albeit off a small base and Succeed Magazine increased by 6%. The Thinker increased by 42%, albeit off a small base and Succeed Magazine increased by 6%. Noseweek (-13%) reflected the largest decline. Noseweek (-13%) reflected the largest decline.

Q.3 – Circulation Composition: Comment: Copy Sales declined by 13%. Copy Sales declined by 13%. 3rd Party Bulk Sales declined by 50%! 3rd Party Bulk Sales declined by 50%!

Q.3 – Year on Year Analysis Comment: Of the quarterly reporting titles, Drum (8.6%) and Reader’s Digest (5.2%) showed the largest increases. Of the quarterly reporting titles, Drum (8.6%) and Reader’s Digest (5.2%) showed the largest increases. Huisgenoot (-5%) reflected the largest decline. Huisgenoot (-5%) reflected the largest decline.

Q.3 – Circulation Composition: Comment: Subscriptions declined a disappointing 50%! Subscriptions declined a disappointing 50%!

Q.3 – Year on Year Analysis Comment: House & Leisure (11.1%) and Tuis/Home (9.4%) reflected the largest increases. Top Billing (-38%) and SA Garden/SA Tuin Paleis (-26%) showed the largest declines.

Q.3 – Circulation Composition: Comment: Copy Sales (6.2%) and Free Circulation (53%) increased because of new entrants. Copy Sales (6.2%) and Free Circulation (53%) increased because of new entrants. Subscriptions declined a disappointing 19%. Subscriptions declined a disappointing 19%.

Q.3 – Year on Year Analysis Comment: Popular Mechanics increased by 8.2%. Popular Mechanics increased by 8.2%. FHM (-23%) and Tech-Smart Magazine (-16%) showed the largest declines. FHM (-23%) and Tech-Smart Magazine (-16%) showed the largest declines.

Q.3 – Circulation Composition: Comment: Free circulation declined by 13%. Free circulation declined by 13%.

Q.3 – Year on Year Analysis Comment: Cars in Action grew a significant 48.4%! Auto Trader (-10.7%) showed the largest decline.

Q.3 – Circulation Composition: Comment : Comment : Copy Sales grew by 4.5%. However, Subscriptions fell by 7%. Copy Sales grew by 4.5%. However, Subscriptions fell by 7%.

Q.3 – Year on Year Analysis Comment: Mamas & Papas (42%!) showed the largest increase. Living and Loving (-28%) and Your Baby (-20%) reflected the largest declines.

Q.3 – Circulation Composition: Comment: Copy Sales declined by 16%. Subscriptions increased by 20%, albeit off a small base. Copy Sales declined by 16%. Subscriptions increased by 20%, albeit off a small base. Free circulation increased by 21%, because of a new free circulating title. Free circulation increased by 21%, because of a new free circulating title.

Q.3 – Year on Year Analysis Comment: Amakhosi (30.7%) showed the largest increase. Amakhosi (30.7%) showed the largest increase. Golf Digest declined by 67% because of the loss of World of Golf contract. Modern Athlete declined by 28.6%. Golf Digest declined by 67% because of the loss of World of Golf contract. Modern Athlete declined by 28.6%.

Q.3 – Circulation Composition: Comment: Copy Sales increased by 9.9%. Copy Sales increased by 9.9%. Subscriptions fell by 31% because of the previously mentioned reason. Subscriptions fell by 31% because of the previously mentioned reason.

Q.3 – Year on Year Analysis Comment: SA country Life grew by 5%, while Getaway declined by 8%. SA country Life grew by 5%, while Getaway declined by 8%.

Q.3 – Circulation Composition: Comment: Copy Sales and Free circulation increased because of new entrants. Copy Sales and Free circulation increased because of new entrants.

Q.3 – Year on Year Analysis Comment: Kuier grew by 98%! (off the chart) – all in copy sales! Kuier grew by 98%! (off the chart) – all in copy sales! O, the Oprah Magazine (-23%), Fairlady (-19%) and Your Family (-18%) reflected the largest declines. O, the Oprah Magazine (-23%), Fairlady (-19%) and Your Family (-18%) reflected the largest declines.

Q.3 – Circulation Composition: Comment: Copy Sales declined by 4%, while Subscriptions remained static. Copy Sales declined by 4%, while Subscriptions remained static.

Trend Analysis – Total Circulation: B2B Magazines Comment: While total circulation declined by 7.5%, real circulation fell by 4.6%. While total circulation declined by 7.5%, real circulation fell by 4.6%.

Q.3 – Circulation Composition: B2B Magazines Comment: Bulk distribution fell by 19.5%. Bulk distribution fell by 19.5%.

Q.3 – Year on Year Analysis Comment: Travel News weekly grew by 7.4%. Travel News weekly grew by 7.4%. Business Traveller Africa declined by 15%. Business Traveller Africa declined by 15%.

Q.3 – Composition: Comment: Individual distribution fell by 11%, and bulk distribution by 35%. Individual distribution fell by 11%, and bulk distribution by 35%.

Q.3 – Year on Year Analysis Comment: Hire SA increased by 5.6%, and SA Jewellery News declined by 6%. Hire SA increased by 5.6%, and SA Jewellery News declined by 6%.

Q.3 – Composition: Comment: While Individual distribution increased by 10%, bulk distribution fell by 13%. While Individual distribution increased by 10%, bulk distribution fell by 13%.

Q.3 – Year on Year Analysis Comment: CEO Magazine declined by 16.6%. CEO Magazine declined by 16.6%.

Q.3 – Composition: Comment: Individual distribution grew by 54%, and paid circulation by 15%. Individual distribution grew by 54%, and paid circulation by 15%. Bulk distribution declined by 22%. Digital declined significantly, because a publication with significant digital circulation resigned (HR Future). Bulk distribution declined by 22%. Digital declined significantly, because a publication with significant digital circulation resigned (HR Future).

Q.3 – Year on Year Analysis Comment: Front Shop increased by 29.3%. Front Shop increased by 29.3%.

Trend Analysis – Total Circulation: Custom Magazines Comment: Total decline of 6.3% was impacted by the loss of several large titles. Total decline of 6.3% was impacted by the loss of several large titles. Real circulation increased by 3%. Real circulation increased by 3%.

Q.3 – Composition: Custom Magazines Comment: Individual distribution fell by 9% and Bulk distribution by 16%. Individual distribution fell by 9% and Bulk distribution by 16%. Paid circulation increased by 16%. Paid circulation increased by 16%.

Q.3 – Year on Year Analysis Comment: Dish Compact (14%) and Dish Commercial (11.5%) reflected the highest growth. Dish Compact (14%) and Dish Commercial (11.5%) reflected the highest growth. M (-30%) and Magic (-20%) showed the largest declines. M (-30%) and Magic (-20%) showed the largest declines.

Q.3 – Circulation Composition: Comments: Both Individual and Bulk distribution declined. Both Individual and Bulk distribution declined.

Q.3 – Year on Year Analysis Comment: Both Vision (40%) and The Blue Train (19%) showed considerable growth. Both Vision (40%) and The Blue Train (19%) showed considerable growth.

Q.3 – Circulation Composition: Comments: While individual distribution increased, Bulk distribution declined. While individual distribution increased, Bulk distribution declined.

Q.3 – Year on Year Analysis Comment: Club X (48%) and Foschini Sports (25%) showed the largest increases. Club X (48%) and Foschini Sports (25%) showed the largest increases.

Trend Analysis – Total Circulation: Free Magazines Comment: Total circulation has been significantly impacted by the resignation of Vuk’uzenzele, which has converted to a free Government newspaper. Real Circulation is stable.

Overall Conclusion: While we may wonder about the state of the global economy, decisions in the weeks ahead will significantly shape our financial prosperity next year. Globally aligned businesses will not escape the austerity measures being put in place - no matter their performance locally. These locally represented entities will be expected to contribute more profit to their “centres”. Print entities will, as a consequence, be required to adopt more value based strategies…delivering more for more or charging less for less. Against this gloomy backdrop we do, however, continue to see some strong performers. Specifically: Newspapers: Daily Newspapers continue to be under extreme pressure. The loss year on year is equivalent to the closure of an average sized title. And this is in spite of an increase in questionable distribution at less than 50% of cover price. Vernacular titles show solid and consistent growth. Afrikaans titles are down with the notable exception of Beeld. Weekly Titles are up almost 19%, driven by Soccer Laduma & Ilanga. M&G grew over 10% which suggests there’s still interest in this form of journalism. English and Afrikaans Weekend titles continue to decline while vernacular titles are growing.

Community titles are still stable while Free newspapers grew as a result of new entrants. Magazines. Growth in general coming from new entrants. Subscriptions are declining suggesting continued consumer desire for flexibility. While traditional growth titles are performing well, we’re now seeing increased variety. Growth ranges from marginal to incredible (Kuier!) Continued trend away from 3 rd Party bulk distribution and with a few exceptions (Parenting category specifically) we also note declines in free distribution. Vernacular titles seem to be fairing better than English or Afrikaans titles. While the B2B category declined it’s important to point out that “bulk distribution” was cut by almost 20% suggesting self imposed austerity measures.

In conclusion, there are many titles that continue to grow as well as some new titles. Their secrets, if any, (other than good journalism and a consistent well targeted read), are in the public domain so the contributing factors are there for all to scrutinize. Amongst declining titles, it’s key to look at the source of the decline as in many cases these declines are driven by economic pressures rather than reader rejection. It could be argued that the remaining circulation should be seen as more valuable to advertisers than in the past, since the reader is more committed and capable to purchase. Globally, there is increased optimism in print, so perhaps local publishers should embrace this as an alternative to the current gloomy perspective, which can only create a self fulfilling prophecy.

Thank you.

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