2011 Report nd Quarter Release - Johannesburg 17 August 2011

Introduction: General Up-date: General Up-date: Global economic down turn now seems unavoidable as many economists are no longer debating if there will be a “double dip” but how low will it go and how long will it last? Locally, we seem (again) to be well placed but recent employment figures released earlier this week suggest that there are a further people out of work today than there were a year ago. And while this might stimulate interest in the various “job & career” supplements it further tightens family and personal spending….which cannot be good for print. Print wise, you will see from this presentation that while there are some positive performances the general mood i.r.o. circulation is sombre. Further, as we approach the year end planning period, industry focus will be on value and with print media inflation being well above the average, the conversations may well move from discounts to guaranteed performance or CPM linked negotiations.

International Up-date: International Up-date: Nielsen Global Consumer Confidence Nielsen Global Consumer Confidence The latest Global study across 51 countries reflects SA up 4 points. India continues to have the highest index, albeit unchanged. The latest Global study across 51 countries reflects SA up 4 points. India continues to have the highest index, albeit unchanged. SA performance reverses the trend established from the past two studies. SA performance reverses the trend established from the past two studies. Spending in SA suppressed by concerns over rising fuel prices, and utility (electricity) prices. Specific findings include: Spending in SA suppressed by concerns over rising fuel prices, and utility (electricity) prices. Specific findings include: Paying off debt is a key priority.Paying off debt is a key priority. More up beat re job prospects – energy to find / improve..More up beat re job prospects – energy to find / improve.. Fuel & food price increases cause for concern.Fuel & food price increases cause for concern. Cut backs on non-essential items & activities.Cut backs on non-essential items & activities.

Local Up-date: Local Up-date: Q Media Inflation Up-dateQ Media Inflation Up-date While total and print rate inflation are similar, the ROI being derived from print has dropped (worse) by a further 13.47% Daily Newspapers inflation is now almost 5 time higher than overall MIW inflation. Community Print is the only print platform tracking against the norm.

Television is the only platform reflecting improved cost efficiency / value; in spite of some sharp rate increases. Radio. Balanced performance with rate adjustments matching audience growth. Cinema. Continues to struggle...as a result of the impact of the poor global economy, social changes as well as quicker public access to movies / content.

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 June 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 : POSITIONMOVESECTORCIRCULATION NUMBER OF PUBLICATIONSAVERAGE 1-Custom Magazines12,008, ,731 2-Consumer Magazines6,865, ,082 3-Free Newspapers5,729, ,476 4-Advertising Brochures3,209, ,226 5-Weekend Newspapers2,456, ,975 6^Daily Newspapers1,727, ,447 7^B2B Magazines1,166, ,744 8^Weekly Newspapers682, ,872 9^Community Press471,570597,993 10vFree Magazines364, , Hybrid Newspapers157,275439,319 TOTAL34,840, ,976

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: GDP grew by 4.8% quarter on quarter. Manufacturing industry grew by 2.2%, and Finance, Real estate & Business Services by 1%.GDP grew by 4.8% quarter on quarter. Manufacturing industry grew by 2.2%, and Finance, Real estate & Business Services by 1%. Retail Sales for the 3 Months ended April 2011, increased by 6.9% compared to General Dealers showed the largest increase.Retail Sales for the 3 Months ended April 2011, increased by 6.9% compared to General Dealers showed the largest increase.

Newspaper Performance Relative to Economic Measures. Comment: Total newspaper circulation fell by copies quarter on quarter, mainly in daily newspapers offset by gains in Free Newspapers. Total newspaper circulation fell by copies quarter on quarter, mainly in daily newspapers offset by gains in Free Newspapers.

Trend Analysis – Total Circulation: Daily Newspapers Comment: The decline continues.The decline continues fewer copies sold than in Q (-8.4%), and less than Q fewer copies sold than in Q (-8.4%), and less than Q

Q.2 – Composition Comparison: Daily Newspapers Comment: Both PMIE and 3 RD Party Bulk declined. Copy sales declined by 8.4% and Subscriptions by 11.1% Digital increased significantly, albeit off a small base.

Trend Analysis – by language: Daily Newspapers Comment: Afrikaans titles declined the most in percentage terms (-17%), while vernacular titles gained slightly. Afrikaans titles declined the most in percentage terms (-17%), while vernacular titles gained slightly.

Daily Newspapers ranked by Copy Sales: Comment: 10 titles declined, 8 remained static, while only 1 title grew circulation. 10 titles declined, 8 remained static, while only 1 title grew circulation. Whilst remaining the largest circulating title, Daily Sun declined 12% year on year. Whilst remaining the largest circulating title, Daily Sun declined 12% year on year. RankingPublication Name Copy Sales >50% % Change on Prior Year 1 Daily Sun380, % 2 Isolezwe107, % 3 Son (Daily)105, % 4 Sowetan88, % 5 Star, The65, % 6 Citizen, The (Daily)51, %

Q.2 – Year on Year Analysis: Daily Newspapers Comment: Isolezwe increase circulation by 9.4%. Beeld Daily (-22%), Volksblad (-21%), Son (-13%) and Cape Argus (-12%) reflected the largest declines.

Trend Analysis – Total Circulation: Weekly Newspapers Comment: Total circulation reflects a dramatic increase of 15% compared to the previous year, continuing the trend reflected in the previous quarter

Q.2 – Composition Comparison: Weekly Newspapers Comment: Copy Sales increased by 16.4%.

Weekly Newspapers ranked by Copy Sales: Comment: The overall increase in circulation was directly attributable to the significant increase in the circulation of the 2 largest titles. RankingPublication Name Copy Sales >50% 2011 % Change on Prior Year 1 Soccer Laduma313, % 2 Ilanga137, % 3 Mail & Guardian37, %

Q.2 – Year on Year Analysis: Weekly Newspapers Comment: Ilanga grew a substantial 34%, while Soccer Laduma grew a creditable 20%. Umafrika declined by 12%.

Trend Analysis – Total Circulation: Weekend Newspapers Comment: Circulation declined by 4.4% over the prior year, but equivalent to the previous quarter. 4 titles increased circulation while 5 remained static and 14 declined.

Q.2 – Composition: Weekend Newspapers Comment: PMIE declined, while 3 rd Party Bulk Sales increased. Both Copy Sales and Subscriptions declined.

Trend Analysis – by language: Weekend Newspapers Comment: Afrikaans titles reflected the biggest decline in percentage terms (-10.5%), while vernacular titles grew a significant 15 %.

Weekend Newspapers ranked by Copy Sales: Comment: Of the 6 largest titles only Ilanga Langesonto showed growth. RankingPublication Name Copy Sales >50% % Change on Prior Year 1 Sunday Times249, % 2 Sunday Sun226, % 3 Rapport225, % 4 City Press148, % 5 Sunday World131, % 6 Ilanga Langesonto87, %

Q.2 – Year on Year Analysis: Weekend Newspapers Comment: Isolezwe ngeSonto grew a significant 19.5%, while Ilanga Langasonto grew a creditable 11%. Volksblad (-19%) and Rapport (-12%) reflected the largest declines.

Trend Analysis – Total Circulation: Community Newspapers Comment: Stable performance with no real growth.

Trend Analysis – Total Circulation: Free Newspapers Comment: Total circulation grew by 8.7%, because of new entrants. Real circulation remained static.

Q.2 – Composition Comparison: Hybrid Newspapers Comment: The Times grew paid circulation significantly, both in copy sales (38 237) and subscriptions (76258), although until recently subscriptions could only be obtained as part of a twin offering with the Sunday Times.

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 7.7% because of new entrants, real circulation declined by 3%.

Q.2 – Composition: Consumer Magazines Comment: Whilst Copy Sales increased by 1.3%, subscriptions declined a disappointing 20%! Free circulation increased by 70%, mainly the result of new free circulation titles.

Q.2 – Year on Year Analysis Comment: The category reflected an overall decline of 8%. Succeed magazine was the only quarterly reporting magazine to reflect an increase (+12.2%). Entrepreneur (-33.9%) and The Thinker (-11%) reflected the largest declines

Q.2 – Circulation Composition: Comment: Copy sales declined by 6.5%, while Subscriptions declined by 14%. 3 rd Party Bulk Sales increased by 62%.

Q.2 – Year on Year Analysis Comment: Drum (+14%) reflected the largest increase. The Crest (-14%) and LIG (-13.7%) reflected the largest declines.

Q.2 – Circulation Composition: Comment: Subscriptions declined by more than half, the result of 1 title (Taalgenoot) changing frequency and will report in December 2011.

Q.2 – Year on Year Analysis Comment: Sarie Woon (reporting annually) grew 18.4%, Elle Decoration (reporting 6 monthly) grew 7.6%, and Tuis/Home (reporting quarterly) grew 8.5%. Top Billing declined by 44%!

Q.2 – Circulation Composition: Comment: Copy Sales (+7.2%) and Free Circulation (+59%) increased because of new entrants. Copy Sales (+7.2%) and Free Circulation (+59%) increased because of new entrants. Subscriptions declined a disappointing 24.3%. Subscriptions declined a disappointing 24.3%.

Q.2 – Year on Year Analysis Comment: Stuff magazine grew a significant 29%, while Men’s Health declined by 16% and FHM by 11%.

Q.2 – Circulation Composition: Comment: All categories reflect little change in spite of a new entrant (Playboy).

Q.2 – Year on Year Analysis Comment: Total category increased by 4%. Commercial Trader (+35%) and Leisure Wheels (+9%) reflected the largest increases. Auto Trader (-14%) reflected the largest decline.

Q.2 – Circulation Composition: Comment : Comment : Copy Sales increased by 5.4%, while Free circulation increased by 24%. Copy Sales increased by 5.4%, while Free circulation increased by 24%.

Q.2 – Year on Year Analysis Comment: Mamas & papas (+38.6%), Joburg’s Child (+15%), and Baba & Kleuter (+14%) showed the largest increases. Living & Loving (-16%) reflected the largest decline.

Q.2 – Circulation Composition: Comment: Copy sales declined by 14%. Subscriptions increased by 34%, and Free Circulation by 29% because of a new entrant.

Q.2 – Year on Year Analysis Comment: Category declined by 6.5%. Fitness Magazine (+20%), Amakhosi (+19%), and Runners World reflected the largest increases. Golf Digest declined 70% because of the loss of World of Golf contract. Kick Off declined 17%.

Q.2 – Circulation Composition: Comment: Subscriptions fell 38.5% because of the reason previously mentioned.

Q.2 – Year on Year Analysis Comment: Of the reporting titles, Travel Ideas (reporting annually) reflected the largest increase of 31.5%, while Weg/Go reflected the largest decline(-7%).

Q.2 – Circulation Composition: Comment: Copy Sales and Free Circulation increased significantly because of new entrants. Copy Sales and Free Circulation increased significantly because of new entrants.

Q.2 – Year on Year Analysis Comment: Overall category declined by 2.5%. Kuier grew by 108% (all in Copy Sales!), Elle by 17%, and Move! by 11%. Your Family (-17%) and O, The Oprah Magazine (-13%) reflected the largest declines.

Q.2 – Circulation Composition: Comment: Copy Sales declined by 5.2%, and Free circulation increased by 27.7% because of a new entrant.

Trend Analysis – Total Circulation: B2B Magazines Comment: While overall circulation declined by 3%, real circulation declined by 2%.

Q.2 – Circulation Composition: B2B Magazines Comment: Individual distribution increased by 8%. Paid circulation declined by 10% and Bulk distribution fell by 14.7%. Digital circulation increased by 41%.

Q.2 – Year on Year Analysis Comment: Category declined by 16.5%. Southern African Tourism Update (reporting 6 monthly) increased by 14%. Conference Venues (reporting annually) declined by 41%, and Business Traveller Africa by 15%.

Q.2 – Composition: Comment: All categories of circulation declined.

Q.2 – Year on Year Analysis Comment: Of the reporting titles, Cold Chain (reporting 6 monthly) increased by 24%, and Northern Cape Business (reporting annually) declined by 22%.

Q.2 – Composition: Comment: A significant switch occurred from bulk to individual distribution.

Q.2 – Year on Year Analysis Comment: Of the reporting titles, HR Future reflected the most significant increase of 29%, although down on the previous quarter.

Q.2 – Composition: Comment: Bulk distribution declined significantly, because a large title ceased publishing (Big News for the Business Owner). Individual distribution increased because of new entrants.

Q.2 – Year on Year Analysis Comment: Front shop increased by 25%, while Trader’s Friend declined by 9%.

Trend Analysis – Total Circulation: Custom Magazines Comment: Overall decline of 4.7% was impacted by the loss of a large title (Vodaworld). Real circulation increased by 5%.

Q.2 – Composition: Custom Magazines Comment: Total paid circulation increased by 15%!

Q.2 – Year on Year Analysis Comment: Category grew by 13%. Dish compact grew by 46.6%! M fell by 25%.

Q.2 – Circulation Composition: Comments: Bulk distribution declined by 43%.

Q.2 – Year on Year Analysis Comment: Category declined by 9%. Private Edition (reporting annually) increased by 15%. The Blue Train declined by 22.6%, and Taste (reporting 6 monthly) declined by 11%.

Q.2 – Year on Year Analysis Comment: Club X (+72%!), Reality (+60%!), and Foschini Sport (+38%) showed the highest growth. A Plus (-13%) and Jet Club Magazine (-12%) reflected the largest declines.

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: There is little doubt that we are fully integrated into the global economy and hence economic ripples will “wash our shores”. While consumer confidence has improved there is little doubt that this will be tested in the months ahead and one wonders if our rugby team can improve our sense of well being or put us into depression! Looking forward despite our best endeavors to find sustainable good news iro print we see growing amount of red ink…which will not be corrected by driving print inflation which is already comparatively high. The slide in daily newspaper circulation continues and while deal driven distribution is at a low we now note declines in core circulation performance. Previously English language titles seemed to have suffered worse that other languages but the decline has spread to Afrikaans newspapers. Vernacular newspaper circulation is generally more stable. Weekly titles have grown remarkably and the efforts of those titles should congratulated…and studied.

Weekend titles by comparison have struggled and the downward trend continues. Community and free newspaper categories are stable. In terms of the Hybrid category (ie those sold and distributed as a subscriber incentive), has done well as a result of Times which despite low advertising support has grown single copy sales impressively. The Magazine category has faired poorly and now there are clear signs that many titles across categories are now reverting to free distribution (up 70%!) and deal driven tactics to prop up their circulation performance. Media decision makers should watch individual “core” circulation performance for a clearer understanding of title health / value. Within the consumer magazine category, however,we do see several titles recording solid growth e.g, Stuff, Mamas & Papas, Kuier, several fitness titles and many others; so there is growth. Business 2 Business titles dipped slightly although HR Review and Leadership continued to perform well. With new entrants expected the competition here is likely to pick up.

So in summary the key trends coming through from my perspective are: The resilience of the Afrikaans market is now being tested and some declines are noted. By comparison vernacular language title resilience seems solid. Newspaper relevance, confidence in editorial (trust) maybe becoming a factor influencing circulation as certain categories are now showing strain. Across most categories subscriptions are down as consumers opt for more flexibility of choice. Digital growth remains small and slow generally but we now note pockets of significant growth as the gap between printer and publisher interests grow. The role of print seems to be being redefined by increasing economic pressures as well as competition from other platforms. From an advertising perspective, increased pressure should be expected as value becomes the subject of negotiations far more than discount.

Thank you.

Your ABC - Transparency you can see -