VSS Communications Industry Forecast 2010-2014 Now with Data and Analysis by Both Revenue Stream Sector & Industry Sector It’s my pleasure to be able to speak again this year on this topic. As you are aware, there is significant change that has occurred in our industries, which has resulted a proliferation of new media segments and new ways of measuring them. While this is a boon to VSS from an opportunity to expand investment, it is a real challenge to research, organize and categorize these changes in a manner that is understandable and digestible Once again, for the 22nd year, VSS CIF has done this. It would be wrong to not recognize the efforts of those who continue to drive the changes in this amazing research piece…. JSS, JPR, BS, TD, CB as well as the VSS MD’s and professional staff that contribute to editing the various chapters As you’ll see from my presentation, the work serves as a beacon for us to follow in terms of considering the long term trends which aid in setting our investment agenda and strategy for where we will be investing in the future My goal today is to provide an overview of the communication segment, comment on the major trends impacting spending, with an emphasis back to VSS in our investment strategy

Previous Edition Analysis The VSS Forecast has historically viewed Communications spending by four Revenue Streams Forecast

Revenue Stream Sectors Institutional End-User Advertising Forecast Marketing Services Marketing Services Consumer End-User Consumer End-User

What is a Revenue Stream? Revenue Stream: Broad-based, generic descriptions of different types of revenues that comprise the industry. E.g., Advertising and Marketing Services are commercially underwritten consumer and business media and end-user media is paid for by the person or company. For example, one would think Videogames, a segment of the Entertainment & Leisure Media Industry Sector, would fall only into the Consumer End-User Revenue Stream. However, portions of Videogame spending (online & mobile gaming advertising, in-game advertising) fall into the Advertising Revenue Stream. Similarly, portions of the Newspaper segment in the Traditional Consumer Advertising Media Industry Sector, has both Consumer End-User (which is paid for subscriptions and single copies) spending AND Advertising spending. Same goes for Consumer Magazines

Segments within Revenue Streams Newspapers Broadcast television & radio Cable & satellite television Yellow pages Internet & mobile Consumer mags B-to-B mags TV programming, license fees & retransmission B-to-b trade shows & mag subscriptions Education & training Biz & professional information Biz & professional services Institutional End-User Advertising Forecast Direct marketing B2B promotions Consumer promotions Branded entertainment Outsourced custom pubs PR & word-of-mouth Cable & sat TV Consumer books Entertainment media Internet & mobile access & paid content Newspaper subs Magazines subs Marketing Services Consumer End-User

Additional Perspective Was Needed… Rapid changes in the media & information landscape has led VSS to incorporate an additional analysis of spending in the Communications Industry grouped by Industry Sectors Because media owners, investors and top management require greater awareness of how their companies match up against their industry peers and other industry-specific spending patterns, VSS, for the 2010 Forecast, has added an entirely new and additional data perspective: Spending by Industry Sectors

Industry Sectors within Communications Business & Professional Info & Services Marketing Media Forecast Education & Training Media & Services Targeted Media Entertainment and Leisure Traditional Consumer Ad Media

Segments within Industry Sectors Business and Professional Information Business Information Professional Information Business and Professional Services Business & Professional Processing Services Business & Professional Technology Services Consumer Promotion Business-to-Business Promotion Public Relations & Word-of-Mouth Marketing Business & Professional Info & Services Marketing Media Direct Marketing Direct Mail Branded Entertainment Outsourced Custom Publishing Pure-Play Consumer Internet & Mobile Services Business-to-Business Media Forecast Education & Training Media & Services Not-For-Profit College Instructional Media K-12 Instructional Media For-Profit Educational Services Outsourced Corporate Training Education & Training Media & Services Targeted Media Subscription TV Entertainment Media TV Programming Home Video Recorded Music Videogames Box Office Consumer Book Publishing Entertainment and Leisure Traditional Consumer Ad Media Broadcast Television Newspaper Publishing Consumer Magazine Publishing Broadcast & Satellite Radio Out-of-Home Media Yellow Pages Directories More extensive information on each of the industry groupings can be found in the appendix.

Added perspective; greater depth and detail Total Communications Spending is on pace to increase 3.5% in 2010 and grow at a CAGR of 6.1% in 2009-2014 period to $1.416 trillion, fueled by measured economic growth, digital technology advances, institutional spending on Business Information & Services and consumer spending on Entertainment & Leisure Media Traditional Consumer Advertising Media will continue to decline in 2010 and 2011 as brands shift to alternative advertising and marketing strategies Business & Professional Information & Services will be fastest growing Industry Sector in 2009-2014 with 8.2% CAGR Entertainment & Leisure Media to remain largest of six major Industry Sectors, growing to $353.87 billion in 2014 Institutional End-User to remain largest and fastest growing Revenue Stream, expanding at a CAGR of 7.3% to $661.48 Billion in 2014

2009 Communications Industry Spending Communications Spending by Industry Sector Communications Spending by Revenue Stream Marketing Media 6.7% Business & Professional Info & Services 15.9% Advertising 17.1% Forecast Education & Training Media & Services 21.3% Institutional End-User 44.2% Targeted Media 17.7% Marketing Services 18.0% Forecast Traditional Consumer Ad Media 13.6% Consumer End-User 20.6% Entertainment and Leisure 24.7% 2009 Communications Industry Spending: $1,055.2 billion

2014 Communications Industry Spending Forecast Communications Spending by Industry Sector Communications Spending by Revenue Stream Marketing Media 5.5% Advertising 16.8% Business & Professional Info & Services 17.8% Forecast Education & Training Media & Services 22.3% Institutional End-User 46.1% Marketing Services 16.3% Targeted Media 19.0% Forecast Traditional Consumer Ad Media 11.4% Consumer End-User 20.6% Entertainment and Leisure 25.3% 2014 Communications Industry Spending: $1,399.0 billion

Appendix (greater definition of Communications Industry Sectors) Business and Professional Information & Services Targeted Media Marketing Media Education and Training Media & Services Entertainment and Leisure Traditional Consumer Advertising Media Examples of companies by Industry Sector

Business & Professional Information & Services Forecast Business & Professional Information Business Information Marketing Information Financial & Economic Information Credit & Risk Information General Industry News Professional Information Legal & Regulatory Information Scientific & Technical Information Health & Life Sciences Information Business & Professional Services Business & Professional Processing Services Payroll & Human Resource Services Financial Processing Services Other Outsourcing Services Business & Professional Technology Services Institutional Internet Access Wireless Data SaaS & Licensed Software

Branded Entertainment Targeted Media Forecast Direct Marketing Direct Mail Telesales Catalog E-Mail Direct Response Television Other Direct Marketing Branded Entertainment Consumer Events Paid Product Placement Outsourced Custom Publishing Custom Magazines Custom Newsletters Custom E-Pubs Custom Tabloids Pure-Play Consumer Internet & Mobile Services Pure-Play Internet Services Pure-Play Internet Advertising Pure-Play Internet Access Pure-Play Paid Internet Content Pure-Play Mobile Services Pure-Play Mobile Advertising Pure-Play Mobile Access Pure-Play Mobile Paid Content Business-to-Business Media Trade Shows, Seminars & Conferences Business-to-Business Magazines Advertising Paid Circulation E-Media Advertising & Content

Business-to-Business Promotion Marketing Media Forecast Consumer Promotion Point of Purchase Coupons Promotional Licensing Premiums Loyalty Programs Product Sampling Games, Contests & Sweeps Business-to-Business Promotion Promotional Products Travel & Incentive Marketing Public Relations & Word-of-Mouth Marketing Public Relations Word-of-Mouth Marketing

Education & Training Media & Services Forecast Education & Training Media & Services Not-For-Profit College Instructional Media K-12 Instructional Media For-Profit Educational Services Outsourced Corporate Training

Entertainment & Leisure Forecast Subscription TV Subscription & Content Advertising License Fees Entertainment Media TV Programming Home Video Videogames Recorded Music Box Office Consumer Book Publishing New Books Used Books Audio Books E-Books, Digital Content & Advertising

Traditional Consumer Advertising Media Forecast Broadcast Television Network & Local Station Advertising Network Advertising National & Local Spot Online & Mobile Advertising & Content Retransmission Fees Newspaper Publishing Daily Newspapers Print Advertising Print Circulation Weekly Newspapers Digital Advertising & Content Consumer Magazine Publishing Advertising Circulation E-Media and Mobile Platforms Broadcast & Satellite Radio Broadcast Radio Radio Stations Radio Networks Satellite Radio Online & Mobile Advertising & Content Yellow Pages Directories Print Yellow Pages Telephone Company Publishers Independent Competitive Publishers Internet Yellow Pages Out-of-Home Media Traditional Out-of-Home Digital & Alternative Out-of-Home

Examples of Companies by Industry Sector Business & Professional Info & Services Marketing Media Education & Training Media & Services Targeted Media Forecast Entertainment and Leisure Traditional Consumer Ad Media Please note, the VSS Forecast doesn’t not report or forecast any information regarding any specific company. The list above is solely for reference to ensure readers understand the composition of each Industry Sector.