General Session: “New Directions in Single Copy Supply Chain” IDEAlliance Print Distribution 2007 Monday April 23, :30 pm – 2:15 pm Sheraton Sand Key Resort Clearwater Beach, Florida Manufacturing Plant Retail Wholesaler Air Freight Truck Freight

Agenda: I. Introduction of Panelists II. Overview of Re-launch Newsstand Operations & Technology Committee III. State of the Business – Focus on Industry:  Developments  Trends  Business Analysis “New Directions in Single Copy Supply Chain”

State of the Business – Focus on Industry: Developments, Trends, Business Analysis Moderator: Scott Bauer, Associate Director of Distribution, Newsweek Panelists: Rose Cirrincione, Director of Traffic, Time Warner Dave Davis, Director of Transportation, Nationwide Midwest Keller Whalen, Executive Vice President, Distribution Services

Where have all the drivers gone? Driver shortage remains key issue for most carriers –Prevents business growth –Results in higher expenses for recruiting and retention (80% to 120% turnover rate) –Aging driver force means many will retire and the industry is not attracting younger drivers

Technology / Regulation ULSD – Mandate New Engine Spec. Hours of Service

Pre-Weekend Peaks too high, valleys too low Does not fit well with HOS Makes it harder to schedule freight other than weekly titles (LTL) Everything between Wed 5:00 a.m. and Thursday 5:00 a.m.

Statistics $13.5 billion in magazines shipped in 2006 –4,000,000,000 units $4.8 billion magazines sold in 2006 –1,427,784,000 units Reported shortages total about 0.2% of copies shipped –8,000,000 units Shortages cost the publishers $27,000,000 –what do they cost the rest of the supply chain? Source: The New Single Copy

Opportunities Increasing number of drop ship locations –Nighttime and key-drops –Shortage claims not identified by drop location Tighter delivery windows (for pre-weekend deliveries) –Penalties assessed –Additional publisher costs to meet limited schedules One day per week dealer deliveries –Late deliveries to retailers

Working together for solutions Increasing number of drop ship locations –Publisher absorbs cost of delivering to additional locations –Wholesalers consolidate – ProLogix, Source/Levy warehouses Tighter delivery windows (for pre-weekend deliveries) –Publishers and shippers re-arrange delivery times –Wholesalers guarantee pre-weekend for weeklies (72%!) One day per week dealer deliveries –Publishers and shippers alter lead times –Wholesalers accept flexible delivery windows

ProLogix Background –2002: Jim Pattison Group Started ProLogix Distribution Services and AccuLogix Distribution Services in Canada. –2006: The News Group and Anderson News formed a strategic alliance under ProLogix East and ProLogix West. Functions include: warehousing, order assembly, returns processing, merchandising and delivery to retail customers Goal: Streamline deliveries and reduce overhead costs

ProLogix East and ProLogix West

ProLogix – A National Distributor’s View Pros Standardization of receiving hours for both TNG and ANCO: Thurs 4am, Pre-weekend delivery. ProLogix allowed the break-up agents nighttime access via lock box/key for drop-ship locations. –ProLogix East is shifting to separate driver and merchandiser as was done from the outset in ProLogix West. –Net impact positive or negative?

ProLogix – A National Distributor’s View Cons OS&D issues Publishers incurred Incremental transportation costs Poor Communication - Prologix East had too many address changes in the beginning...communication was better with Prologix West (example, News Group Receiving Policy) Routing and merchandiser turnover Shifts in delivery patterns have led to a loss in copies delivered pre-weekend as well as a shift in copies from Thursday to Friday delivery. –Total net impact on sale unknown at this point, but will likely be significant –Continuing to work through these issues with Pre-Weekend delivery to retail Bottom line – “the jury is still out”

Time Magazine Pre-Weekend What’s Changed  Time Magazine Manufacturing changed  Sun to Thurs  Sun for 25+ years  Printing Plants moved  Torrance, CA to Merced, CA  Dallas, TX to Ok City, OK

Delivery  Newsstand On Sale  Work in-progress.  Target 100% pre-weekend.  Increased pre-weekend distribution in terminal and bookstore dealers  Subscriptions  In-home 90%+ by Saturday  Reader gets the product in a much more convenient time to read on the weekend.  USPS was extremely helpful working with Time Inc.  All of our (4) weeklies can now arrive to many retail and subs pre-w. Time Magazine Pre-Weekend

Quality of Life Changes  TIME EDIT has worked weekends for many, many years—now they get to enjoy weekends as well.  Our carriers and staff now enjoy the same Quality of Life change.  Premise is readers have more leisure time to read on the weekend.

2006/2007 Changes: Closing Schedule:Date: Six hour earlier close to the printers ( Saturday 6 pm )January 2007 Printing Plant Reconfigurations:Dates: Consolidated Oklahoma City, OK to the Rock, GA November 2006 Consolidated Strasburg,VA to Saratoga, NYApril 2007

Questions ?

Thank You