The Problemand A Solution

Where we’re going continues to evolve…

…where we start never changes

So… what is the problem?

“Let’s hope print ad revenues flatten out.”

Hope is not a strategy.

“Digital ad revenue will save us.”Over the past five years, the newspaper industry has lost $50 of print ad

revenue for every $1 of digital ad revenue growth.

This doesn’t feel like salvation.

Sobering trend

Houston we have a problem

The Problem

• It’s not clear that print and digital subscriptions and advertising revenues will be sufficient to continue to support the scale of resources we invest in gathering, publishing and distributing news and information.

• It is the scale of our news and information resources applied to a local market that provides us our competitive advantage.

• Therefore, we must find ways to sustain this scale so we sustain our competitive advantage; otherwise, we risk being commoditized.

• So if necessary, we will cross-subsidize the investment we make in our news resources in order to preserve our scale, which is essential to preserving our competitive advantage and sustaining the strength of our brand.

This is our strategyAs we go forward, we will succeed to the extent we leverage our brand, along with our core competencies and our infrastructure, to build or buy complimentary businesses that provide us with sustainable revenue growth.

So what do we do?

This is our solution

We have to diversify our sources of revenue.

Period.

End of statement.

Distributions of Revenue

Core Print42%

Circulation31%

Niche Print10%

Digital8%

Commercial Print & Distribution6%

New Business1%

All Other2%

2012

Core Print39%

Circulation31%

Niche Print10%

Digital9%

Comerical Print & Distribu-tion6%

New Business3.5%

All Other2%

2013

Q2/12 Q3/12 Q4/12 Q1/13 YTD0

50

100

150

200

250

300

98221 254 187

Contracts by Quarter

Sales Volume:Launch to March 2013

Average Value Order (AVO): Launch to March 2013

Plan Q2/12 Q3/12 Q4/12 Q1/13 YTD $-

$100

$200

$300

$400

$500

$600

$700

$800

$475

$285 $412

$650 $672 AVO

Diversifying Sources of Revenue

The decrease in core print ad revenues in the 2013 financial plan are offset dollar for dollar with the planned increases from the new businesses started or purchased in 2012: