Valuation

of Digital Assets
Newspaper, Broadcast, Online Only

Family Ownership Conference Chicago, October 2011 MelTaylorMedia.com

DIGITAL
Business Advisory
How We Help

Digital First Operations Investment & Valuation Financial Audit & Diagnostic Local Market Intelligence Strategy & Tactics

Digital Worth
Interactive Financial Health
of your online business model or someone elses

thru lens of investor

driving company over cliff

Old School Culture Research & Debate Outdated Metrics

11/4/2011 MelTaylorMedia.com

Agenda
Why its important How we do it Past valuations Current valuations

Whos Driving your Digital Bus?

Are They Qualified?

Who Runs Digital ?

Compensation & Job Security tied to digital profitability

WHY
Raise cash for digital initiatives Partner wants accounting Price tag for buyer / investor

Digital Diagnostic
This will only hurt a bit

Cash flow trajectory

Current margin / ROI

Market demand Competitive threats Team & skills

Youre sitting on a gold mine. How would you know it?

Newspaper you want to buy sitting on gold mine. They dont know it

Newspaper you want to buy overstating / understating digital valuations Your going to sell clean up balance sheet

Valuation
Newspapers Digital Assets SPIN OFF ?

Family wants to split up company

Spin Off Digital

Intertwined w/ print operations Expenses covered by print Content development Office space Headcount Admin

Digital First
Profit First

NEWS
Not a Business Model

Pied Piper Effect

HOW
REVIEW Acquisitions Mergers Investments

Investor Questions
Whats your sustainable, competitive advantage?

Unique product

Dynamic product line, not single product

Dramatic cost improvement

Proven team with inside relationships

Lock on market or customer base

Strong focus and differentiation

Leadership Team Meet loan requirements Control of Expenses Cash flow Revenue Trajectory Road to Profitability Ad Count Moat

digital
P&L

Share Value

A.H. Belo Corp. Gannett

$4,026,000 $142,998,000

McClatchy

$4,420,000
$15,675,000 $1,195,000 $1,885,000 $4,367,000 Unknown (private)

Alden
Global Capital
news holdings as of 3/31/2011

Sinclair Broadcast Group Media General Journal Communications LIN TV Journal Register

Nexstar Broadcasting Group $6,459,000

Phila Media Network

Tribune Company Freedom Communications MediaNews

Unknown (private)
Unknown (private) Unknown (private) Unknown (private)

Pandora Tech Crunch Huffington Post Facebook

Main Street Connect

$7 Million in New Funding

Network of hyper-local news sites

Matching round raised 1 year ago

$ from private equity firms

Slide updated 11.4.11

Roll Up Man

Digital Roll Up
sorta like

ISPs Cable & Radio Phone Newspaper

Huffington Post
Profitable
Page views & uniques

Management success
Tools & rules web 2.0

Aggregation

do what you do best

point to the rest

Huffington Post
2006 $5 million venture capital 2008 $25 million raised

$31m 2010 $60m 2011

$315m
value reader $12.60
6x Sales 30x Operating profits.

CPM RoadKill

Ex-CEO

Past Valuation
Traffic Revenue YOY Comps % Overall Revenue Facebook Fans Time on Site

Better Valuation
Rev Growth % Print Clients Online % Non-Print Clients Product Lines Competition Operational Efficiency

ARPU
Average Revenue Per User

Digital Performance
industry overall market local competition

Buy Build Partner

Hyper local Trade Group

Hyper local Trade Group

Hyper Local

-Ad Network -63 sites -PBS -NPR -Ad Agency

Core Business
newspapers journalism communications advertising enable commerce

Most Powerful Weapon

Local Sales Relationships

Staffing
& Workflow
reporting structure reduce operational redundancy

Reporting & Positions

Publisher
Digital GM
Substantial % of comp tied to digital revenue & profit margin

Editor Ad Director
Comp tied to digital sales

% of comp tied to digital revenue growth

Digital Editor Print Sales

Overall comp tied to digital sales. Bonus & Penalty

Digital Sales Manager

Substantial % of comp tied to digital revenue

Digital Ops Mgr

% of comp tied to digital revenue

Newsroom
Produce for print & online

% of comp tied to digital revenue

Web writers

Digital Sales Staff

Online-only Sales Assist print sellers

Indie bloggers, Freelance

Vendors

Integrated Marketing
Print, Web, Social, Mobile, Event

AD ops
Online inventory Ad server, scheduling Inventory mgmnt

Research, Data Project mgnmt Hyper local content network

Web dev, Tech

Mel Taylor Media - Dec 2010

Newspaper

Website, Mobile, Social

Editor

Web Editor

Central Content Repository

Web Writers
Content Partnerships Indie Bloggers, Freelance

Newsroom

Content Workflow For Newspapers

Mel Taylor Media - Dec 2010

Aggregation, Curation Hyper Local Content Network

cost
Reduction
cms platform content research open source outsource

Regional Advertisers

Back Office Administration

Representing
Local Ad Network

content creators, to local & regional advertisers

Helping regional advertisers reach premium set of local readers

Sales & Marketing Services

Allows online publishers to focus on content, not sales.

Content / Editorial
Independent, Professional Journalists Photographers & Videographers Indie-news Orgs, Pro-am Bloggers Curators of Pubic Domain Data Community & Citizen Participation

Stringer Services Syndication & Licensing Legal & Agent Representation

Representing independent content creators (ex: Regional AP)

Serving needs of content creators (ex: blogs, news photographers) and those that have interest in acquiring rights to that content creation (ex: traditional news orgs)

TV, Radio, Newspaper

As newsrooms are downsized, the need to outsource news gathering, increases

Goal: Excellent news gathering/content gets fair and appropriate compensation. Tapping the explosion of hyper-local content.
MelTaylorMedia.com

11/4/2011

Unrealized
Revenue
Paywall for out-of-towners Ecommerce links Digital marketing services Tiered web pricing Events

Client Education

Client Education

Frenemy

Centro
Raised $22.5 million
expand sales force target mid-tier advertisers / agencies

automated media-buying software

Centro
Middle man Commoditize Hidden spread Less reliant on Newspaper

Local Media Position

Owner CEO / COO Investor

Primary Background
Building Profitable Business

Primary Responsibilities
Increase shareholder value Manage overall operations Drive top line growth Increase profit margin Build & manage digital platforms Drive online traffic Content & tech development

Potential Weakness / Limitations

Delegate strategy to content first executive Thinks only brand extension strategy Over reliance on internal managers & research Tough keeping track of online competitors Little or no direct sales & revenue experience Compensation primarily based on traffic Employs content first, not profit first strategy Over reliance on outside research & analysis

VP Digital

Content & Tech

Local Sales Management

Traditional Sales

Sell traditional inventory Sell web inventory (secondary goal) Manage sellers

Prefer to sell traditional Limited or no web sales training No web business model experience Compensation favors traditional sales
Prefers traditional content development Thinks only brand extension strategy Limited or no web development training No web business model experience Prefer selling traditional Limited experience selling web Limited or no web sales training Compensation favors traditional

Local Content Management

Traditional Media

Traditional media creation Web media creation Increase audience numbers

Local Sales Reps

Traditional Sales

Sell traditional inventory Sell web inventory (secondary goal)

Why Traditional Media Struggles w/ Online Revenue Growth

MelTaylorMedia.com INVESTOR PRESENTATION 7 / 2011

TOP 10
Web Revenue Mistakes of Local Media
1. Management, Owners & CEOs Lack Specialized Web Training

2. Dangerous Thinking: Selling Web Cannibalizes Traditional Sales

3. Limited Web Training of Sales Reps 4. Management Structure & Compensation Conflicts 5. Poor Attention to Fast Changing, Online Environment

6. Setting Web Budgets Too Low

7. Ineffective, Inventory & Yield Management 8. Confusing Media Kits, Sales Packages & Pricing 9. Director of Interactive; Tech & Content Background Only? 10. Over-Reliance on Vendors & Research for Sales Strategy

Staff Training

SNPAdigital.com

Staff Training

SNPAdigital.com

What attendees say about Mel Taylor

Multimedia Key Executives Conference 2011 in St. Petersburg, Florida

Mel Taylor was far & away the best of the presentations.
Mel Taylors presentation was exactly what I needed!

Wish they were all like his.

What info was of greatest value to me? Mel Taylor.

Mel Taylor Testimonials

When we heard Mel Taylor at the Mega-Media conference in St. Petersburg, Fla., we all agreed: We need to hire him. Were glad we did. Mel created a strategic roadmap for moving faster and deeper into online media. Before he arrived, we didnt know where to start. After he left, we had a clear, step-by-step vision of what to do, how to execute and, most important, how to generate more revenue!

Matt Walsh, Publisher / CEO; The Sarasota Observer

As publisher of The Vancouver Observer, my background is in journalism. Ill admit my aversion to selling, but I knew I had to get over it. We hired Mel for his ability to simplify the digital sales process for hyper-local sites like ours. Mel refreshed our sales programs, pricing structures, our online inventory and support materials. Not only did Mel dramatically upgrade our sales efforts, but he helped us tweak our site design and editorial strategy.

Linda Solomon, Publisher; The Vancouver Observer

Mel Taylor Testimonials

Our Web 101 for Small Business was a huge success
$140,000 in new revenue and 26 NEW advertisers Increased average revenue per account by 18%.
Mel is charismatic, well spoken and easily captures attention of the crowd. He takes the time to build a story that can make the most difficult concepts seem easy. Before the client seminar (where Mel trained our sales staff) he addressed the most common objections. Mel helped give the sales staff more confidence, and made them fully prepared to sell. At the client seminar, Mel engaged the audience, spoke in terms that made them comfortable, and made professional reference to promote our Newspaper website, without losing credibility as a professional, outside consultant.

Dan Sarko ; VP of Interactive; Tribune

Mel Taylor Testimonials

Over $140k of new (quarterly) online business
The seminar results far exceeded our expectations. Mels presentation was also a very effective learning tool for our print sales staff, reinforcing our in-house web training. One key to our success was Mels presentation style. He was able to build the advertisers web comfort by using non-tech, easy to understand methods & terminology.

John DOrlando, VP Advertising; Orlando Sentinel

MelTaylorMedia.com
267-625-5313 Mel@MelTaylorMedia.com