Gruppo L'Espresso old media crosso media multimedia

Gruppo Editoriale L’Espresso OLD MEDIA, CROSS MEDIA, MULTIMEDIA September 2008

THE WORLD OF COMMUNICATION IS IN THE MIDST OF A DEEP AND RAPID CHANGE A TRUE EVOLUTIONARY STORM Will an “old media” publisher be able to transform itself, matching communication needs in the digital age in order to improve its market share, grow and: ➡ Meet users’ needs ➡ Give value to advertisers, through useful, effective and functional tools ➡ Attain satisfactory results for our shareholders ? 2 / 34

OUR PAST MAKES OUR FUTURE TRUSTWORTHY SEVERAL TIMES IN THE PAST WE HAD BEEN GIVEN UP FOR DEAD IN THE SEVENTIES IT WAS ANNOUNCED THAT THE BELLS HAD TOLLED FOR NEWSPAPERS THE NEWS OF OUR DEMISE PROVED TO BE GROSSLY EXAGGERATED.... AFTER DEEP TRANSFORMATIONS AND TIMES OF DIFFICULTIES WE ARE STILL ALIVE AND KICKING, THANKS TO TWO KEY FACTORS  Economic growth and growth of the general population's cultural needs  No more linotype and hot lead but computers 3 / 34

THE DIGITAL REVOLUTION HAS GENERATED  CELLULAR PHONES  CABLE TV, SATELLITE TV, DIGITAL TERRESTRIAL TV  THE INTERNET, THE MOTHER OF ALL REVOLUTIONS ADDING NEW CHALLENGES BUT ALSO OPPORTUNITIES WE BELIEVE WE HAVE WHAT IS NEEDED TO PULL THROUGH AND EMERGE BIGGER, STRONGER AND MORE PROFITABLE 4 / 34

IT’S NOT THE SAME OUTLOOK FOR EVERYBODY THE WEAKNESS OF SOME “OLD MEDIA” IF CONTENT BELONGS TO SOMEONE ELSE AND THE MEDIUM IS NOT IN ITSELF A “SOURCE”  “DIRECTORIES”  RECORD COMPANIES  BOOK PUBLISHERS PEOPLE BUY THE BOOK, THE RECORD, NOT THE PUBLISHER’S BRAND THE MIDDLE MAN BETWEEN THE AUTHOR AND THE MARKET, THE PUBLISHER BECOMES REDUNDANT AND EXPENDABLE in dus tr ia l an d d is tr ibu t io n pr oc e s s author record company record user book publisher book napster / amazon mp3/reader user 5 / 34

THE STRENGTH OF OUR “OLD MEDIA” NEWSPAPERS, RADIO, TV AND MOVIES THEY ARE THE “SOURCE” OF THEIR OWN CONTENTS News, comments, pictures and sounds: commodities shaken (not stirred) via ➡ Peculiar and original creative process ➡ Unique and hard to reproduce value: title, logo, brand Newspaper editorial staff Radio authors production audience TV Network artists distribution Cinema artists Entrance barrier Internet TRUST RELATIONSHIP BETWEEN AUDIENCE AND BRAND THE BRAND RULES 6 / 34

EVEN IF COMPETITION IN ADVERTISING TV and radio HAS GOT SATELLITE AND streaming podcast CABLE TV MORE INTENSE NON-NEWS WEBSITES Terrestrial TV and radio Pie of advertising growing but in search of newer and more effective tools Newspapers on PR, points of sale, etc. the Internet Telephone Newspapers Free press 7 / 34

AN ITALIAN PECULIARITY: CLASSIFIED ADVERTISING One of the major elements in the printed media’s crisis in America and in the other countries is the slump of classified ads, which have moved to the Web  In Italy classified ads have always had limited relevance (different hiring practices, mainly in the public sector, small real estate market).  There has already witnessed and overcome a crisis in Italy, in the 70’s, caused by free ads papers (like Secondamano, Porta Portese, etc.) Structure of daily newspapers revenues in 2000 Italy USA circulation 40% 18% national ads 34% 13% local ads 13.4% 36% classified ads 12.6% 33% 100% 100% 8 / 34

PUBLISHER’S FUNDAMENTAL GOALS ➡ EDITORIAL PRODUCTS WHICH ARE CONSISTENTLY IN TUNE WITH THE CONSUMER ➡ GAINING “AUDIENCE” ➡ PROPOSING ONESELF TO ADVERTISERS (NON-EDITORIAL EXCEPTIONS: BILLBOARDS, MOVIES, WEB) newspapers radio TV Ads Internet readers viewers Advertisers Audience listeners users 9 / 34

THE ESPRESSO GROUP AND ITS STRONG POSITION ■ la Repubblica is the the most read newspaper in Italy, both in its print and web versions ■ ■ ■ Websites reaching 13.3 mln unique users: Repubblica.it is the number one news website in Italy ■ ■ ■ A network of 16 regional newspapers that serves the wealthiest and most highly developed areas in Italy ■ Leading titles (both for circulation and visibility) ■ Radio stations (Radio DeeJay ranks high among privately owned radio networks) and TV networks and has been syphoning away audience from big and stale networks ■ Synergy among the different media: the Espresso Group has been a mature and fully integrated cross-media group for a long time, with a presence on all the old media and the new ones (including mobile), which has no peers in Italy. ■ One out of two Italians connects to our media at least once a week 10 / 34

STARTING FROM ITS PRESENT POSITION THE ESPRESSO GROUP IS CHANGING AND MORPHING into a multimedia publishing house strongly tied to its brands A MULTIMEDIA BRANDED CONTENT COMPANY Each title develops its contents on the new platforms, according to the peculiarity of each brand From the dual model (print+ads/audio+ads) to the multiplatform model (print+sound+audio+video+mobile+ads) 11 / 34

A MULTIMEDIA BRANDED CONTENT COMPANY FROM THE ORIGINS TO THE NEAR FUTURE La Repubblica system: quality news and comments No. 1 among “influential” adults Radio Add-ons Venerdì TV Salute Viaggi La Repubblica XL “D” repubblica.it E-ink Affari & Finanza Mobile phones New Platform 12 / 34

A MULTIMEDIA BRANDED CONTENT COMPANY FROM THE ORIGINS TO THE NEAR FUTURE The appeal of “local”: serving communities in over 50 towns and districts Local Newspapers ➡ Internet, aiming to develop classified ads and new direct sale methods Local Editions of la Repubblica ➡ Websites open to citizens contributions become the new “agora” of local communities parma.repubblica.it : new local edition online only 13 / 34

A MULTIMEDIA BRANDED CONTENT COMPANY FROM ITS ORIGINS TO THE FORSEEABLE FUTURE Radio and TV:quality entertainment No. 1 among the most coveted market, young people DJ TV RDJ Capital m2o DJ chiama Italia Satellite TV the radio becomes TV Internet (broad band) All Music Mobile phones TV 14 / 34

NEWSPAPERS, RADIO, TV ONE ON TWO ITALIANS CONNECTS TO OUR MEDIA FROM 1999 TO 2007 ITALIAN PEOPLE WHO, IN THE AVERAGE WEEK, READ, LISTEN, WATCH AND CONNECT TO ONE OF THE GROUP’S MEDIA, INCREASED FROM 22 TO 32 MILLION 32,231 10,034 22,190 31.1% 6,946 Aged > 44 31.3% Aged 14 to 44 15,244 22,197 68.9% 68.7 15 / 34

READERS OF OUR PRINT AND WEB TITLES ARE INCREASING Readers increased, in the average week, from 1999 to 2007, from 10 to 13 mln, of which 3 mln only or in part on the internet Aged 14 to 44 Aged > 44 Total 8,055 1,924 Total 5,898 648 200 +41.6 200 720 Internet Both 5,917 Newspapers 5,483 4,978 4,164 1999 2007 1999 2007 16 / 34

COMPETITIVE FRAME: HOW OUR SITES ARE RANKING TOP 20 NEWS RADIO TV NETVIEW NETVIEW NETVIEW 1 Google 20.1 1 La Repubblica 5.6 1 Mediaset.it 3.1 2 Microsoft 13.7 2 Corriere.it 4.6 2 Rai 2.7 3 Telecom 10.9 3 Libero News 3.0 3 Sky 1.2 .... 4 Il Sole 24 ORE 2.2 4 Mediaset Tv 1.0 8 Espresso 7.0 5 ANSA 1.8 5 Repubblica Tv 1.0 .... 6 Google News 1.7 6 Rai Tv 0.8 10 RCS 6.5 7 Tiscali News 1.6 7 Corriere Tv 0.8 .... 8 La Stampa 1.4 8 Radio Deejay 0.6 12 Seat PG 5.4 9 Yahoo! News 1.2 9 Radio Rai 0.6 13 DADA 5.0 10 Alice News 1.1 10 Radio 105 0.5 14 Tiscali 4.7 11 Rai Info 0.9 11 MTV.it 0.5 21 Mediaset 3.2 .... 28 Rai 2.7 All Music 0.1 (Source: Italia- Netview June 08. Users/million) 17 / 34

COMPETITIVE FRAME: HOW OUR TITLES ARE RANKING Average (daily) .000 Readers Circulation La Repubblica 3,069 615.4 Espresso Group Local Dailies 3,150 442.5 Corriere della Sera 2,906 679.8 La Gazzetta dello Sport 3,706 357.3 La Stampa 1,449 310.5 Il Messaggero 1,313 202.0 Il Sole 24 Ore 1,122 342.4 Il Mattino 719 72.5 Il Gazzettino 656 94.7 La Gazzetta del Mezzogiorno 549 58.6 Il Giornale 654 201.6 Il Secolo XIX 528 105.7 Il Giornale di Sicilia 530 63.1 Unione Sarda 398 65.9 L'Unità 270 45.5 Avvenire 246 101.5 Il Tempo 168 57.8 Others (excluding free press) 10,506 2,426.9 Total 31,939 6,243.7 Our Share (Paid Circulation) 19,5% 16,9% Our Share (estimate-including Free Press) 16,3% 12,1% (Source: FIEG December 2007; Audipress 2008) 18 / 34

THE ESPRESSO GROUP IS CHANGING 2001-2007 revenues: yearly variation 2001 2007 €923mln €1,098mln €mln Total turnover Circulation Advertising Add-ons 19 / 34

THE ESPRESSO GROUP IS CHANGING Internet advertising revenues of the Espresso Group (consolidated “pro-forma”) Online % on total FY 2006 FY 2007 1H 2008 advertising (€mln) Repubblica 10.4 17.7 11.2 5.8% (of which Repubblica TV) (1.1) (1.1) (1.2) Espresso 0.3 0.5 0.4 1.3% Local newspapers (including Free Press) 0.2 0.3 0.5 0.4% Radio and TV 2,0 3.0 1.2 3,4% Kataweb sites 2.6 3.4 1.7 TOTAL DISPLAY 17.2 24.9 15.0 4.5% Online classified ads (whole Group) 1.6 3.4 2.1 4.6 TOTAL ADVERTISING (excluding intercompany) 17.2 28.3 17.2 4.6% On line services revenues 2.5 2.2 1.1 Mobile services revenues 1.8 2.7 0.7 TOTAL REVENUES 21.5 33.2 19.0 EBITDA (2.6) 2.4 2.6 EBIT (3.0) 1.7 2.2 20 / 34

THE ESPRESSO GROUP IS CHANGING Contribution to our REVENUES and EBIT will change as follows 2007 REVENUES Radio e TVTV Radio and Magazines (€109mn) (!109mn) (€62mn) Periodici 10.8 6.1% 10,8% Add-ons (!62mn) Add-ons 6,1% (!138mn) (€138mn) 13,7% 13.7% Stable or slightly decreasing circulation Local Quotidiani Changes newspapers locali (€267mn) (!267mn) 26.4% Stable or slightly decreasing add-ons 26,4% over the Against a negative trend of print Repubblica Repubblica (!435mn) 43.1% advertising… (€435mn) 43,1% next 5 EBIT … steep growth of Internet, classified and context advertising Radio and e TV Radio TV (€37mn) (!37mn) years 23.0% 23,0% Magazines Periodici Strong growth of revenues from (€1mn) (!1mn) Add-ons Add-ons 0.9% 0,9% (€39mn) (!39mn) 24.7% value-added online and mobile 24,7% services Local Quotidiani newspapers locali (€55mn) 34.5% (!55mn) Cost improvement actions to limit 34,5% Repubblica inertial growth of operating costs Repubblica (!27mn) (€27mn) 16.9% 16,9% 21 / 34

IN THE MEANTIME… The first half 2008 has outlined all the problems of the sector: 1H 2007 1H 2008 Stable circulation Circulation revenues (including add-ons) 212 207 Add-ons with slightly lower revenues but with better margins Advertising 336 323 Elections impact + economic cycle Ebit 102 75 The impact of the revenues vs. costs on the result has required the start-up of several rebalancing actions 22 / 34

IN THE MEANTIME… COST IMPROVEMENT ACTIONS Actions affecting both 2008 and 2009 and following years have been started: Personnel costs Freezing of turn-over Early retirements for over 100 employees Other stronger actions Industrial costs Insourcing of printing facilities (Milan and Bologna) Introduction of Computer to Plate Optimization of runnings/distribution of la Repubblica Reduction of the size of newspapers and magazines Cost efficiencies on printing materials Reduction of pagination of newspapers and magazines 23 / 34

Annex 24 / 34

Repubblica.it jun-08 vs jun-07 Monthly users 10,903,935 +17.5% Page views 533,802,719 +31.8% home page 173,721,221 +37.9% Cinema Restaurants Repubblica.it June 2008 2007 Advertising revenues (€k) Users (daily) 1.2mln Repubblica.it 19,792 Page views 21.5mln The newspaper updated by the minute! (free access) You can download in pdf format the newspaper with the latest Source: Site Census news of Repubblica.it, you can print it, take it with you and25 / 34 read it whenever and wherever you like

REPUBBLICA RADIO TV Radio and TV Monthly users jun -08 vs jun -07 Radio 1,204,689 +7.8% All Music 157,704 -11.7% Repubblica Radio & TV June 2008 Users (daily) > 100 thousand REPUBBLICA READER (MICROSOFT VISTA): ALSO ON DT TV PRINT NEWSPAPER IN A FORMAT FOR MOBILE OR COMPUTER DISPLAYS: SAME CONTENTS ON DEMAND 190,000 videos downloaded in the average day in June Source: Site Census 26 / 34

seidimoda june-08 vs jun-07 seidimoda Monthly users 653,366 +60.7% June 2008 Users (daily) 51 thousand Page views 333 thousand Source: Site Census 27 / 34

Local editions of la Repubblica Local newspapers Monthly users june-08 vs june-07 Monthly users june-08 vs june-07 1,600,925 > +100% 1,343,917 >+100% Source: Site Census 28 / 34

A new product line: classified ads online JOB SEARCH AND RECRUITING ADS Advertising revenues Total Internet classified ads 2007 vs. 06 (€k) 3,912 +109% Total print classified ads (including death notices) 2007 vs. 06 (€k) 80,764 +6.7% Source: Site Census 29 / 34

PODCAST AND MOBILE AT THE BORDERS WITH THE FUTURE: PODCAST: FRAGMENTATION OF CONTENTS ON COMPUTER, MOBILE, I-POD, ETC., SETS FREE FROM THE RESTRAINTS OF LIVE TRANSMISSION AND ALLOWS TO EXTEND BRANDS ON NEW PLATFORMS MOBILE: PODCAST + OTHER TAILORED SERVICES 30 / 34

208,000 downloaded in June 877,000 downloaded in June Internal source 31 / 34

DEEJAY CLUB: ACCESS TO MOBILE PORTAL RDJ DOWNLOAD AUDIO FILES OR JINGLES (WITH BUONGIORNO) REPUBBLICA SMS LA BUONA STELLA REPUBBLICA.IT FOR VODAFONE LIVE AND WIND I.MODE Services revenues Total online and mobile 2007 vs. 06 (€k) 4,924 +14.6% The Guide of restaurants on mobiles Source: Site Census 32 / 34

Consolidated financial results 1997-2007 Behind numbers there are 10-years changes FY FY FY FY FY FY FY FY (€ mln) 1997 1999 2000 2001 2003 2005 2006 2007 Revenues 696.1 848.1 952.7 923.1 1,051.1 1,079.9 1,102.6 1,098.2 EBITDA 85.9 143.7 125.9 130.7 231.5 222.2 204.4 223.4 EBITDA (before paper and employee termination indemnity contributions) 85.9 143.7 125.9 130.7 231.5 207.1 204.4 211.8 EBIT 65.6 112.9 85.0 89.8 190.3 177.5 163.3 180.6 EBIT (before paper and employee termination indemnity contributions) 65.6 112.9 85.0 89.8 190.3 162.4 163.3 169.0 PROFITABILITY INDEXES EBITDA 12.3% 16.9% 13.2% 14.2% 22.0% 20.6% 18.5% 20.3% EBITDA Margin (before paper and employee termination indemnity contributions) 12.3% 16.9% 13.2% 14.2% 22.0% 19.2% 18.5% 19.3% EBIT 9.4% 13.3% 8.9% 9.7% 18.1% 16.4% 14.8% 16.4% EBIT Margin(before paper and employee termination indemnity contributions) 9.4% 13.3% 8.9% 9.7% 18.1% 15.0% 14.8% 15.4% Since 2004 the Group’s financial results have been reclassified in compliance with the new International Financial Reporting Standards. Data from 1997 to 2003 have been adjusted to eliminate the amortization of titles and radio and TV frequencies, to reintroduce at the same time the historical cost, thus to benefit the Shareholder’s Equity. 33 / 34

Consolidated results of the 1997-2007 “core business” The “core business” has been growing since 2001 EXCLUDING ADD-ONS, KATAWEB (though with the internet), PAPER AND EMPLOYEE TERMINATION INDEMNITY CONTRIBUTIONS FY FY FY FY FY FY FY FY (€ mln) 1997 1999 2000 2001 2003 2005 2006 2007 Revenues 660.9 807.3 867.2 843.6 814.4 860.1 884.0 935.0 EBITDA 81.1 145.8 184.7 147.1 150.7 151.0 150.6 172.5 EBIT 60.9 118.4 152.9 114.0 116.0 107.1 110.2 130.6 PROFITABILITY INDEXES EBITDA Margin 12.3% 18.1% 21.3% 17.4% 18.5% 17.6% 17.0% 18.4% EBIT Margin 9.2% 14.7% 17.6% 13.5% 14.2% 12.4% 12.5% 14.0% 34 / 34

Gruppo L'Espresso old media crosso media multimedia

by Luca Conti on May 19, 2009

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Gruppo L’Espresso old media crosso media multimedia — Presentation Transcript