Didier Quillot

Slide 1: Global Digital Magazine Media 2.0. Conference Digital Strategies for Magazines Didier Quillot - Lagardère Active Media Hanover – 15/03/2007

Slide 2: 2 Agenda Opening remarks : A time of convergence p.3 to 6 I. In this rocky period of transition, p.7 to 15 magazines are not doomed to decline II. Lagardère Active Media Digital Strategy p.16 to 27 Keys and Implementation III. A quiet revolution p.28 to 44

Slide 3: 3 A time of convergence

Slide 4: 4 A time of convergence EVENT MEDIA “EXPERTS” • 1922: first BBC radio broadcast “Print is dead” • 1928: first BBC TV broadcast “Radio is dead. And so is “Television Queen’s Messenger” print, by the way” • 1995: first free daily newspaper “Paying print is dead” launched in Stockholm by Metro • 2006: US Online advertising growth : +24% “TV and radio are dead. And print is even deader” (Source : Merrill Lynch, MediaPost)

Slide 5: 5 A time of convergence Developing a virtuous print / web model MASTERING THE MASTERING THE STRATEGY FOR STRATEGY FOR PRINT DIGITAL SUCCESS SUCCESS The website widens The magazine anchors brand recognition and web traffic and increases print circulation recognition MASTERING THE STRATEGY FOR CONTENT SUCCESS

Slide 6: 6 A time of convergence A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Sir Winston Churchill

Slide 7: 7 I. In this rocky period of transition, magazines are not doomed to decline

Slide 8: 8 Magazine are not doomed to decline The magazine industry has strong Internet is an opportunity to : assets to succeed on the web : • Leverage those assets • Readers communities • Broaden brands’ audiences • Trusted brands • Generate additional revenues • In-depth content • Specific segment expertise • Relationships with advertisers

Slide 9: 9 A rocky environment Advertising growth has been slow or negative • French magazines’ net advertising revenue 2006 compared to 2005 : -1.0% • American magazines’ gross advertising revenue 2006 compared to 2005 : +0.1% Rationalizating of portfolios is necessary Publisher US editions closed in 2006 (Source : IREP, Publishers Information Bureau)

Slide 10: 10 Prejudice N°1 : "Time spent on the Internet is subtracted from magazine reading” Germany : Time Spent Daily w. Media (> 14 y.old) 2000 2006 484 min per day 575min per day 2000-2006 CAGR 700 Minutes per day 600 Magazines +4% 500 Newspapers -1% 400 Internet +28% 300 TV +4% Radio +1% 200 Music +5% 100 Video +5% 0 Total +4% 2000 2006 (Source :ARD/ZDF - Studie Massenkommunikation – 01/2007)

Slide 11: 11 Prejudice N°1 : "Time spent on the Internet is subtracted from magazine reading” AEPM French Magazine Audience Study – March 2007 97,2% of the French read magazines every month 58,9% of the French read magazines every day 65% read at least one magazine published by Lagardère Active Media in 2006

Slide 12: 12 Prejudice N°2 : "Online advertising budgets are subtracted from magazine advertising budgets” (Source :BIPE – Russia and China include B2B magazines)

Slide 13: 13 Prejudice N°3 : "The global magazine market is negatively impacted by the Internet " FREQUENCY CATEGORY Weekly Monthly Bimonthly … Women Kids Cars THERE IS NO GLOBAL TRUTH Shelter ABOUT THE MAGAZINE MARKET Teens News Celebs Lads THE SITUATION IS VERY Parenting DIFFERENT ACCORDING TO THE Sports SEGMENTS AND FREQUENCY Travel …

Slide 14: 14 Prejudice N°3 : "The global magazine market is negatively impacted by the Internet” Ad sales growth of US Women Magazines Ad Pages Publisher Publication March 07 / March 06 +23% +5% +19% +11% +20% +21% +51% +2% (source : Publishers Information Bureau)

Slide 15: 15 Internet : a strategic move for magazines Assured downside Potential upside • Some magazine content is available • Significant savings on production & free of charge on the Internet (for distribution instance Der Spiegel, Le Nouvel Observateur etc.) • Potential new paying services (commercial referrals, users databases, • Internet takes away ad revenue from classified ads, paying archive, etc. For magazines instance DailyCandy.com) • Ease of entry for new competitors, • New digital opportunities to strengthen while some pure plays have already brands and re-publish magazine contents established authoritative brand loyalty (Allociné, Aufeminin etc.) • New communities with a new loyalty • Internet giants want to take ad revenue • Internet giants look for premium content (Yahoo!, MSN, Google etc.)

Slide 16: 16 II. Lagardère Active Media Digital Strategy – Keys and Implementation

Slide 17: 17 Hachette Filipacchi Medias : a global leading magazine publisher More than 250 magazines • 2006 revenue : 1 848 M € • Publisher in 41 countries Magazine revenue 35% International France 65%

Slide 18: 18 Lagardère Active Medias : a multiplatform content producer Movie / TV production More than 250 magazines Radios TV Channels New Media Multi-media ad sales house Movie / TV distribution

Slide 19: 19 Lagardère Active Media growth strategy 2. Rationalise our Portfolio 4. Shift from operating to licensing magazines in some countries 6. Exit from some underperforming segments 8. Address issues of scale 10. Develop web capacity 12. Benefit from the merger of our advertising sales houses Strong management commitment to achieve Lagardère Active Media’s transformation

Slide 20: 20 First priority : WHAT? Monitoring the business by categories

Slide 21: 21 Second priority : WHERE? Global growth for global brands LAM Magazine portfolio (as % of 2005 revenue) Take advantage of fast growing countries (China, Russia)

Slide 22: 22 Third priority: HOW? Improving print publishing efficiency • Improve overall productivity and reduce purchasing costs by implementing pre-press automated copy flow management • Improve coordinated paper and printing negotiation and review specifications at international level • Improve distribution practices and develop collaboration with distributors in the US and Russia • Invest in core business titles and segments (for instance Elle and Tele 7 Jours in France)

Slide 23: 23 Developing a virtuous ecosystem with group assets and partners Magazines TV Mobile Websites Radio Events Production Web distribution

Slide 24: 24 4 levers to develop our websites in all key segments / themes by 2010 1. Organic growth (launch or relaunch of content websites) 3. Digital acquisitions ( november 2006) 5. Digital alliances ( + ) 7. Dedicated organisational structure (250-strong staff by the end of 2007) Our multiplatform strategy implies that print and web editorial teams collaborate closely

Slide 25: 25 A strategy built on Lagardère Active Media assets 1. Segment expertise (women, auto, celebrities, news, kids etc.) 3. International brands 5. Current advertising market trends 7. Ad attractiveness of brands and contents

Slide 26: 26 Merger of own advertising sales houses

Slide 27: 27 Cross-media campaigns Audience aggregation based on Lagardère Active Media portfolio and integrated sales house

Slide 28: 28 III. A Quiet Revolution

Slide 29: 29 Premiere : accompanying the readership move to digital Premiere.fr was launched in Februrary 2007 A content-driven website Premium content (Reviews, Interviews, News) Rich Media Content (Trailers, Slideshows) Community content (forums, user comments) Exclusive box-office game (develops loyalty)

Slide 30: 30 Premiere : accompanying the readership move to digital A service-driven website Showtimes anywhere in France Integration of Google Maps to find movie theaters Spiderman 3 – UGC Les Halles – Mon Tue 11:20 Free showtimes by SMS

Slide 31: 31 Premiere : accompanying the readership move to digital Content synergies : website is feeded with L.A.M.’s databanks TODAY Movie reviews Movie Showtimes Celeb news TOMORROW Theatres & Restaurants TV Listings & reviews News

Slide 32: 32 Premiere : accompanying the readership move to digital PREMIERE.FR TARGET : 1 MILLION UNIQUE USERS ON MOVIE CONTENTS AT THE END OF 2007

Slide 33: 33 Premiere : accompanying the readership move to digital Digital transition for the Premiere brand in the US Print edition will The Premiere end in April 07 brand will continue to grow online… October November Premiere.com 06 06 Page Views 1,3M 5,2M … and on mobile phones (Premiere mobile launched in november 06)

Slide 34: 34 Caranddriver.com : maximizing brand audience and revenue Online traffic growth benefits to the brand Caranddriver.com January 06 December 06 Unique Users 1,1 M 1,5 M Page Views 16M 21M 80% of Caranddriver.com users are new to the brand

Slide 35: 35 Caranddriver.com : maximizing brand audience and revenue For in-market users, deeper content than in print magazine In-market content (buying guide, vehicle reports, used car pricing, comparisons, dealer quotes) Rich media content (Slideshows, video road tests and interviews) Community content (forums, user-provided road tests) Video advertorials (Virtual Test Drive)

Slide 36: 36 Caranddriver.com : maximizing brand audience and revenue Fast-growing revenue The US auto magazine ad market is depressive : 2006 vs 2005 auto ad pages : -13.8% But LAM’s investment in Caranddriver.com allows online growth to exceed print erosion Print ad revenue -1,931M$ evolution 2005-2006 Web ad AD revenue +2,972M$ REVENUE evolution EVOLUTION BRAND AD REVENUE EVOLUTION +1,041M$

Slide 37: 37 Caranddriver.com : maximizing brand audience and revenue TARGET : 2008 WEB AD REVENUES = 40% OF PRINT AD REVENUES

Slide 38: 38 Creating value for a multimedia group strategy

Slide 39: 39 Elle.fr : building a leading women’s portal Relaunch of the website Elle.fr will cover all the women subcategories : Fashion, Beauty, Diet, Food, Entertainment etc. Each category is built as a proper web site (ex : the food subcategory Elle à Table includes 11 700 pages) Elle à table, launched in october 2006, was the first element of the new portal Video recipes

Slide 40: 40 Elle.fr : building a leading women’s portal Four ways to increase content and service In-house premium content (Recipes, Astrology) Group synergies (Nanny Finder with Parents.fr and Infobebes.com, Evening Planner with T7J.fr and Premiere.fr) Partnerships with category experts (dating, ecommerce) Community contents (blogs, forums)

Slide 41: 41 Elle.fr : building a leading women’s portal TARGET : 1 MILLION UNIQUE USERS AT THE END OF S1 2007

Slide 42: 42 Creating value for a multimedia group strategy

Slide 43: 43 Digital growth LAGARDERE ACTIVE MEDIAS FRENCH WEBSITES GROWTH October 06 February 07 Growth Page Views per week 7,49 M 9,32 M + 24% Visits per week 1,0 M 1,26 M + 26%

Slide 44: 44 Conclusion 2. Magazines will still be there for years • Target : save quality content Think added value content Adapt content to segmented audiences • Digital usage will grow because of digital generation • Digital ad spending will follow • Need to reverse paradigm and to come to : • Multiplatform content publishing • Management of segments / brands • Internal digital transformation : editors, publishers, salesforce, production 9. A general and cultural (r)evolution 11. Timing is everything