Richard D.

Burbidge (#0497)
rburbidge@bmgtrial.com
Jefferson W. Gross (#8339)
jwgross@bmgtrial.com
Carolyn LeDuc (#14240)
cleduc@bmgtrial.com
BURBIDGE MITCHELL & GROSS
215 South State Street, Suite 920
Salt Lake City, Utah 84111
Telephone: 801-355-6677
Facsimile: 801-355-2341

William Kolasky (pro hac vice – pending)
Kolasky@hugheshubbard.com
HUGHES HUBBARD & REED LLP
1775 I Street, N.W.
Washington, D.C. 20006-2401
Telephone: 202-721-4600
Facsimile: 202-721-4646

Ethan E. Litwin (pro hac vice – pending)
Litwin@hugheshubbard.com
HUGHES HUBBARD & REED LLP
One Battery Park Plaza
New York, NY 10004-1482
Telephone: 212-837-6540
Facsimile: 212-422-4726

Attorneys for Defendant Kearns-Tribune, LLC
Raymond J. Etcheverry (#1010)
David M. Bennion (#5664)
PARSONS BEHLE & LATIMER
One Utah Center
201 South Main Street, Suite 1800
Salt Lake City, UT 84111
Telephone: (801) 532-1234
Facsimile: (801) 536-6111

Lee Simowitz (pro hac vice – pending)
BakerHostetler
Washington Square
1050 Connecticut Ave., N.W., Suite 1100
Washington, D.C. 20036-5034
Telephone: 202-861-1608
Facsimile: 202-861-1783

Attorneys for Defendant Deseret News
Publishing Company


IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH - CENTRAL DIVISION


UTAH NEWSPAPER PROJECT, dba
CITIZENS FOR TWO VOICES,

Plaintiff,

vs.

DESERET NEWS PUBLISHING
COMPANY and KEARNS-TRIBUNE, LLC,

Defendants.



DECLARATION OF JOHN PATON



Case No. 2:14-cv-00445-CW
Judge Clark Waddoups

Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page l of l4


Declaration of John Paton

I, John Paton, declare under penalty of perjury that the foregoing is true and correct.
1. I am over the age of eighteen (18) years and have personal knowledge of the
statements of this Declaration. If called as a witness, I could competently testify to the
facts set forth in this Declaration.
2. I am the Chief Executive Officer of MediaNews Group, Inc., d/b/a Digital
First Media (“DFM”).
1
I make this declaration in opposition to Plaintiff’s Motion for a
Preliminary Injunction. The facts set forth herein are based on my personal knowledge or
based on information contained in business records regularly maintained by DFM, unless
otherwise indicated.
My Background
3. I have spent my entire working life in and around the newspaper business. I
started my career as a newsroom copy boy. I am a journalist who was everything from a
reporter to an editor-in-chief, before becoming more involved on the business side of
running newspapers. I am dedicated to the proposition that journalism matters and to
finding business solutions to keep journalism viable. I fund two scholarships annually for
promising young journalism students at the Graduate School of Journalism of the City
University of New York where I also sit on the Board of Advisors. My university degree is
in journalism from Ryerson University where in 2006 I was named an Alumnus of
Distinction. I am a former governor of the National Newspaper Awards program in
Canada – that country’s “Pulitzer Prize” – and I was recently asked to join the Board of

1
Unless specifically referred to otherwise herein, all references to Digital First Media refer to MediaNews
Group, Inc., d/b/a Digital First Media.
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 2 of l4


Overseers of the Columbia Journalism Review, which I accepted. In one form or another,
I have been running companies since 1995.
4. My involvement and interest in helping build digital platforms for
newspapers started in the late 1990s when I was first the Vice-President in charge of new
media for Sun Media Corporation in Canada and then CEO of Canadian Online Explorer
(“Canoe”) - with news operations at the time in Canada, France and Spain. Since then, I
have been recognized as one of the leaders in restructuring newspapers to compete
effectively in the digital world, including by The New York Times (Exhibit A) and The Pew
Research Center for Excellence in Journalism (Exhibit B). My work has led me to be
named as one of 15 “digital media influencers.” (Exhibit C.)
5. My leadership on digital issues has led to my being recruited to join a
number of media-related boards, namely: The Guardian in the UK, El Pais in Spain and
PRISA, a multi-media corporation also based in Spain, with divisions in more than 20
countries. The Guardian is currently the third-largest newspaper site in the
English-speaking world, while El Pais is quickly establishing a similar leading role in the
Spanish-speaking world. Both The Guardian and El Pais have been able to dramatically
expand their audiences and business opportunities by aggressively pursuing a “digital first”
strategy. I am a frequently sought-after speaker on digital transformation in the U.S. and
abroad. I have presented at annual conferences such as the Newspaper Association of
America, World Association of Newspapers, Global Editors Network and Online
Publishers Association.
6. My leadership on digital issues was recognized in 2009 when Editor &
Publisher named me Publisher of the Year citing my efforts in multi-platform publishing.
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 3 of l4


That recognition also led to my being recruited to the board of Journal Register Company
(“JRC”) in August 2009 by its creditors following its well-publicized bankruptcy. JRC’s
Board undertook a search for a new Chief Executive Officer and in December 2009 the
then-Chairman of JRC asked me to take on the job. I accepted and became CEO in
February 2010. In July 2011, JRC was sold to a company controlled by funds associated
with Alden Global Capital, which are also major stakeholders in MediaNews Group. In
September 2011, I became the Chief Executive Officer and a director of MediaNews
Group as well, running both MediaNews Group and JRC via a management company
called Digital First Media, LLC (f/k/a Digital First Media, Inc.).
7. After a series of transactions, the voting securities of the former JRC were
acquired by MediaNews Group in December 2013. MediaNews Group was then
rebranded and now does business under the Digital First Media name.
The Digital First Strategy
8. The newspaper industry is in trouble today because of the simple truth that
print is in steep decline and most newspapers are ill-prepared to compete in a digital world.
9. Revenues for print advertising have been declining every quarter since 2006
and, according to the Newspaper Association of America, among others, print revenues in
2013 were less than half their 2006 levels. (Exhibit D.)
10. Faced with this catastrophic decline in revenues, newspapers need to
aggressively innovate away from a reliance on print. The industry still has a long way to go
in its transformation - print advertising continues to account for approximately 46% of all
newspaper revenues, industry-wide, with print circulation accounting for another 30%.
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 4 of l4


According to industry sources, revenues generated by print advertising have fallen by 55%
since 2006. (Exhibit D.)
11. The world is rapidly moving away from print and to digital. We therefore
now have to compete with other media, especially new digital media, for readers and
advertisers in an increasingly competitive market. Over the last decade, as print
advertising has declined by more than half, digital advertising has grown exponentially.
As a result, digital is now the largest medium for advertising, having surpassed broadcast
television in revenue market share in 2013, and spending for digital advertising is now
more than 35% higher than the spending on print advertising in newspapers and magazine
combined (and a full two times the spending on newspaper advertising alone). (Exhibit E
at 19.)
12. If one accepts (as I do) that print news and print advertising are in decline
and, further, that this decline is irreversible and not cyclical, then two propositions follow:
a. Newspapers must grow their digital advertising revenue at a faster
rate than they have in the past if they are to survive. Growing this revenue requires
generating new digital content which, in turn, mandates new types of products.
b. Significant cost issues must be addressed if these new digital-first
models are to be viable businesses. Newspapers currently carry large legacy costs
associated with print publication. These include costs related to sales, administration,
content creation and, especially, industrial production, including the real estate and
logistics associated with print publication and delivery. There is no way to make print as
profitable as it once was. It is impossible. People already get much of the content
newspapers used to deliver—such as news, opinions, television and movie listings,
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 5 of l4


restaurant reviews, and real estate, automotive, and classified advertising—from digital
media including mobile devices, such as iPhones and iPads. Newspaper digital media now
reaches 78% of online adults in the U.S., and the pace at which the shift to digital media is
occurring is accelerating. (Exhibit F.) In 2012, Pew Research Center reported that more
Americans get their news from online sources than from newspaper sources: when asked
where they had read their news “yesterday,” 39% of readers reported that they had read
news from online sources and 50% reported that they had read news from a digital source.
Only 29% reported they read news from newspapers. It is inevitable that the per-unit costs
of printing and distributing newspapers will increase as circulation declines. (Exhibit G.)
c. Newspapers cannot be saved through cost cutting alone, because the
revenue that supports print publication is falling, day after day, quarter after quarter, and
year after year. As I’ve already noted, print advertising revenues today are less than half
what they were a decade ago. While circulation revenue has declined less dramatically,
that is only because most newspapers are experimenting with new pricing strategies for
print editions, and including digital subscription packages in circulation revenue numbers;
actual print circulation is now only 70% of what it was in 1990. (Exhibit H.) While it is
important to continue to address the legacy cost structure associated with print publication,
the real emphasis must be on the process, strategy and team-building and culture change
that is necessary to drive digital revenues. This is my “digital first” strategy. The term
“digital first” is now routinely used by news organizations around the world to describe
their transformation from a legacy-based business to a modern multi-platform news
company. Specifically, the “digital first” strategy has numerous components, including: (i)
reducing exposure to legacy costs associated with print publication, (ii) increasing
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 6 of l4


collaboration among its various newspaper holdings, (iii) taking advantage of the unique
qualities of digital publication to provide a more robust multimedia experience for readers,
and (iv) developing digital advertising models that go beyond simply selling ad space in a
newspaper.
13. The digital first strategy has been successful for DFM’s newspapers; our
company now generates more than $180 million a year in digital advertising revenues
alone.
The State of The Salt Lake Tribune at the End of 2012
14. After becoming CEO of MediaNews Group in September 2011, I began
familiarizing myself with its various assets. In 2012, my attention focused on The Salt
Lake Tribune (the “Tribune”), which is owned by Kearns-Tribune, LLC
(“Kearns-Tribune”), a subsidiary of DFM. At the time, I understood that the Tribune was
party to a joint operating agreement (“JOA”) with The Deseret News (the “News”),which is
owned by Deseret News Publishing Company (“Deseret”), and had been for many
decades. This JOA was structured so that a common entity, called the Newspaper Agency
Company, LLC (“NAC”) assumed all of the business functions of both newspapers,
including the sale of advertising, circulation, production and delivery for both newspapers,
while each paper funded its own news and editorial costs.
15. This system had worked well for many decades, but was in serious trouble
when I began reviewing the situation in Salt Lake in 2012. In line with the collapse of
advertising revenues in the newspaper business generally, the revenues earned by NAC
from the sale of advertising in both the News and the Tribune, had declined dramatically
from what they had been just six years earlier in 2006. As a result, by the end of 2012, the
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 7 of l4


Tribune’s distributions from its share of NAC profits were a small fraction of what they
had been just six years ago, let alone when MediaNews Group (now doing business as
DFM) bought the paper for $200 million a little more than a decade ago.
16. The steep decline in NAC profits was of great concern to me. I understood
that the agreement that governed the JOA was due to expire in 2020 and that it was
commonly understood within DFM that, while no decision had yet been made, the JOA
was unlikely to be extended. I was concerned that the Tribune would not be able to survive
as an independent newspaper once the cost-saving efficiencies of the JOA were lost. I was
also concerned that even before 2020, distributions from the NAC would no longer be
sufficient to continue to sustain the high quality editorial content for which the Tribune was
known, unless we could grow our digital advertising revenues substantially to replace the
declining distributions we were receiving from NAC from their profits on print advertising
and circulation.
17. To better understand the situation facing the Tribune, I travelled to Salt
Lake City on November 27, 2012 for a series of meetings. While there, I first met with
Brent Low, who is the President and CEO of the NAC, and Mike Todd, who sits on the
board of the NAC and is the CFO of the News. Mr. Low told me that the Tribune’s share of
NAC’s profits derived from its newspaper operations were, in his view, no longer
sufficient to cover what he understood to be the Tribune’s then-current editorial budget.
Mr. Low confirmed to me later that day that, as a standalone entity, the Tribune would lose
money on its newspaper operations in its then-current fiscal year. I learned that Mr. Low
had been making up for the shortfall primarily through profits earned from unrelated
non-newspaper business, such as a real estate brokerage. Mr. Low and I each anticipated
that the profits of the NAC’s newspaper business would continue to shrink in the future, but I
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 8 of l4


was concerned that unless we made significant changes, we would not be in a position to
replace these lost revenues through more aggressive sales on the digital front.
18. My second meeting was with Nancy Conway, then the editor-in-chief of the
Tribune. I have great respect for Ms. Conway, who is an experienced journalist and an
excellent editor, but I came away from my meeting with her concerned that she did not
share my view of the kind of restructuring and re-positioning that would be needed at the
Tribune and at newspapers generally in order to assure their future viability.
19. I concluded my day with a meeting with Clark Gilbert, my counterpart at
the News, at his office. I believe that Mr. Gilbert generally shares my views on the digital
future of newspapers and had already taken many of the necessary steps needed to position
his newspaper to succeed in the future. In particular, he had negotiated with
Kearns-Tribune to be allowed to sell digital advertising in the News outside of the NAC.
He had also engaged in significant cost-cutting and had recently substantially reduced
staffing at the News.
20. My discussion with Mr. Gilbert was wide-ranging. Among the topics we
discussed was our mutual belief that the NAC was not fully realizing the digital potential of
the Tribune in Salt Lake. Our discussion focused on our mutual concerns that both of our
newspapers were struggling under the then-current JOA. At some point, we also discussed
restructuring the JOA to allow the Tribune to control its digital future in the same way that
Mr. Gilbert had negotiated for the News. That discussion ultimately led to the amendment
of the JOA in October 2013.
The 2013 Amended JOA
21. I have read the Declarations that Nancy Conway and Joan O'Brien
submitted in support of Plaintiff's motion for a preliminary injunction. They are, to be
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page 9 of l4


kind, mistaken as to the intent and function of the 2013 Amended JOA. Far from trying to
hurt the Tribune, the 2013 Amended JOA was designed to save it.
22. First, and most importantly, I want to make it clear that the 2013
amendments were not intended, as Plaintiff alleges, to cause the Tribune to suffer financial
losses so that we would be able to terminate the JOA before it expires in 2020, cease
publishing the Tribune, or sell it to the News’ owner, Deseret News Publishing Company
(“Deseret”). Nothing could be farther from the truth. Our purpose was exactly the
opposite: to make the Tribune a stronger, self-sustaining newspaper that could survive
long-term in a world with very different newspaper economics than before, while at the
same time monetizing some declining legacy assets in accordance with our company’s
overall strategic plan. At no time—either when I proposed the 2013 amendments to the
DFM Board or any time since, have I or anyone else associated with DFM had any plans or
intentions to cease publishing the Tribune or to sell it to Deseret. There are no plans to
cease publication of the Tribune today, tomorrow, next week, next month, next year or
ever. There have never been any discussions, either at the board level or among the
executives of DFM, contemplating closing the Tribune. Nor would I ever have agreed to
the 2013 amendments had I thought they would adversely affect the quality of our
journalism or the independence of our journalists.
23. Second, Mses. Conway and O’Brien claim that the staffing reductions that
were imposed on the Tribune over the last year were mandated by the 2013 Amended JOA.
They were not. Even if the JOA had not been amended, these cuts would still have been
necessary, given the ever-shrinking distributions we were receiving from the NAC.
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page l0 of l4


24. Third, recognizing that the profit distributions we received from the NAC
would soon be unable to support the editorial costs of running the Tribune without
additional cost reductions, I had to find another revenue source to help cover those costs.
The obvious answer was in digital, where our newspapers outside of Salt Lake had seen
considerable revenue growth since the institution of our digital first strategy. We,
therefore, secured Deseret’s agreement to move the unit responsible for the sale of digital
advertising for the Tribune out of the NAC so we could manage those sales ourselves and
integrate them into the DFM platform. At the same time, we agreed that NAC could
continue selling digital advertising in conjunction with print advertising in the Tribune
through its own sales force on a case-by-case basis. This arrangement allowed us to
maximize our digital revenue opportunities.
25. Fourth, in negotiating the 2013 Amended JOA, I was careful to ensure that
the Tribune would be protected. Part of my digital-first strategy is to reduce exposure to
legacy costs and assets. In connection with the 2013 Amended JOA, DFM sold to Deseret
its interest in the production plant the two parties had jointly owned. But, as part of the
terms of that sale, Deseret is required to continue to lease the production plant to the NAC
as long as the JOA endures so that it can continue to print the Tribune. I negotiated the
terms of the lease and the 2013 Amended JOA so that the Tribune bears none of the rent or
other expenses associated with the lease other than its pro rata share of the costs and
expenses that flow through to the NAC. Moreover, even if the JOA were to expire, we
have the right to continue to have the Tribune published at that plant in such quantities and
at such times as we reasonably request at market rates. I negotiated for and won further
protections for the Tribune in the 2013 Amended JOA. Those protections include the right
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page ll of l4


to prevent the News from taking any of the following actions without the consent of at least
one of the two Tribune members of the NAC management committee:
a. Changing the Tribune’s publication schedule (2013 Amended JOA,
§2.02, ¶ 5, clause (m)};

b. Offering promotions to potential subscribers of the News that are not
offered to potential subscribers of the Tribune in its primary
circulation area (2013 Amended JOA, §2.02, ¶ 5, clause (n));

c. Budgeting less news or color availability to the Tribune than to the
News (2013 Amended JOA, §2.02, ¶ 5, clause (p));

d. Reducing the Tribune’s primary circulation area (2013 Amended
JOA, §2.02, ¶ 5, clause (q));

e. Changing the Tribune’s press deadlines, delivery targets, number of
editions or days of publication (2013 Amended JOA, §2.02, ¶ 5,
clause (r));

f. Suspending or ceasing publication of the Tribune (2013 Amended
JOA, §2.02, ¶ 5, clause (s)); and

g. Amending, modifying waiving or terminating the lease of the
production plant discussed above or any of the other leases between
the NAC and Salt Lake Newspaper Production Facilities, LLC, the
entity through which Deseret owns the production plant and certain
other fixed assets used by the NAC to print the Tribune and the
News, including printing presses and related equipment (2013
Amended JOA, §2.02, ¶ 5, clause (l)).

26. Fifth, as part of the overall transaction, DFM and Deseret each contributed
to the NAC’s pension plan to the benefit of that plan’s participants.
The Tribune Would Be Harmed If the Injunction Were Granted
27. The initial results of our restructuring in Salt Lake are encouraging. Our
new digital salesforce is now generating approximately $500,000 in digital advertising
revenue each month and we expect these revenues to increase significantly going forward
It is this growth in digital advertising revenue, made possible by the 2013 Amended JOA,
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page l2 of l4


that has forestalled any plans for further cost-cutting and editorial staff reductions at the
Tribune.
28. If a preliminary injunction were to be issued, the Tribune would be
seriously damaged. This damage is not limited to the sort of monetary damages mentioned
in Plaintiff’s moving papers. Simply put, the issuance of an injunction could irreparably
harm the Tribune and result in its eventual closure.
29. First, an injunction would stultify our efforts to grow digital advertising
revenues for the Tribune sufficient to sustain the newspaper if the JOA is not renewed in
2020. As part of the restructuring of the Tribune to better accord with my digital-first
strategy, the 2013 Amended JOA allowed us to move the Tribune’s digital business, Utah
Digital Services, out from under NAC control and management. The Tribune and the
News have terminated their Internet Advertising Agreement and the two newspapers have
been running their own competing digital advertising for several months now. An
injunction would unwind those actions to the serious detriment of the Tribune.
30. Unwinding this deal has practical implications. For example, Utah Digital
Services’ equipment and furniture has been transferred from the NAC to the Tribune. The
Tribune has hired eleven new employees to handle its digital advertising and expects
additional employees to be hired in the coming weeks. If the deal were unwound, these
employees likely would be let go and Utah Digital Services would need to be
reincorporated into the NAC.
31. But, more importantly, reversing the 2013 Amended JOA and the changes
to the Tribune’s operations over the past several months would be tremendously disruptive
to the Tribune’s digital-first strategy, would jeopardize payments and agreements that have
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page l3 of l4


already been made, and impose additional costs that may never be recovered. At a
minimum, the Tribune would lose much of the approximately $500,000 in digital
advertising revenues its new digital sales force is generating on a monthly basis. As
discussed above, these revenues are essential in order for the Tribune to continue
publishing the high quality journalism for which it is known.
32. The Tribune would also incur much greater but harder to quantify costs.
Restructuring is always difficult, diverting management from other responsibilities,
impairing employee morale, and imposing reputational and other costs with employees and
customers that are difficult to quantify. Stopping the restructuring after it is substantially
accomplished and either reversing it or freezing it in its tracks could undermine the
viability of the Tribune altogether.
33. With the help of the 2013 amendments, we have launched what amounts to
a new digital business in Salt Lake, which will enable us to support the delivery of
high-quality news and other content to the Tribune’s readers, both in print and digital form.
We are pounding the pavement every day, trying to sell these new digital products to
customers. Those efforts have considerable support from Digital First Media. Stripped of
this sales and support staff, these new and necessary digital initiatives would wither on the
vine, putting us back to square one or worse. The confusion this unwinding would cause in
the marketplace would inevitably damage the brands of both the Tribune and Digital First
Media. This damage is not quantifiable, but is potentially fatal to the Tribune.

_____________________________
John Paton
CEO, Digital First Media

Dated June 30, 2014
Case 2:l4-cv-00445-CW Document 22 Filed 06/30/l4 Page l4 of l4




Exhibit A

Case 2:l4-cv-00445-CW Document 22-l Filed 06/30/l4 Page l of 6
_"'-HI.N __ .IIIr. __ ....
nan-.mon:lol "_ anlr_ You ..., anI ... _IaII .. -.lr capiHfar
dloiribullan 10 ,...,0011_" oIlan,"", ... IIom ... ... "'0_111. _ lI10t _n_ II>"r
orIIoI •. _.nyIraprInlo.oom for .... pI ........ IUanoi Infannoll ... era .... roprint arlll.OJtIoi. n_
Newspapers' Digital Apostle
Ely DAVID CARR
Last week, John Patm. met with execnt:ives d the MeiliaNews Group, the second-larFrt
oewapaper chain by circolatioo. in the oonutry, htme to papers like The DelIver Post, The
Debmt News, The Salt Late Tril:nme and a broad IJW3th d dailies tlJrouIhout Califurnia,
iDcludq; The San Jtwe Mercury News_
Mr _ Patm. wu liven cmtroJ. dMediaNew. by its 0WIIeI'S in September bued ml his S1lCCellS
qlel'aIio& the ","alJer Journal Rqilter Canpany after it: emerpd from baIJkruptcy in 2009_
Amma; other fea.t8, he iDcreued digital revenue by aver 200 percent in his first: fullyeu as
chief executive .
.Acca-dio& to Mr. Patm, hiI new employ_ at MeiliaNews WHe hopjq; to diM:ern the silver
bullet that woold enable them not mIy to survive. but prosper. 11I8tead, he worked his w.y
throuih a detaiIOO pre»CDta.tioo. about outiol1l'ciq; II10It qICI'IltDJa other than INI1es and
editaia1, focusina; m the coil: me that might jnclnde further layoflB. stressing digital Ales over
print sales with inoontivea, and lWioa!; relatjrwllWipo. with the I'QIlmunity to provU IIOIIlC of the
CIntent in tIwir DCWspapers.
-When I flnisbed. they looIr:ed crestmJJ.m: he said, adding that they lCCIDed to be aking. -No
IIOOI'eI: sauce? No magic program to make Ullgo &un print to digital? Anyone can do whM
you're talking about.'"
Ez.oept few have. Mr. Patm. has berune eunet:hing rJ a darling among media thinker. fur
PUtl:ins his business where his rhetuic is. He issued. Flip cameral! to all the ttpOl ten .t: Journal
Register papers, heJpOO create a newaI'OOOl cafe that's to the I'QIlmunity in Torrington,.
Com., and has boon pushing to dump ancient pruprkltary new5I'OOIIl software in favor of fr-ce,
Web-bIUIlld publishing tools. He has finanood a lab to foster employee innovation. and the
(UIlpany has finned partnershipe with a number rlWeb (UIlpauies to provid. MOlE IN IIIE
What began lUI a tidy Iit:tIe experiment has boetmte perhaps the single biggest 1
newspaper bosi! -u: The Journal Register andMediaNews are now in 18 stab
o

,
Iilid' .;I __ 1I'I1II4ob.oI,., __ "'" •• ___ __ •• b_+._.'" ad plot
Aereol
Court, i
Broade
........
"
Case 2:l4-cv-00445-CW Document 22-l Filed 06/30/l4 Page 2 of 6
612712014 Palm P'epa-es His Newspapers fa" aWa"ldWithoul Print- NYTimes.com
print and digital products, with revenue of over $1.4 billion and 10,000 employees_ The second-
largest newspaper chain in America is now being run by someone who thinks that print is, if not
exactly dead, dying a lot faster than anyone thought_
Mr. Paton has heard all about how choosing digital revenue over print revenue is like choosing
dimes over dollars. He points out that the print dollars have dropped by more than half in the
last five years and perhaps it is time to start "stacking the dimes." He also notoriously proposed
that real transformation would happen only if the industry were willing to "stop listening to
newspaper people."
Oddly enough, that's exactly what he is, albeit one who has come to very different conclusions
about what the newspaper industry needs to do to survive. This includes the idea of eventually
ceasing to put out a print paper altogether.
"Every time I talk about this, people jump out of windows, so I want to be careful about what I
say," he said.
A bearded man with a round, friendly face, Mr. Paton does not froth at the mouth or flail his
arms when he talks about transforming newspapers, but he is absolutely convinced that if
newspapers are to survive, they will all but have to set themselves on fire, eventually forsaking
print and becoming digital news operations. He shares a rhetorical set with new-media thinkers
like Emily Bell, Jeff Jarvis and Jay Rosen, all of whom sit on the advisory board of Digital First,
his management company that now runs both newspaper chains. Mr. Paton has a long history
in the business, and chatting with him, you know you are in the presence of a working
newspaperman (hold the paper).
After starting as a copy aide at The Toronto Sun in 1977, Mr. Paton went on to cover the police
and politics and write features before serving as city editor and eventually assistant managing
editor. He helped introduce The Ottawa Sun, where he worked as editor in chief, publisher and,
eventually, chief executive, and helped engineer a leveraged buyout and purchase of additional
properties before the company went public again and was sold to Quebecor.
Mr. Paton got an education in the possibilities and pitfalls of new media when he ran Canoe.com,
a large news site, during the first dot-com bubble and then worked in investment banking. He
and his partners decided to invest in Hispanic media, buying El Diario La Prensa in New York
and other Spanish-language properties in big American cities and formed impreMedia in 2003,
where he served as chief executive.
In 2009, he was approached by Alden Global Capital, the creditors of Journal Register, then
bankrupt, and asked to join its board. He became the chief executive of the company in
hUp:ltv.wN.n}ti mes.can'2011/11/141busi nessJmedia/palm-prepa-es-tis-......... papers-fa"-a-1MlI"Id-v.ithoul- print.hIm? J=O&pag........mad= pri nt 215
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February 2010.
After taking note of his success at Journal Register, the board of MediaNews asked him to
become chief executive of the much larger MediaNews, with 57 dailies and 100 smaller
newspapers. A management company, Digital First, was formed to run both enterprises in an
operational merger, although both companies remain as separate entities.
Dean Singleton, who has known Mr. Paton for 23 years and is long an advocate for industry
cousolidation, stepped aside as chief executive of MediaNews to become chairman, and Mr.
Paton was given day-to-day control.
Digital rhetoric comes cheap these days, and business results are difficult to come by in the
publishing industry. The jury is still out in part because the properties controlled by Digital
First are private, and financial information is rarely shared.
"John deserves kudos for frankly acknowledging what other publishing C.E.O.'s won't, which is
that the cost structure will not be supported by the business for much longer," said Ken Doctor,
the author of "Newsonomics" and a publishing consultant for Outsell.
"But we can't really tell how much of the answer he has because we don't really know what the
business results are. Is he going to be the one to transform these businesses? We don't know
yet."
Asked about this, Mr. Paton said he was willing to share some business results. He said the
story so far at Journal Register - he has been working with MediaNews only since September
- has been encouraging but is short of definitive.
Revenue was down 2 percent last year against a national newspaper industry average of more
than 6 percent. More important, digital revenue, which was $6 million a year when he took
over, is projected to reach $32 million this year.
In order to prepare for a paperless future, the company has emphasized digital sales that are
not bundled with print, and 60 percent of its sales were digital only, he said.
In the past, Mr. Paton has publicly stated that Ebitda - earnings before interest, taxes,
depreciation and amortization - was $41 million in 2010, and employees at what had been a
beleaguered, bankrupt newspaper company received bonuses of a week's pay.
There have been brutal cuts: staff is down 16.5 percent over all at the Journal Register since he
took over, although he is quick to point out that the number of people in editorial and sales
positions has remained constant.
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But there have been some psychic dividends as well.
"No overhaul is without obstacles, of course, but when I go home at night, I don't feel like I'm
working for a dying industry," Karen Workman, the community engagement editor at The
Oakland Press, a daily in Pontiac, Mich., said in an e-mail.
In Mr. Paton's version of newspapering, a third of the news will be expensive local content
produced by professional journalists, a third will come from readers and community input, and
a third will be aggregated.
To that end, he and Jim Brady, a former Washington Post digital editorial head, and now the
editorial chief of Digital First, came up with the rather epically titled Project Thunderdome -
"Somebody on Twitter said that we should be in charge of naming Pentagon initiatives," Mr.
Paton joked - which centralizes production of so-called common content, the wire service and
national report that editors at each paper had to spend time putting together.
"Half the editors were spending time putting together pages for things like the national section
and the health section, which makes no sense and doesn't generally lead to quality content," Mr.
Paton said. The newspapers are also looking to their audiences to generate content as well, with
accommodations made for blogging and photos from the community.
That's part of what grabbed Mr. Brady's attention.
"I have been doing the digital thing for 16 years, and one of the frustrations has been that the
digital DNA is not at the top of the organization," he said. "The fact that John was a reporter
and understands newsroom culture means he is a very good person to lead this kind of
transformation."
Paul Bass, the editor of New Haven Independent, a nonprofit online daily that competes with
The New Haven Register, a Journal Register newspaper, said he still could not tell whether it
would all add up to better journalism.
"What I can say is that the reporters there now work for a company that wants to put out a
good newspaper. They have a sense of mission," he said. "But they are still struggling with the
level of resources they have, but Paton took a string of notoriously bad newspapers and is
trying to reinvent them. He's a real news guy, not some corporate windbag."
Mr. Paton already sees the logical end of the transformation: the elimination of some, if not all,
print vehicles. "There are probably a whole bunch of dailies out there than cannot sustain
themselves going forward at seven days a week," he said. "Some should probably be weeklies,
or there may come a time when they don't put out a newspaper at all."
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Alan D. Mutter, a new media consultant who writes the blog Reflections of a Newsosaur and is
an adjunct professor at the University of California, Berkeley, pointed out that The Detroit
News, a MediaNews property, had already reduced home delivery in 2009 to three days a
week.
"Publishers across the country have eliminated print publication on certain days of the week
and trimmed home delivery on others," Mr. Mutter said. "Given the trend of the industry, it is
not unimaginable that MediaNews or Journal Register may do likewise."
Mr. Paton hears all sorts of clocks ticking. His newspapers are mostly owned by hedge funds
and investment banks, which are not known for patience, and part of the reason that the
percentage of digital revenue is rising so fast is that the print revenue that it is compared with is
dropping so precipitously. Although he is something of an evangelist, he says he is also a
pragmatist.
"At some point, print is going to cost more money than it is worth," he said. "If you don't have a
viable business model to turn it off when that day comes, where does that leave you?"
E-mail: carr@nytimes.com;
Twitter.com/carr2T!
This article has been revised to reflect the following correction:
Col'J"ection: November 15, 2011
The Media Equation column on Mondny, about the business strategy of John Paton, chief executive
of the MediaNews Group, gave an incorrect definition of the financial acronym Ebitda. It is earnings
before interest, taxes, depreciation and amortization - not earnings before interest, taxes, "debt" and
amortization.
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Exhibit B

Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l of 25
The Pew Research Center's Project for Excellence in Journalism
The State of the News Media 2012
An Annual Report on American Journalism
Newspapers: Building Digital Revenues Proves Painfully Slow
Bt IUd: EoifiUndJ uf thr Pbwntw /nslltutr, Emi/r Gusldn, Tum IroHnstMl Q/Jd Amy MltdNr!! gf fIfJ
Upd.wd Fllbrulll'Y 11, 2013: See QU" "'tat RPOrt. NewllpiIpeI'1 Twnt ... ldeu Into DuIlaI1. for four -..
Jur;r;etlJ Jturln.
The llICbtry enten 2012 neither dyI ... nor UIInd gf illtilblt The llICbtry hill I'iIllled ilround iI
ltory iIbclut Itlel - IhiIt yor-byyor It II de.clIpl ... new dtlltill prudud:l iIIld new -.. ItIUllll to t .... lttgn
frum depeilde"ce on print ildRrttll .... In 2011. IhiIt tndtttOllill ildmttll ... pool. dedtned for illixth cunecutlve
ynr. The 'MbIlte gf the Gilmett CcmPilllY. emphulzt ... tOOIe dtlltill Intttilttftl. now IntenttOllilUr hill no mentign
gf on Itl heme Pille.
If thli InrIIfQl'Tl1i1tton 'Mn 1fJI ... MI, OM """'*I expect the new _ to let mer uch yur to ad
rwerJJeII bit In print. In 2011. ... to NewII.,..... AllfJdiltton gf AmeriCilltilttlttCl. &dverttllrc _ up
$207 mlWon llICbtry-wtde tumPilRd to 2010. PrInt ildRrttll .... thooIh. _ dcMn $2.1 billion. Sg the print blln
w=re lreilter IhiIrI the dtlltill pllll by 10 to 1.'
TlIiIt _ IMm 'MIlle IhiIrI iI 7·to-l n.ttg gf print blln to dtlltill piN In 2010. And durl ... 2001 iIIld 2009. lteep
dedtnn In print w=re m;umpmled by Imill blln In online too. (An artier PEJ ltudy eumtned print blln to
dtilitillllilllll for illampll gf ... 11'8 2010 iIIld flUId Ilmlll.r relultl.)
Even If the llICbtry CiIII find ill ... tillrabie model. online. mcnover. tOOIe n.ttQl ...., '''I"00IIIII wtU bE
mudilmillllr IhiIrI !My __ iI dICiIct. qg.
In iI .kIIv mnf..-ra cd, an llICbtry ubet MtCII.tdly'1 d1t1ll' iIDCUtIn. Guy Pruitt: If IDIt·alttlrc ......... a
bullbdllam •• w.t Imtl'8 """'*I It t. In?
PruItt r.pIt ... "W", It f .... Mtw 1M 19th.-
z
H. _ liI)'I .... In III'f.:l:. tt.t 1M proc.l hill drilll" gn. tt.t
prog ... 1IiI hill t..a In t.by IWpI iIIld itat no .net II In Iitht. And 1M III'fort hill t..a_rl ... for IDllpuly iIDCUtI"
iIIld po.jlUlt.n tryIlI8 to t..d to iI dIIttratton !rio......., U ..... U for 1u1 .. 1 iIIld .-ItilffI IMI)MtIaUr abet to
do monwtth l1li1.
an. Indication gf haw tore It. dIdt .. hal lOIII 011 - iIIld hfJw llow 1M prcaIl gf tryt ... to ....... 11. 1M doWI_rd
tnndI hill t..a- II It. runblr gf llICbtry ...... _vi ... or ..... !-.placid. In 2011. 1M CEO! gf 1M lII!pIt
tumpany. G...tt (Cn.IIIl\DIw). iIIld 1M llICbtry'l ...... t print. tumpany. MedtaNrM (WIlliam DRn
Sln&Ifion). It.ppId aldl for t.dh .... 0l'Il. NlwYort Tim. CEO.IIIwt RfJbtNOil mlr.d uDrprellu ... lilt. In till
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page 2 of 25
YftI'". Tgm Co.riIy, the"'.oo;Iated Pren' praldent..oct CEO, 2012 ht he MOUld .. nrtIri"ll, too •
.fond cbt"ll the CJlO.ne of 2011, the top editor'. job Uned _at The New York Tlma, USA Today, the lOll A .... 1e
Timalllld allOllt of melroll.
The lid-formed cp.IeIItton for the IncUliy .eem. to .. wI..,d .... OrpntRotton I'ftd to 10 d In for dtath.l by
Irwtdl"ll top executIva IIIId edlton wIio .peel". In ..w media. Another quatton I. wI..,d..,r their OrpntRotton
em _tiler UIOIher five yewII or more of tnrwltton If the effort tIka ht lore?
In a PEJ report on dtllt.l revenue ht boked In depth at 10 r.MPIJIer CIlIIIPIIlla, executlvell pr.Ilc:ted tlw.t In flv
YftI1I -.id print onIvon S\.IICIayIi, or ........ t'MI or tine _ a Wftk.
The of 2011 'MIl! chdmIllII at bat:
• Admtl.I"II rwenuetI over .. 'MIl! cbMJ 7.3", deIIptte pi .. In online rwenue of '.n. Ad rwenue ¥IIU at
$23.9 btllon -len tMn lid 10 pnk of $41.7 btllon In 2000. Revenue I. pmIlo;ted to fd.pln In 2012. The
deep recenlon I. putIv to blime, but r.MPIJIer iIdftrtl.I"II hu not tw;k In the lut t'MI )U11 ..
other medialft\lT1ed 1J'OWIh. Clmatton _ iIdded a len tMn $10 btlllon In 2011. Over aU,
therefore, iIIl! _la. tMn a $34 btllOft'a-yur IncUtry, cbMJ from $59.2 btlllon In 2000.
3
Ad Revenue Drops While Circulation Revenue Remains Stable
_ Totol Ad Rov. nu. _ Totol Ci rculotio n Rov. nu.
:;1;0 ,000
50,000
40,000
30,000
20 ,000
10,000
,
19BO 19B2 19B4 19B6 19BB 1990 1992 1994 1996 199B 2000 2002 2004 2006 200B 2010
",",oo, N .... _ ..... _ "....,000.
Ho .. ' N"'"_ .... ..._ . ........... _ ___ .. , ..., . • _ _ =""""" .. """' .... ,,...,. _ _ _
P£W "ESCAACH CENTE" S .... OJECT FOf> EXCEuENCE ,N
2012 STATEOFTHENEWS MEDIA
SEE fULL OATA SE
• MOlt IWM.-pII'Ian profltablil on an bul., many with mUJI .. In the mld·te... fIut net IIII.rat .. -
aft..- Int.nlt, taUlllIIId .plCld ctarpI - an lUIlI'-thtn • .fond mOlt .-pII'I uflteved II.rpir
ttrouah ClIttIII8. 5gm • .-pII'I no In the nd for 2011, •• enttallr dIoOIlrc to retnvat In MW
pI'OiI'&III' ratt. tMn cGp ...runp to the ...
-
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612712014 N ..... papers: Buildirg Digi1al R .......... Prlll<lS PainfullySiowl Slate of the Media
• Audiences continue to hold up much better than revenues, but after a decade of losses, the case the industry
can make to advertisers for premium-priced print ads has weakened. Print drculation (measured under a new
set of auditing rules) continued to decline in 2011, especiaRy on weekdays. Most measures of audience on
various digital platforms showed growth. But the continuing murkiness of digital data - the fact that different
measuring companies' data are so different and doubts about which metrics make sense - continues to be on,
of the factors that complicates selling advertising on digital platforms.
• Stock prices, after a modest rally in 2010, fell by about 25% in 2011. Those who bought newspaper stocks
before the ad coRapse of 2007 to 2009 and are still holding have taken a beating - McClatchy, for instance,
which purchased the Knight Ridder chain in 2006, has faRen from $70 in 2005 to under $3 a share in February
2012.
4
• After several years of stasis, newspapers began changing hands again in late 2011. The trend of private equit
owners gaining control through bankruptcy proceedings continues to grow, though their intentions often remai
mysterious since the typical hedge fund operators say nothing publicly. Prices are low and a variety of new
owners are coming forward. Some hometown buyers - including Warren Buffett in Omaha - have also emerged.
• Newsrooms continued to shrink as companies, and to remain in the black, felt the need for more rounds of cos
reductions. The contemporary newsroom has fewer articles to produce after trims in the physical size of paper
and reduction of the space devoted to news. At the same time, the remaining editors and reporters are also
being stretched further by the need to generate content suitable for smartphones and tablets and establishing
a sodal media presence as well as putting out the print paper daily and feeding breaking news to websites.
Strength on Sunday
While the growth of digital and other new revenue streams fell short of covering print declines, there were a numb«:
of positive trends. One of those, is that Sunday print editions did relatively well in 2011. Circulation stabilized, am
at some papers increased. Also, preprint insert advertising, despite the beginnings of electronic coupon
competition, has held up relatively well. The "super-couponing" craze finds some eager bargain hunters buying fiv.
or six copies of the Sunday paper to maximize their savings.
The industry is responding by increasingly emphasizing Sunday-only or Sunday and some additional days in
marketing new subscriptions in preference to trying to get new seven-day-a-week readers. Also, as noted in last
year's report, Gannett papers and many others now offer "Sunday select" - an insert package free on request in
certain upscale ZIP Codes to households not receiving the full Sunday paper. That extends the reach of the
industry's most popular advertising format and covers for declining household penetration as Sunday drculation hal
waned over two decades.
The Sunday emphasis is a revenue and profit plus, but it also may represent a tipping point of sorts. Sunday
advertising now represents 35% to more than 50% of the total at most papers.
5
As papers target Sunday readers,
more valuable to advertisers than those on weekdays, they may gradually opt to serve weekday readers with a
website report, other digital editions or, in some markets, a smaller-format, free tabloid version.
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AMove Toward Paid Content
Another positive development in 2011 is that after years of talk and no action, the industry began to embrace pay
walls for digital content.
The New York Times did this most prominently, but, according to Newspapers It Technology roughly 150 smaU, mid·
sized and metro dailies also have instituted variations of the so·called metered model that The New York Times
used or offered premium paid sites.
6
TypicaUy, a metered plan allows free views of a limited number of articles, so
a site retains its traffic from search, links and sodal media recommendations.
More frequent readers are asked to pay a monthly rate, for which they get unlimited access. The new pridng model
also allows organizations to sell so·caUed bundled subscriptions to print readers, who gain access to the website anc
often mobile and tablet editions too, either free or for a modest additional charge of a doUar or two a month. This
payment structure encourages people to continue to receive the print edition, which is more profitable, particularly
for the ad·rich Sunday edition, and helps shore up print drculation. It also is moving companies away from the
concept of pay walls, which sound as though they keep people out, and moves more toward the concept of full
access, which invites people in.
At The New York Times, for instance, a Sunday·only subscriber gets access to all other digital editions of The
Times. Looked at another way, the 390,000 who have signed up for the digital edition could get home delivery of
the print version on Sundays as a freebie.
7
Dozens more papers are likely to follow in 2012, though there are still notable holdouts, including The Washington
Post, USA Today and many metros that fear the loss of users seeking breaking news to other free websites and
potential loss of online ad revenue.
The Times' first fuU report on results of the pay wall, instituted March 31, was altogether sunny. Besides the
250,000 digital·only subscribers, 75,000 more were paying for the iPad and e·reader versions by the third quarter 0
2011. The paid total had grown to 390,000 by the end of the year. An advertising sponsor is providing 100,000
more users with a year's free trial subscription.
8
Far from cannibalizing print, The Times' bundled deals actuaUy
supported a modest growth in paid Sunday subscriptions. Digital unique visitors were also up slightly (though page
views were down) and digital advertising was holding steady.
The Times was less than clear, however, about how many of those subscribers were paying full freight rather than c
trial rate. Some bumps in building audience or retaining ad revenues could still lie ahead. Also, the Times high·
quality/high·price/high·demographic strategy mayor may not be a fit for more modestly scaled newspaper
organizations.
But signs are positive for others making the switch. Morris Communications' Augusta Chronicle began a metered·
model pay wall four months before the Times in December 2010. Page views actually went up 5% in the next three
months. The Augusta offer began by allowing up to 100 page views per month free, gradually redudng that threshol
to 15. It charges digital· only subscribers $6.95 per month and print subscribers an additional $2.95 for digital
access.
9
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In some ways Augusta is viewed in the industry as the more relevant example than The New York Times. And by
midyear, chains like Lee and GateHouse Media were installing variants at most of their small and mid'sized papers.
Metro papers have been slower to embrace paid digital plans but are coming along. The Boston Globe and The Dalla:
Morning News, which both dedded on a high'cost, high·quality print strategy several years ago, now charge for
online access to their journalism as well. The Star Tribune of Minneapolis started a pay wall in October. First report
saw traffic and projected ad revenues down slightly but added digital subscription revenue making up the
difference, according to publisher Mike Klingensmith.
The Milwaukee Journal Sentinel launched a bundled subscription strategy in early January 2012. And Gannett has
announced that all 80 of its community papers will have digital pay packages by the end of the year.
In March 2012, The Los Angeles Times put up a metered pay wall, providing 15 stories a month for free. After that,
readers need to buy a subscription. The digital·only subscription, which starts at 99 cents for a month, rises to
$3.99 a week after that month.
Why and why now? The pay systems re·establish the prindple that users should pay for valued content, expensive t(
produce, whatever the platform. It gives flexibility to raise the subscription price in later years or charge more for:
particularly convenient medium like tablets. The change is unlikely to have a big finandal impact, positive or
negative, right away, but it better positions newspaper organizations eventually to wean themselves away from
print.
Licensing Content
A companion development, much less noticed, has been the industry's launch of a licensing organization,
News Right, seeking to collect royalties for the content originators from aggregators. The rights agency, led by
former ABC news president David Westin, opened for business the first week of January 2012, after three years of
development led by the Assodated Press. AP remains the biggest investor and is joined by 28 other news
organizations. 1 0
Westin concedes that success is far from guaranteed. But the partidpation of most major newspaper companies is
important. NewsRight will begin slowly, asking commerdal enterprises that scrape stories and sell online news
digests to business clients to pay licensing fees. Asking royalties from bigger players and for aggregated short
summaries may come later. For a start, only text stories aggregated in the United States will be tagged and
tracked. Plans are to add photos, video and international markets later.
If the venture achieves critical mass, it will also yield detailed real·time metrics on which stories are being most
heavily aggregated. That data will be of use to the partidpating content creators and possibly to public relations an
advertising customers in tracking the trajectory of a given news topic. But the effort faces a number of hurdles.
The arrangement is non·exclusive - all publishers, including the AP, have existing licensing agreements in place wit
businesses and schools. The nonprofit Copyright Clearance Center has been collecting royalties for several decades.
One company, Attributor, and other newer businesses already track pickups by aggregators and ask for payments.
Like pay walls, this innovation has been under discussion for years, peaking in early 2009, when American news
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executives joined Rupert Murdoch in decrying Google and a host of other aggregators for helping themselves to
content. A successful path for News Right would position newspaper organizations to collect fees for their content
both from their regular readers via digital subscriptions and from the huge and expanding aggregation sector.
Tablets, Mobile and Social Media
We noted in last year's report a wave of exdtement in the industry for the potential growth opportunities in
smartphones and tablets. If anything, 2011 bolstered rosy predictions about consumer enthusiasm for these devicel
and their substantial use - among an array of choices - to access news reports.
The Newspaper Assodation of America offered the summary statistic in December that mobile traffic (tablet and
phones) was up 65% in a year as measured by page views, comparing September 2011 to September 2010.
11
A Pew
Research/Economist study on tablets, released in October, found that the 20% of tablet readers surveyed who use
news apps typically go directly to a news organization's app (as opposed to accessing the content through a
browser). More than a quarter of the tablet readers exhibit some willingness to pay for their favorite app news
sources. 12
Another Pew study, in January 2012, confirmed that tablets (such as Kindle Fire and the iPad) had huge sales during
the holiday shopping season, growing in ownership among adults in the u.S. roughly 50% since the summer of 2011,
from 12% to 18%.13 Amazon announced that it was selling a miUion Kindles per week worldwide during the holiday
season. So, earlier forecasts of a super-fast adoption curve remain on track.
But the qualifier here for newspaper organizations is a familiar one - will they be able to monetize the new
platforms? With the exception of e-reader editions, most news to smartphones or tablets remains free or included i
bundled subscription offers to print subscribers.
And mobile advertising - estimated at $1.45 billion in 2011 and expected to almost double in 2012-may again not
connect up strongly with news content, as has proved the case on the web. 14 Another AP initiative, iCircular, offers
the equivalent of preprint inserts in a mobile format. And shopping apps from individual newspaper organizations
attempt to carve out a share of that very popular use of the devices. But do consumers need the middleman of a
newspaper organization to plan their shopping or make price comparisons on intended purchases? They may simply
turn instead to Amazon, the shopping sites of the stores themselves or verticals like Yelp for restaurants.
Probably even more of a challenge, mobile advertising is a growth target for Google in 2012. Analysts estimated in
January that Google will receive $4 billion to $6 billion in mobile ad revenues worldwide this year. 15
In the more modest domain of video advertiSing, pre-rolls and other video ads have been available on newspaper
websites for five years. But the $300 million in local video advertising revenues those organizations booked in 2011
according to analyst Gordon Borrell, is only an eighth of the total. The field is dominated by digital-only enterprises,
prindpally YouTube, and by "pure play" advertorials or targeted electronic classifieds for jobs or cars.
16
Sodal media and e-readers are parallel cases. Newspaper organizations have cranked up their Twitter and Facebool
efforts, finding sodal media both a means to drive traffic to their stories and a reporting resource to find sources
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quickly during breaking news events. E-reader editions bring in some subscription revenues, and the rising
popularity of longer format minibooks may bring publishing opportunity for salable storyteUing. As yet, though,
neither sodal media nor e-readers are a revenue difference-maker. And Facebook is already booking 14% of aU
internet display ads.
17
Alternative Revenue From Freestanding Businesses
Another bright spot for newspapers in 2011 has been the growth of freestanding affiliated businesses, some digital
others not. As we have reported the last several years, the industry has sorted itself out, with many newspapers
shutting down their presses and outsourdng printing and those retaining presses viewing outside print jobs as a
profit center. The DaUas Morning News now gets almost 10% of its revenue from contract printing, according to
publisher Jim Moroney. 18
The Washington Post has developed successful events and newsletter businesses over the last two years. Each is
free to partidpants or readers but draws sponsorships from organizations trying to reach a targeted audience. The
Post also has launched a sodal media agency and a Facebook sodal reader (showing what your friends are reading).
Both events and sodal media advice are gaining momentum at other papers. But the modest added profits are
helpful rather than game-changing.
An earlier PEJ study on newspaper economics found that almost half the newspapers that provided data reported
trying to develop some form of nontraditional revenue. The most common effort involved functioning as online
consultants for local merchants, helping with everything from search engine optimization to building websites. In
most cases, this was produdng relatively modest revenue, but there were some papers and companies who were
seeing significant success.
Gannett has made a long string of digital acquisitions over the last decade, some hits others not. Most recently it
bought Fantasy Sports Ventures in late January, a network that is the nation's fifth-largest sports website and an
addition to USA Today's already strong presence in the lucrative online sports field.
Some older ventures have also fared weU. Gannett, Tribune and McClatchy, for instance, own CareerBuilder, which
now has a larger volume of U.S. employment listings in the reviving recruitment market than Monster. That gives
the companies a valuable stake in a growing company should they ever wish to seU it, plus a share of CareerBuilder
ads on their websites and dividends they can use to reinvest, pay down debt or any other purpose
McClatchy CEO Pruitt told an investors meeting in December that the company expected to receive almost $30
miUion in such payments from its stakes in CareerBuilder and similar national online car and real estate classified
businesses.
19
That income does not appear in the company's report of operating results. Nor does the Newspaper
Assodation of America yet attempt to measure "other" income in its industry statistical profile. So this modest bul
increasing element of recovery for newspapers has remained largely unnoticed.
Unfortunately, digital ventures are subject to their own ups and downs. The New York Times Company's About.com
and similar smaUer services, such as Media General's DealTaker, experienced sharp declines in traffic after Google
revised its search algorithm early in 2011, making it harder for such sites to game the system and end up in the
htIp:l/stateollhemeds.orgI20121r-eNspapers-buildirg-digital-r ......... -prlMlS-painfully-slowi 7124
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page 8 of 25
612712014 N ..... papers: Buildirg Digi1al R .......... Prlll<lS PainfullySiowl Slate of the Media
first page of rankings.
The Rise and Semi·Fall of Discount Programs
One other major development of 2011 was the popularity of discount programs such as Groupon. We wrote in last
year's report about Groupon's meteoric rise, its deal-of-the-day offers giving an assortment of local businesses a
potent tool for attracting new customers. In the process, Groupon sucked away a portion of local merchants' ad
budgets that used to go to newspapers and their websites.
As some analysts had expected, Groupon's growth rate in the U.S. slowed substantiaUy in 2011. With questions
about some of its accounting practices (treating marketing costs as if they could be allocated to future fiscal years)
its initial public offering of stock in November was not the runaway success the company had hoped.
The industry scrambled to create its own deal-of-the-day clones, such as Gannett's DealChicken and McClatchy's
service called dealsaver, and found the basic formula easy to replicate, even for a single paper unaffiliated with a
chain. So a worst-case scenario was averted, but newspaper organizations did not gain back a big share of what
they lost in 2010 to Groupon and the other big national service, Living Sodal, also a young privately owned
company.
Local COlJ1)etitors
While 2011 turned out to be yet another disappointing year financiaUy for newspapers, some of their most
noteworthy direct competitors experienced reverses as weU. Patch, AOL's network of 863 hyperlocal sites, has seen
little sign of advertising success and dim prospects going forward. Expansion into new markets leveled off in 2011
and there were cost trims continuing into 2012, both puUing back on full-time hires and redudng freelance
budgets.
20
But even staUed, Patch has continued to baffle analysts. Between salespeople on the street and enough
advertiser-friendly content like event listings and restaurant reviews, it has been a factor for newspapers in the
suburban communities where AOL has focused its effort.
Also, as we and others have predicted, some of the independent, mostly nonprofit local news websites experienced
setbacks as their initial foundation and benefactor launch-funding ran out. Both Voice of San Diego and the Center
for Public Integrity began 2012 with layoffs. San Frandsco Bay Citizen's angel, finander Warren HeUman, died in
December 2011 and the operation is being merged with the Center for Investigative Reporting. The Chicago News
Cooperative, which like Bay Citizen had contributed regional content to The New York Times, ran out of money and
ceased operations in February 2012.
Once again, though, this sector is not going away and many of the sites look to be sustainable if unlikely to expand
greatly.
But looking just at news competitors like Patch or a vigorous independent news site like MinnPost or the mass of
localized spedal interest sites is far too narrow a frame of reference. Aggregators, including such tablet start-ups
as Zite and Flipboard appear to be booming as news content creators struggle - a central point of a talk on the Statl
of the digital business The New York Times' Martin Nisenholtz presented to the Newspaper Assodation of America',
MediaXChange convention in March 2011.
21
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Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page 9 of 25
J.nd the m .. t fri!lhtentnt o;ompetiton. u eII.CUI.ed In the O¥erYtew_ the triftll'llt of the trill\lYll.'u;h u App'"
IIIId Gql.e. ARM typtcdv rea .... the term. of .ervtce. the CUltomer datl.lIIId tI.ka • '-lthy cut of
.o.t.crtptton _ ... I ... the CIUIhtnt force of.ard! iIICWertt.I .... Gogp,...., .fford iIIl end ...... .,ria of
1Kq.It.lttOlll (min thiI/1100 In the lut ... to Wlldpedt.·. CIlUIt) IIIId ntche pn;odud; LM.n;ha. Gq'"
IIIId AppI.e ...., put mu;h men morwy In iIIld mOft men PRIIIII.I ... ..w IWOI!IlUOI! plultriltta tlw.n the
I,.try 131'1 hopr to m.td>. And thOI!rOI! I. no .1 ... tlw.t tilt. Imbllllnce wi. n. Mo_r. to the OI!XtOI!nt
tlw.t the CJ:II'OI! lul, ... of tha., ..w eIIlltd atil/lbl I. con...., .... dati.. ¥lhtch tIwy...., .. ., to tl.rpt Min!rtI.I .... nil
content prgcb;er 131'1 o;omportOl! with '-mu;h tIwy "'-d>out tlwtr ........
Tlw.t mMa Vilw.t lapperied In 2011 with .om., COR dmrOl!llbr of -u, mol1'
PrInt ... DlgltaI .... rtl*lg
For pint iIICWertt.lnt. the Igua .".,..., f.lr\' eII.trtbuted ..... ttClllill ¥All doMll0.SJ for the ,.,..,r. da .. lfled III
IIIId I'OI!tI.tI (. -.er ClltOl!lCllY thiI/1 the other t'MI o;ombtned) U. IUny uecutlva •• Id tlw.t the fll1t .fln of •
YftF ¥All the decI.fCIII by tel 1111 iIIld .om., other iIdmtI ...... durl ... the fll1t qw.rtOI!r of 2011 to
CiIIlcel.cheduIn fn nnr\' ill '.VOI! Ita., with IV.ttonwidOl! dn;W.tton bu.,.ll
11 y",,,-Decline for o..ilyAdvertising Revenue
ifl -. of DoIN>
_R. toil _ Notio nol _ CI. " if i. d _ Pr intTotol
",
"
........
-
"
-
,
s::
-
">
19B5 19B7 19B9 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
P£W RESCAACH S ""OJECT FOIl EXCWENCE ,N JO<JRNAL :.
2012 STATEOFTHENEWS MEDIA
SEE fULL OATA SE
AII_ ...... 'M1tt.n In pIWlcu r.portI. du.tfted .... ..., tIw 1IadI ...... of print 1011_. Ihrl-*' ... to about 25"
ofVilw.t It ..... In 2000. n. "" l1li1 In 2011 ..... o;ompuattv.lrllli brutll ... tt.n tNt In 10IM....,t; Amo,..
dultfted Cllt.&or! ... r.aultm.nt (tt. Imdlrrt) hIId _. doMll.R. r.tllctl ... Impro¥1 ... dImInd for 10m
prof .. IIOIII - lUll .. and o;ompo.m IpKldlbi. for_pli- In lome pu1:I of tIw aumy. Auto ..... down 10.71.
rHI .. tl.te 19.U and -other" (nowtt. \uplt CllteaorY. IrdIdI ... llp.lnotlc. and .. Id obttlarl_, 101. fUrther
-
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l0 of 25
""",,,,11lc reo:wery o;o.kt .. three. U
'Other' Classified Ads More Stable Than Auto, Real Estale and Recruitment
(;.bs,rNAtNero."" Revenue, -. dD<*lrs
_ Aulo _ R • • I E, I . I . _ R. uuil "", nl _ oth. r
"'
,

,

,

,
,
,
,
,= ;00' ;00'
'00'
2004 200S 2006 2007 200B 2009 2010 2011
P£W "ESEAACH CENTE" S ""OJ£CT FOIl EXCWENCE ' " JO<J"N" ,-,,*,
2012 STATEOFTHENEWS MEDIA
SEE FULL DATA SE
1tetJ.t1 Induclel preprinted l .. er1:I. Vlhtch remilln popr.jiIr with dIiIl .. 6ke TlIrtet iIIld ant Buy even ill they I'MIP 141
vvtety of dtlltill mukettnt chiIrmeII. A Itrorc ltart to the hoIIdiIy Ilqlptnt I_on helped. I.lthouIh
more iIIld more of the bu!tina II b!f computer IiIther IhiIn In ItoRI.
The !UlUdv IRded companlell iI/'e not forecutt ... iI 2012 tImuoInI. twllCilII»' budIetI ... for print lilies to be off 6lI
or 10 for iltaJl'dtna to tt.tr r.por1:I i1t iI o.c.m ... I_ton' CD,r. ...... Z4 A ........ r of fourilNI,aiWr
amoo.ncementJ of -ae freezell. flRltclw iIIld Interrala.t·recU:tlon tiIIk foroes lugests tNt the
IRIIIn to do men with 1111 Vlhtll flndlrc lome money for IWW III'for1:I II Indultry-wlcie.
The btga- IIIUI. ill noted abcwe. II tlat tIw pi .. In dtl1td&dverttII .... 14I .... ln 6.'" In 2011 &fter 10.'" In 201C
filllli Mllhort of It. tn.ktlGt.iRh It. Indultry.-ll. AI U.S. dtl1td ildNrtlll .... b!f ....... 141 m ,..r
In It. thfrd q.arter of 2011. So not onIv An .-...... not powI ... fiIIt WIDt.iIh on6 ... but they &110 &re
filllfna blhfnd 011.- dtgltill t*Yws.15
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page ll of 25
PrintAd""rtising Re""nue FIIlIs, Online Grows
iflllliliM> of DoIM>
""" .. ' NO' .. _ ..... ""'"""",,_.
Ho .. , N"," _ _ """,
P£W "ESCAACH CE"TE" S ""OJ£CT FOIl EXCWE"CE ,"
2012 STATEOFTHENEWS MEDIA
Print lind Online Ad""rtising Re""nue Changes
,
-2.000
-10.000
_ Pr int _Onli ne
P£W "ESEAACH CENTE" S ... OJ£CT FOIl EXCWENCE ' " JO<J""ALISI.O
2012 STATEOFTHENEWS MEDIA
SEE FULL DATA SE
2010 2011
SEE fULL DATA SE
KIln Doctor, an foa..ed on dilltal tnnIform.tlon, noted In. . .oo ........ ryht __ pipers"" rttll
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l2 of 25
612712014 N ..... papers: Buildirg Digi1al R .......... Prlll<lS PainfullySiowl Slate of the Media
presence in search or in ads priced by performance (as opposed to by impressions), thus missing the biggest digital
categories surging for the last decade. They are not yet well positioned in the smaller, but fast·growing, video
advertising sector.
"'n all the areas of growth," Doctor concluded, "news and magazine publishers are weakest. Despite uneven digital
ad results reported by newspaper and magazine companies, it's not that the money isn't there - they just haven't
transitioned their businesses enough to compete for it. ,,26
We hear some promising ideas listening in on industry conferences about building digital ad revenues. Reintrodudn
an element of scarcity can help. For instance, the Arizona Daily Star in Tucson has created "GreenTag Tuesdays," a
display of a set number of discount offers (in print but with scanable·to·mobile QR·codes), a sort of juiced·up
bargain·of·the·day. Asking merchants to reserve early to avoid being left out helps drive sales, according to
publisher John Humenik.
27
On a bigger scale, The New York Times and others sell home page "takeovers" - ad packages, often including vide<:
which are the only message to appear on the first screen. These command huge premiums compared to the
depressed rates for run-of·the-site display.
Some sales strategists recommend pulling back on or eliminating so-called remnant advertising to networks, an
arrangement so prevalent that many advertisers wait for those deep discounts rather than placing schedules at
stated rates.
Debate continues on how to rebuild an ad sales staff to maximize digital results. Consultant Gordon Borrell and Clar
Gilbert, a fonmer Harvard Business School professor now running Deseret Digital Media and the Deseret News in
Utah, believe that hiring a separate corps of digital spedalists leads to much greater ad volume. But many
newspaper organizations are stiU trying to improve sales by retraining staff and juggling incentives, which for yearl
had sales people earning bigger commissions by concentrating their effort on print.
In early 2011, the Newspaper Assodation of America enthusiastically backed a project, Making Measurement Make
Sense, centered in the Interactive Advertising Bureau, to improve digital metrics both for measuring audience and
ad effectiveness. Early in 2012, it remains a work only half completed, but it aims to develop a new set of standard
accepted by both the advertising and publishing communities.
An interim comScore study connected with the project and released in January 2012 confirmed what ad buyers had
long suspected, finding that nearly a third of online display ads are never seen, either because they have failed to
load by the time a user moves on or are on second screens of the home page or a story the user does not reach.
28
Borrell's annual forecast contained a nugget of good news for newspaper organizations. Display growth is now
keeping pace with search growth. Starting in 2006, newspapers lost share of local advertising dramatically to so-
called pure plays, digital-only sites like Google or Monster, many of them with no news content. But in 2011, their
growth rate stayed even and will grow faster than the pure plays in 2012, Borrell predicts.
29
Circulation Nurmers and Revenue
htIp:l/stateollhemeds.orgI20121reNspapers-buildirg-digital-r ......... -prlMlS-painfully-slowi 12124
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6/2712014 N ..... papers: Buildirg Digi1al R ........ Prlll<lS PainfullySiowl Slate of the Media
This has been the year in which the audit rules are changing and drculation totals cannot validly be compared to
those of previous years. The first apples·to·apples comparison will come from the Audit Bureau of Circulations six·
month period ending March 31 and released roughly May 1.
Even without strict comparability, though, the trend is clear. Daily print drculation continued to decline in 2011,
though at a rate perhaps only half as bad as the worst of the last decade - under 5% rather than the peak of nearly
10%. Sunday drculation industry-wide is probably down slightly, though many individual papers have shown growth.
As noted in earlier reports some of the drculation losses over time can be traced to price increases and voluntarily
discontinuing service to remote areas.
While ABC is not making year-to-year comparisons, a number of the public companies keep their own figures,
typically reporting a loss in the low and mid-single digits at year's end. ABC's total drculation (print and digital)
among roughly 650 audited organizations for the six-month period ending September 30, 2011 was 33.4 miUion dail
and 38.6 miUion Sunday. That contrasts with 34.0 miUion daily and 38.2 million Sunday in 2010.
30
Those changes ar
relatively small and may reflect slightly more lenient rules.
Nor did the new rules lead to wide swings in the totals for individual papers or the ranking of the top papers in
drculation (see data section for details).
Adding an estimate for unaudited papers, most of them smaller, and drawing on apples-to-apples reports by some
companies, we calculate drculation losses for the year of 4% daily and 1% Sunday and total industry drculation at
41.7 million daily and 43.7 million Sunday for 2011.
31
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Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l4 of 25
Total Cifwlobon
Excluding Total _nded Rank in Rank in
_nded Edrtion" Edrtion" Total Cifwlotion
"" ""
W.II SlrootJoL>rnol
1,7S.,242
, ,
, NewYorl< Ti m.,
1,150, [,39
, ,
'.=
605,677

0
L9 ...... g.Ie,Time' 51;':.M
,

s..n Jo, . Moroor; New, '
==
527,563 0
,
NewYorl< f'<l,t 51 .. 061 51 .. 061
, ,
W._ W._
, ,
. Chic.o.goTnrune
, ,
Doll., MorrO-og New, ' 154,029 400,01.42
" "
New' ,!!y(NY)
" " ChiCllgo 500_ 11me,'
==
" "
Ho" ,tonCf'o"orOd.' _,710
" "
D .. ,w Of f'<l ' t' :l5J,115
" "
" "
Minn .. poh SIorTnOOne
" " Ari_Ropubtc H
"
Orang.eoorty 97,867
"
CI"".lond P10in D •• I.r
"
H
S • • ttl . Tim. , 242,814 242,S14
" "
O<ogo .... n .-4.l.1i4 ;':-4.l.15'
" " 51. Potor, burg Tim. , 240,024 240,024
" "
Dotroit Fr •• Pr." ZJ.4. 57\1 ZJ.4.57\1
" "
s..n Franci><:oChroride 220,515 220,515
" "
:>on 0; OIl ° U ri on-T n bo.ne 21 9,>47 21 9,>47
" "
,"0' ''' '''''' ...... oIC ___ •• ,.,..,-. ..... 10...-. ....... _.., ... M-F """'_ "' .. __ 01' .... _
Hot" ABC __ ,,,_ 01 "''''''' '' 2011 , . 0 ... 1011 ...., .... ... "",,,,,,,,,,,,_ .. 20. 0 ... """ ...... "' __ ....
....... __ " .. ...., ................ ..-ABC '".., ......... _, ... '"_ ... __ 01 ... ABC '".., .... """""""' .. ABC
...... " .... ,..;" ._"'-_ .. _ ...... -
P£W RESCAACH CENTER S ""OJECT FCfl EXCWE"CE IN JOOR"ALI'"
2012 STATEOFTHENEWS MEDIA
another measle, the mOlt recent Pew Rnan:h Center newI ClDlIIIptlon IUrvey In 2010 reported tt.t 371 of
act&t Amertcar. laid tt.t they read lome form of the newI ...... -yresteroay •• Tlltl ..... dcMn from 3'" In 2001 and
<43, In 2006. JZ
n. mnttrutll8 dlcltllB -'wn....tat CUI ct.rp for advwttll .... rall1 ... pile., .-.. pel1 he"
Mpt dra.*tton 1'WHIUI ..... _ u the run'" mntt .... to taL Stattltta from the NeMpeper
Alllodatton of Am.tca lhow dra.*tton IWWUI In 19fT and lOOt (the IIIDIt _ured) ld1nt1calat
$10.1 btllon. It f .... liom.lill101. Paid dra.*tton. bymntrut. dIcIt..t 22.51 In the 1_12,..11
from 60.5 millon to 46.9 milion. JJ
n. r.w JJJI:. nMI aIcM IIDa1pt10111 to auI1: u peld If the ... pa)'I u u a pII"Il)' a day. fIut It 11 undMr
....t.IhIr r.MpepII' OIpIIlzatlOlll an maid ... _vt .... of dlrlpw dlllDUlted b1alllDcr1pt1on. If 10, tNt would
br1118 dcMn clra.*tlon IWWUI for the lilt booo ,..... not )'It m .. 1nd Incbtry-wlde.
H_, u _ han Indlcat.d In ..tI. tlditlOlll of thtl r.port, manymtllJo ....... voUltaIlWliled peld dnllll.tlo
In rwnDt..,.... n.y he .... dlo ... uIIIZIId cUI ... the mntIrIII ... dicit .. by IpendI ... 1111 on 1.111 ... r.w -Itartl, •
" ...... ...... _ I I • -.kI'1I-<lgIIrrI .. __ pm • ...,...
-
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l5 of 25
612712014 N ..... papers: Buildirg Digi1al R .......... Prlll<lS PainfullySiowl Slate of the Media
or attempts to build drculation. Better to deliver advertisers to a smaller number of mostly loyal readers, the
thinking goes, than an inflated number with a lot of chum.
The reports of publicly traded companies suggest small year·to·year drculation revenue losses in 2011 but no big
swing to cut-rate distribution.
The coming of pay walls and bundled subscriptions complicates measuring total paid drculation. An important
feature, some would say loophole, of the new Audit Bureau of Circulations rules is that subscriptions (or single copy
buys) by the same person on an additional platform counts as added drculation. It is the same prindple as if you ar
a home subscriber but buy another copy at a newsstand or on an e-reader.
For bundled subscriptions a household that spends a couple of dollars more a month for online access is counted as
two subscriptions. In a free access monthly package, each additional platform can count as additional paid copy but
only if the reader uses it a minimum number of times in a month.
Digital Audience
Dedsions on ad placements critically depend on valid metrics of audience. And while the Audit Bureau of Circulation
totals are in transition, measurements of total digital audience, most of it online and mobile visitors who come for
free, have always been weak and remain so. The two most frequent metrics - unique monthly visitors and page
views - do indicate some sense of traffic growth and the relative strength of different sites. Varying methodologies
yield very different results. Also, the large share of visitors who come only once or twice a month via search or a
link and then leave quickly has earned the dismissive nickname of "drive-by traffic." It is of minimal use to
advertisers. In addition, page view totals can be manipulated by site design or by "refreshing" frequently.
The industry still has not developed convindng measures of the much smaller number of regular readers and how
their buying behavior is influenced by the online ads they see. A PEJ analysis using Nielsen data from fall 2010,
found that, on average, only 7% of users of the top news sites are "power users," meaning they visit a given site
more than ten times per month. ,,34 Some argue that the move toward requiring digital subscriptions of those
heavier users will identify many in that group and support higher ad rates for placements targeting just the paid
portion of monthly traffic.
Impredsely measured or not, however, digital audiences are growing, newspaper websites are typically the best
trafficked in a dty and total audience reach is staying steady. David Boardman, executive editor of The Seattle
Times, for example, noted that both unique monthly visitors and page views at his site had tripled since 2006.
35
By the available measures, the industry's 2011 digital audience performance was mixed. For December 2011, the
most recent month measured by the Newspaper Assodation of America, unique visitors were up by about 7.4% year
to-year, but time per visit was down 5.4% and page views were down about 2%. Perhaps the page view decrease is
related to the beginning of pay waUs. 36
Profits and Stock Price
When it came to profits, newspapers did slightly worse in 2011 than they had the previous year. Operating margim
are often quite healthy, in the mid-teens. But for a great many individual papers and chains, interest payments,
htIp:l/stateollhemeds.orgI2012JroeNspapers-buildirg-digital-r ......... -prlMlS-painfully-slowi 15124
Case 2:l4-cv-00445-CW Document 22-2 Filed 06/30/l4 Page l6 of 25
P'""ton obIptton., tuft U>d ,peo;td chuta bot .. the net eunt ... dr:I¥In to iI td<cn -...t. G....tt, ofWn iI
Inder tn profttilbtlty, ._ded iIII ••• 1 muttn for the yar, The New York Ttma Co. iI biI, of 11 ilrod McCLiltdlyil
-4.31 muttn.37 The tnrilltry.wtcte ilVerqe, .. to ,evenI.,q.bI .,.,., poLltd U>d RPCIrted CIlIIIPiI/lY raub,
remilt .. ill 51 net.
Ihder cwrent tl COIJd be utued hi '1l'iItntre to tum iI prWtl t, lICIt the bal ,mteo'.
The Wuhtllllton I'0Il1', po,tlII,htllll dtvt,ton U>d A.H. BetI', tine piIpeI1I both opel'ilted ill iI either iI bI, or bruk
wen for the yew. NeIther CCIIT1PiIIIY hu ,lbtilnttd debt. bther, they lad the option of t_ttre tn deYeklptllll !lei
rwer\UIIII n.ther IhiIn chlpptllll more to the bottom I .. , u McCIJ.tdly U>d oihel1 hilve done for .. now tt
milllillle thetr debt tuden.
Amtd ill then didmla, WdStreet mrlilil. "*-m on the tncMtry. SIw.n prtcell I'iIUled lome tn the CIlUl1e of
2010 vntlr rerniitntllll fill" bftIw the vM.Ia of the mtd 20001 before the ildvertl,tre colllJwe of 2fJlll to 2009. For
2011, thoutIh. mOlI'liel'e dr:I¥In tn the n.rJIe of 101 to 151.:11
Stock Prices Fall Across the Board
P1UpefSMre
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P£W RESCAACH S ""OJECT FCfl EXCWE"CE ,"
2012 STATEOFTHENEWS MEDIA
SEE fULL DATA SE
1M1WM". man .. tn iICXloIlitttOlll. Aft..,..... of HnOlI lID IrvncttOlll, UOIpI thnq:h bl.lilruptcy
OI1antZlltton., iI ttaw milt.rtdZlld, .. 1*=Idr' ..... tIw .nd of 1M me ... r and broker OIrtar,
van Elil.rl It. MIDiIy coo.m.d 71 tndlvtct.al ctarc1relw.ndrr tn 2011 com .. r.d to j .. 1 13 tn 2010.
39
• Many Imill and mtrloltZlld law _I dtlltd or TV competltton and ... tn domtlWlll wtth IMrleI1 ilrod
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local advertisers. Optimists - and buyers are usually optimists - may view them as stable and profitable. Small
chains and some retired publishing executives are among the buyers.
• Some wealthy local buyers emerged. Those included Warren Buffett buying his hometown Omaha World Herald
for $200 million and San Diego hotel mogul Doug Manchester buying The Union-Tribune for $110 million from
Platinum Equity, which had acquired the paper just two years earlier from the Copley family for less than $50
million.
40
• The prices are modest compared to those prevailing in the middle of the last decade. A number of the
properties - The Union· Tribune is a good example - come with valuable real estate.
• Probably the biggest transaction was the sale of The New York Times' 19-paper regional group for $143 million
to Halifax Media Holdings, a company formed two years ago to buy The Daytona Beach News-Journal.
41
The
Times had assembled the papers and run them at high profit margins in the 1970s and 1980s to balance out
business ups and downs at its flagship paper. Lately, the regional group was shedding revenue faster than The
New York Times itself, moreover, so the company chose to exit and invest the proceeds in digital
development.
• Political agendas may emerge as a factor. Both Halifax and San Diego's Manchester have indicated they want
their papers to have a pro-business, pro-development tone editorially.
Private equity firms remain an important ownership force as they buyout bank creditors at reduced prices and brin!
organizations out of bankruptcy. Since executives of these firms tend to say little or nothing publicly, it is hard to
discern a general strategy. They do tend to take an aggressive approach to digital transition.
The most high· profile case has been CEO John Paton, backed by Alden Global Capital, pursuing a "digital first"
strategy at the Journal Register papers. The company spun off a separate management arm, Digital First. It has
been given control of MediaNews, the much-larger company built by William Dean Singleton, which Alden acquired iI
2011 when the company was in bankruptcy reorganization.
By digital first, Paton means encouraging the news staff, with heavy community involvement, to focus on breaking
news and developing other content for various digital platforms. Produdng the print newspaper becomes the last
step in the cycle. Similarly, advertising sales staffs are directed to emphasize increasing digital ad sales with the
best compensation going to those who meet ambitious growth targets.
The biggest of the private equity takeovers is yet to come when the Tribune Company bankruptcy proceedings, no\\
in their fourth year, conclude. After many delays, it remains uncertain whether a final plan will be chosen by the enl
of 2012. Alden has been a member of the incoming investor group, but not its leader.
Tribune, with TV holdings as well as major newspapers, including The Chicago Tribune and The Los Angeles Times,
has been run by a management committee headed by former Los Angeles Times publisher Eddy Hartenstein.
According to bankruptcy filings, the company is running profitably, and it seems to be pursuing a typical agenda of
cost cutting and digital initiatives rather than delaying action until the new owners take over.
42
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Unexpectedly, Alden and Angelo Gordon, a second private equity company, indicated at the end of January that
wanted out of their lead investment in the Philadelphia Media Network, which owns The Inquirer and the Daily News
A local group led by Edward Rendell, a former mayor of Philadelphia and a former governor of Pennsylvania, emerge
as a likely buyer.
Media General announced in late February that it plans to sell some of its newspapers.
More Rounds of Cost Cutting
Private equity takeovers typically involve rounds of layoffs and other cost cutting, but more traditional companies
also continue to rely on slashing expenses to break even or turn a profit as print ad revenue declines continue.
More and more companies have gotten rid of their printing presses and outsource production of the print edition.
Some of these arrangements lead to earlier deadlines and later delivery, but they save substantially on labor costs.
As staffs shrink, newspaper organizations also find themselves with more office space than they need and
sometimes rather grand downtown buildings for their current scale of operations. So a wave of building sales and
moves to smaller rented quarters continues. The Philadelphia Media Network has sold its white tower that houses
The Inquirer and The Daily News, and are scheduled to move the papers into a former department store in July. ThE
Miami Herald sold its showcase building on Biscayne Bay (once Knight Ridder corporate headquarters) to an Asian
casino developer. The Herald will be moving to space near the Miami airport.
On the cost front, newspapers caught a break in 2011 as newsprint prices leveled in midyear and the volume of
paper used continued to fall. Managements continue to press for concessions on work rules and benefits at
unionized papers. And such cost·saving tactics as furloughs and salary freezes or reductions continue to be commor
though perhaps not as prevalent as in 2009 and 2010.
Newsroom Staffing
This section updated April 11, 2012.
Then there are cuts targeting newsroom costs particularly. Most common, continuing a trend started in 2010 and
2011, is for chains to consolidate copy editing and page layout at a few central fadlities (the Assodated Press has
made a similar change in its regional and state reports). This year will see more of the same, with the result that
comparatively few chain-owned papers will tailor a national and international report to their communities or layout
most of the pages readers see.
In 2011 and early 2012, there were fresh rounds of cuts at a number of papers, including small buyout programs at
The Washington Post and The New York Times. Estimating total newsroom employment is tricky, however, because
there may be hiring of technologists and other digital spedalists at an organization where editors and reporters are
being let go.
The American Sodety of News Editors employment census, released in April 2012, counted a loss of 1,000 full·time
newsroom jobs in 2011, a decline of 2.4% .. 43
Higher revenue hopes for 2011 never materialized and during budget planning in the fall, 2012 looked like another
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year of net revenue losses. Some organizations put in another round of cuts. The Tampa Tribune, for example,
eliminated 29 newsroom jobs midyear and 165 more throughout the newspaper and its website in December.
44
And the layoffs have continued in the first quarter of 2012.
The losses leave 40,600 news professionals at newspapers, according to ASNE, down about 28% from its peak at thE
turn of the century.45
An exception to overall shrinking staffing levels is the finandal, political and wire service sector. Reuters and
Bloomberg have been expanding, not only adding positions but also hiring away stars from other organizations.
National Journal, Politico, the Huffington Post and The Atlantic are other multi platform organizations that are
healthy and growing.
Add in those working at smaller online startups (ASNE counted about 500 such jobs in the most recent census), and
it appears that several thousand of jobs lost in newspaper organizations have migrated to other journalism
enterprises rather than disappearing entirely.
Making new observations on where the staff cuts have damaged newspapers during the last year is difficult. But thE
longer· term trends we have noted before include much less coverage of government in suburbs or remote dties,
pulling back on state government coverage, the dedmation of specialty beats like sdence and religion, fewer
feature stories and elimination of many weekday feature sections, a smaller business report, typically not a
freestanding section anymore.
A report prepared for the Federal Communication Commission and released in June 2011 documented these
reporting losses and concluded, "In very real ways, the dramatic newspaper·industry cutbacks appear to have cause
genuine harm to American dtizens and local communities. ,,46
In our report last year, we quoted media economist Robert Picard's finding that wage levels, beyond the top tier of
organizations, are falling and will continue to fall and that a gradual "de·skilling" of journalism is in progress. That
is still a concern. And fast·growing "content farms" such as Demand Media, which produce cheap, generic freelancE
content, had reverses of their own in 2011. Changes in Google's search·ranking algorithm gave this work less
prominent play, so it seems less likely than before to supplant the work of professionals.
The bottom line for newsrooms is twofold. Many now produce skimpy papers several days a week. Analysts and
some in management have begun to talk openly, as we have for years, about whether the cutting has gone as far ai
it can and still allow organizations to produce substantial report every day in print and on digital platform.
Booth Newspapers, a Michigan chain owned by Advance, eliminated at least some daily home·delivered editions at
The Grand Rapids Press and its other papers in mid·2011. 47 Since the two Detroit papers cut back to three days a
week of home delivery several years ago, this means that only a minority of readers in Michigan can now get a
hometown daily delivered seven times a week. Relatively few other papers have made similar cutbacks - at least
not yet.
But more and more insiders believe this is the future, if not in 2012, then sometime this decade. Redudng the cost
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of printing and delivering the newspaper on the days when the print paper contains less advertising could be a way
to capture some of the savings of digital while maintaining the high revenue of print - a version of having it both
ways. Dissenters say that newspaper organizations should think twice before cutting off loyal seven-day print
subscribers, in effect encouraging them to get their news elsewhere some weekdays.
The second reality for editors and reporters is that their efforts may be spread over as many as five or six
platforms. Facebook and Twitter clearly promote content distribution and enhance reporting on fast-breaking
stories. The multitasking, multi platform journalist may thus feel energized and empowered. Older newsroom hands
may instead feel pulled in many directions in a confusing way and end up frustrated, especially since the payoff in
business improvement or stability has been so long in coming.
AU of this relates to the central issue of finandal transition - getting digital gains much closer to making up for
print revenue losses (a metric first proposed by French analyst Fn!deric Filloux).48 In early 2005, Rick Edmonds of
the Poynter Institute, the co-author of this chapter on newspapers, ran some projections that suggested that digita
ad revenues would not equal those from print until roughly 2017.
49
Assumptions have changed, and the advertising
crash of 2007-09 intervened.
But if digital revenues (even including revenues from digital subscriptions and side ventures) were to double their
growth rate to 20% a year and print falls 10% yearly, the lines would still be $1 billion from crossing in 2017. Getting
through those six years will take more than just patience, however. And the industry would be smaller still than it i
today, and much smaller than in 2005. Optimists might argue that individual papers and the industry could run
profitably with smaller revenues as many do now. But shrinking revenues nonetheless mean fewer journalists
covering the news.
There remains the chance that the exodus of print readers and advertisers will accelerate to some sort of tipping
point before newspaper organizations get their act together with digital subscription and ad revenues in enough
volume to make for a viable business.
John Paton's Digital First adventure, just beginning to take root at the larger Media News chain, remains admired
and closely watched. He has backed his rhetoric with action, for instance hiring former Washington Post online
editor Jim Brady as the group's editorial director.
But as a private company, Journal Register "releases only selective snippets of data indicating progress" as
newspaper analyst Ken Doctor has noted, too little finandal information to confirm a path to business
success. 50 And both Journal Register and Clark Gilbert's Deseret News cranked up rapid digital change with failing
newspaper franchises, easy to set on the back of the stove. That makes less sense for organizations with stronger
print franchises.
Other publishers and company executives favor a more balanced approach, thinking that the longevity of a strong
print product can be extended for many years with the right news effort and management. That does not equate tc
a vote for more of the same. Attachment to daily news routines or old sales and circulation department cultures
stands squarely in the way of progress on the digital side. And some organizations seem all but paralyzed by the
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scope of the changes required.
If some editors and publishers with five years or more in the transformation trenches are burning out, and they do
seem to be, that begs the question of what wiU be the next generation's skill set and relevant experience? Along
the way, newspapers, whatever balance they strike, are getting more serious about identifying and building the
elements of an innovation business culture, not just invoking innovation as a mantra. At the same time, they have
lost a lot of time. Returning to the basebaU game metaphor we dted at the start of this essay: if this is the 19th
inning, as McClatchy's Gary Pruitt suggested, 2012 could prove to be more of the same - but extra inning games
have a way of ending quickly.
Continue reading Newspapers: By the Numbers
Endnotes
1. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Nunilers.aspx) •
2. Adams, Russell. "Newspapers Edit Down Outlook
(http://onUne.wsj .coml article/SB1 0001424053111903461304576522212803157664. htrri) • " Wall Street Journal. Aug. 22, 2011.
3. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Nunilers.aspx) •
4. Yahoo Finance (http://finance.yahoo.coml) •
5. Shadunsky, Alex. "Newspaper Stocks Deserve Another Look As Fundamentals Improve
." Seeking Alpha.
Dec. 28, 2011.
6. News and Tech. "Papers With Digital Subscriber Plans/PaywaUs (http://www.newsandtech.comlstats/articIeJ2aclefa·
2466·11 el·9c29·0019bb2963f4.htrri) ." Jan. 11, 2012.
7. Healy, Beth. "N.Y. Times Co. Reports Profit Drop (http://articles.boston.com/2012·02·03/business/31015878_I_digital·
advertising·revenue·digital·subscribers) ." Boston Globe. Feb. 3, 2012.
8. Peters, Jeremy W. "Times Co. Reports a Profit, Aided by Digital Subscribers
(http://www.nytlmes.coml2011/1 0/21/buslness/medla/the·new·york·tlmes·company·reports·a·proflt.htrri) ." The New York
Times. Oct. 20, 2011.
9. Moozakis, Chuck. News and Tech. Email to co-author Edmonds. Feb. 24, 2012.
10. Kramer, Stad D. "NewsRight Launches with 29 Publishers (http://paidcontent.org/articIe/419·newsright·launches·with·29·
pubtishers·not·a·Utigation·shopl) ." Paid Content. Jan. 5, 2012.
11. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Nunilers.aspx) •
12. Project for ExceUence in Journalism. "How People Use Tablets and What it Means for the Future of News
(http://www.journatism.org/analysisJeportltablet) ." Oct. 25, 2011.
htIp:l/stateofthemeds.orgI20121r'eNspapers-buildirg-digital-" ........ -prows-painfully-slowi 21124
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13. PEJ Mobile Survey. Jan. 2012.
14. E·Marketer. "New Forecast: U.S. Mobile Ad Spending Soars Past Expectations
(http://www.emarketer.com/PressRelease.aspx?R=1008798) ." Jan. 12, 2012.
15. Schonfeld, Erich. "Cowen: Google Mobile Ad Revenues Could Surge to $5.8 Bimon in 2012
(http://techcrunch.com/2012/01/21/cowen·googies·mobile·ad·revenues·could·surge·to·5·8·bilHon·in·20121) ." TechCrunch. Jan.
21, 2012.
16. BorreU, ordon. "Budgeting for 2012." Borrell Associates. Nov. 2011.
17. Frankel, David. "Report: Facebook, Google Overtakes Yahoo in Display Market Share
(http://paidcontent.org/ articIe/419·report·facebook·google·overtake·yahoo·in·display·ad·market 'share!) ." Paid Content. Feb.
22, 2012.
18. Moozakis, Chuck. "One on One - Jim Moroney, A.H. Belo Corp (http://www.newsandtech.com/news/article_09154504·a386
lleO·afSe·OOlcc4c03286.htrri) ." News a: Tech. June 30,2011.
19. Edmonds, Rick. "5 Hopeful Takeaways from Annual UBS Media Investment Conference (http://www.poynter.org/latest·
news/buslness·news/the·blz·biog/155695/5·hopeful·takeaways·from-new·york·lnvestment·conference/) ." Poynter. Dec. 12,
2011.
20. Mangalindan, J.P. "AOL May Never Be Able to Patch up Patch (http://tech.fortune.cnn.coml2012/02l15/aol·patch!) ."
Fortune. Feb. 15,2012.
21. Cropper, Carol Marie. "Nisenholtz: Papers' Content Not To Be Stolen
(http://www.netnewscheck.comlarticIe/2011/03/28/1 0149/nisenhokz·papers·content·not·to·be·stolen) ." NetNewsCheck. Mard
28,2011.
22. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Numbers.aspx) •
23. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Numbers.aspx) •
24. Various company reports. UBS Media Investment Conference. Dec. 8-10, 2012.
25. MarkingCharts.com. "US Online Ad Spend to Grow 23.3% in 2012 (http://www.marketingcharts.comldirect/internet·
advertising·revenues·continue·growth·20257!) ." Dec. 5, 2012.
26. Doctor, Ken. "The Newsonomics of 2012's Magic Formula (http://www.niemanlab.org/2011/12/the·newsonomics·of.the·
maglc·formula·for·20121) ." Nieman Journalism Lab. Dec. 19, 2011.
27. Humenik, John. Presentation at Key Executives Conference. St. Petersburg, Fla. Feb. 22, 2011.
28. comScore press release. "comScore Introduces Validated Campaign Essentials
(http://www.comscore.comlPress_Events/Press_Releases/201211/comScore_1 ntroduces_ VaUdated_Campaign_Essentials) ." Jan. 1!
2012.
htIp:l/stateofthemeds.orgI2012froeNspapers-buildirg-digital-" ........ -praws-painfully-slowi 22124
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29. BorreU, Gordon. "Budgeting for 2012." Borrell Associates. Nov. 2011.
30. Audit Bureau of Circulations. Email to co·author Edmonds. Jan. 9, 2012.
31. Rick Edmonds' estimate based on various company earnings reports, Jan. and Feb. 2012.
32. Pew Research Center for the People a the Press. "Americans Spend More Time FoUowing the News
(http://www.people·press.org/2010/09/121americans·spending·more·time·folbwing·the·news/) ." Sept. 12, 2010.
33. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Nun"bers.aspx) • 2010 and 2011
numbers are Rick Edmonds' estimates.
34. Olmstead, Kenny; Mitchell, Amy and Rosenstiel, Tom. "Navigating News Online
(http://www.journatism.org/analysisJeport/navigatinLnews_ontine) ." PEJ. May 9, 2011.
35. Boardman, David. Email to co· author Edmonds. Feb. 23, 2012.
36. Newspaper Association of America. Trends and Numbers (http://www.naa.org/Trends·and·Nun"bers.aspx) .
37. Fourth quarter and fuU year earnings releases. Jan. and Feb. 2012.
38. Yahoo Finance (http://finance.yahoo.coml) .
39. Dirks, Van Essen a Murray. "4th Quarter 2011 (http://www.dirksvanessen.comlarticles/view/170/4th·quarter·20111) ." Dec
31, 2012.
40. Hamilton, Walter; Hsu, Tiffany and Perry Tony. "Developer Buys San Diego Paper
(http://articles.latimes.coml2011/nov/18/business/la·fi·union·tribune·20111118) ." Los Angeles Times. Nov. 18, 2011.
41. Dirks, Van Essen a Murray. "4th Quarter 2011 (http://www.dirksvanessen.comlarticleslview/170/4th·quarter·2OIl/) ." Dec
31, 2012.
42. Sass, Erik. "Tribune Bankruptcy Battle Continues (http://www.mediapost.com/pubtications/articIe/165765/tribunes·
bankruptcy·battles·continue.htrrl) ." Media Daily News. Jan. 13. 2012.
43. Edmonds, Rick. "ASNE Newsroom Census Reflects Decline in Traditional Jobs, Growth Online
(http://www.poynter .org/latest·news/business·news/the·biz·blog/130184/why·no·change·in·asne·newsroorn-census·is·good·news·fol
the·industry/) ." Poynter. May 5, 2011.
44. MuUins, Richard. "165 Layoffs Underway at Tampa Tribune, Sister Papers
(http://www2.tbo.comlnews/business/2011/ dec/l21165·layoffs·under·way·at·tampa·tribune·sister·pape·ar·3338461) • " Tampa
Tribune. Dec. 13, 2011.
45. American Society of News Editors. "Total and Minority Newsroom Employment Declines in 2011 but Loss Continues
to S tabi lize (http://asne.org/ Article_ Viewl Articlel d/2499/Total·and·minority·newsroorn-employment·dectines·in·2011·but·ioss·
continues·to·stabiUze.aspx) ." ASNE.org. April 4, 2012.
htIp:l/stateoftherneda.orgI2012froeNspapers·buildirg·digital·" ........ ·praws-painfully-slowi 23124
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46. Waldman, Steven. "The Information Needs of Communities (http://transition.fcc.gov/osp/inc·
reportlThe_1 nforrnatio"-Needs_oCConmmities.pdf) ." Federal Communications Commission. June 9, 2011.
47. Hoagland, Julie. "New Company, MLive Media Group, Formed to Carry Booth Newspapers, MLive.com to the Next
Era of News (http://www.rrlive.comlnews/index.ssfl2011/11/new_corrpany_rrlive_medilUlroup.htni) ." The Grand Rapids
Press. Nov. 2, 2011.
48. Filloux, Frederic. "The Publisher's Dilemma (http://www.mondaynote.coml2011/02l27/the·pubUshers·dilerrmal) ." Monday
Note. Feb. 27, 2011.
49. Edmonds, Rick. "An Online Rescue for Newspapers (http://www.poynter.org/uncategorized/30767/an·onUne·rescue·for·
newpapersl) ?" Poynter. Jan. 27, 2005.
50. Doctor, Ken. "The Newsonomics of Anton Chekhov (http://www.niernanlab.org/2011/11/the·newsononics·of·anton·chekhov,
." Nieman Journalism Lab. Nov. 10, 2011.
htIp:l/stataofthemeda.orgI2012froeNspapers·buildirg·digital·" ........ ·prows-painfully-slowi 24124
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Exhibit C

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6f27flO14 FabUOlB 15: The Top Olglllll Mecla InnU111"1C81'8 - ECOI'UIi Magazine
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Fabulous 15: The Top Digital Media
Influencers
M"rji McClure
May 21, 2012
M"y 2012 Issue
Like 811_ 0
companies."
D 11 _ 8_
The digital medl" Industry continues to evolve, In part because of the people
who have devoted their time iIInd expertise to adVollncinll the technology and
the content that It powers. When we IIsked Industry experts who they felt
were the 15 most influential people In digital media, we expected to receive
" range of responses. And th"t', wh"t we got.
These Influencers have created opportunity for themselves and others
within the digitilll medill industry. BIIrry Gr1!IIubllrt, lIuthor of the Content
Matters blog, SillYS thllt when he made his nominations, he "tried to Identli')'
people who are Influendng behaYlor and changing the roles of digital media
The top 15 digital media Influencers we feature here represent all aspects of the space, from the
technology that enables the medlll to the content providers who use the technology as a
plilltl'onn. We iIIlso recognize the educators, the reseilll'dlers, and the Innovators who continue to
advance digital media through their knowledge and know-how.
Steve lobs, Co-Founder and CEO, Apple
SOdety's use of digital content was undoubtedly boosted by the Invention of deVices such as the
IPhone and the IPad, both of which enable users to "ccess content wherever ind whenever they
need it. While lobs died in 2011, his impact on the digitl!ll medil!l Spl!lce will have 10ng-ll!Isting
e1'l'ects. When people think of digital content, especially mobile digital content, they likely think of
Jobs. "The IPhone remains the seminal product that denned how we view mobile content today:
says lohn Blossom, president iIInd senior "nilllyst at Shore CommunlCilitlons, Inc. "Job, made
premium content IIttr1!llctive to consumers in the digitilll wortd on a widespreilld basis when others
were stili In the plennlng stages for better premium 01'l'er1ngs. Media models may move on from
online storefronts eventually, but for now Jobs' vision has enabled digital medii to thrive In ways
unilTlllginilible II few yellr5 ago."
Jeff Bezos, Founder and CEO, Amazon
Ebooks have been II part of the digital media space for years. But It took a long time for them to
truly become part of the culturallilndscape. Blossom credits Bezos and the Kindle for making
ebooks Pillrt of rTIiIinstreilim mediill iIInd iIIdVollnang digitilll medii! to previously unknown levels.
"Ebooks were nothing new when tha AmoIzon Kindle dlgltilll reader Ciln.. "long, but with more
than a decade of online marketing genius already in place behind its selling of print books and
other digital media, Bezos laid the cornerstone of the online digital revolution for book
publishers," says Blossom. "The Kindle made It easy to discover, evaluate and purchase ebooks
from ill wide villriety of publishers, including self-publishing IIUthOrs who muld upload their own
content Into Amazon's online storefront."
Blossom credits Bezos with Increasing sales ot ebooks to Kindle. The Kindle quickly evolved Into
more than a simple ebook reader. The Kindle Rre, which launched In lete 2011, was Inmedletely
Identified liS II competitor to Apple's IPlid. "Bezos'lnnovilitIva approillches hllw enllbled Amllzon to
keep Its digital musde lind to have leverage over pr1nt publishers as no other online outlet can
comlTlllnd," says Blossom. Amazon has become a multimedia content dlstr1butor, using Its Kindle
devices to stream content from rTICIjor networ1t and Cilble television mmpanles.
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Case 2:l4-cv-00445-CW Document 22-3 Filed 06/30/l4 Page 2 of 6
6'27/3)14 F.tUOUI 15: n. Top DlgllIII M«h - EConIenI Magm:lr.
Mark Zuckerberg, CEO, Facebook
ZUckerberg needs no Introdu<:l:lon. In short per1ud of tllTll!, Fembook helped wht
dlgltlll snd sodsllT1l!dls SI1! todsy. 'With $1 bililan In net IncalTll!, mililan comlTll!nts posted eVl!ry
two minutes, nd mol1! thsn 3 billion photos per month, It's to Fecebook
has changed the Internet," says Graubart.
"He's I prodigy and I Ylslonary In the saciallTll!dia spael!, Ind he literally built the makl fursodi!ll
_dia calTWTUnities as we know them taday," u,. Lynn Russo Whylly, en editorilll consultant who
hIS reportl!ld on the digitll _dia industry fur 20 years.
FaCllbook Is used as I corrmunlcatlan taol tar bath bUllness Ind pieIIUI"II. Graubart lees the
sodal _dla platform as I ,trong channel tar publishers In the fUtul"II. 'With the Open Graph and
the promise of paying with FBOIIbaokaedlt&, publishers Will soon lee Facebookas I atIIcal
plalformtarthelr content,' nys Gl'llubart.
Blossom nates how ZUc:kerberg 'lIIshloned the wortd's IiIrgelt loclill media empll"ll out of content
that no rredla coll1lany Cllred about·and then IIIiInaged to flgura out how to manetlzeit
ell'ad:lvaly betare anyone OIlse did. FBoabook gnaw one tweak at a time, laamlng by I:
went along-lllnd llliilnaging to keep Its socllllsignais to Itself In the prooass. Whena AOL I'ilIled,
Faoabook sua:eeded In creating a wallild ganlen tar evaryday peopla on the Web."
Larry Page, Co-Founder and CEO, Google
Pige can be tTl!dltl!d with helping to lTIiIe digital content mare organized and eaalerto lind. "'The
PlgeRsnk slgorlthrrs nSlNld sfter point to his role In transfunnlng the World Wide
Web IhIm I loose hodge-podge of digital content souroes Into Integrated Infurmatkln resoun;e
thst billions of people 11!fi!!l1!nl;l! every tar to their problems fur enterta-'lNlnt
snd pel"5onlll;Orrmunlcatlons," NYI' Blln$Om. the first online content
orgsnlzatlon tool which rel;Ognlzed hyperllnks In web cantent pointing to other InfurmatiDn
resources were Iiso I mIIp of how the web to the people publllhing on It."
Blossom nat\!!s how Psge Is now Indlng Gaogle's sociallTll!!dlll endeavor, Gaogle+. "Be I: via the
web orYia Its Android Or ChrolTll!! OS mobile mmputlng piatfUrms Ind Gaogle's autonomous
vahide experi_ntl, Plge i. setting thl pace fura widerlnd mal"ll pervasive Prl!lsenoe of the
web In Our liveS," adds Blossom.
Andy Carvin, Senior strategist,. Social Media Desk, NPR
Grlubart vlewl Carvin ... dlgltll media Influenoartar his Innovative use ofTwltter. Ca1'Wlls
charge afNPR's sodalllllldia InitiativeS, using bath Twltterand Faoabook to commun1catlo on thl
news organization', behalf.
"Andy Carvin's Glacarvln twlttlr .treamwas probably thl Intannatlon servo mal"ll journalstll and
_dla professionals relied upon tar Intannatlon lbout the Arilb Spring than Iny othlr," lays
Grlubart. "He leVl!raged Twitter In new ways, retweetlngloml Egyptian and TUnislilln loun;el,
helping mile the world awal1! otthese events.'
John Paton, CEO, Digital First Media
Piton hn 1I;I;OII1lllShed I lot to ensure thr1lle In ilIn
IntTl!ulngly dlgltllily bued world, Implementing 'digital first' ITIIIntra news Pill per
publishing. Dlgltsll;Ontent Is stop pr1urtty befure wonls ever In print.
DlgltIl First Medls I;Onslsts of Digital FI"t ventures, NedlllNews Group Rl!glster
COll1lsny. In sll, the I;OlI1lsnln mure 800 digital onlln .. offiorlngs. "While
newspspe" l;Ont!nu .. to snn::h fur ill mudel can wortc, Digital First
on the web snd ..... blle while using Inexpensive, off-the-shelf publishing tools, returned the
lDurnal Rl!glster to profitability," says Graubert. Paton talks about the mnnectlan between
newspapers and digital media in hi. blog, Digital First.
Tim O'Reilly, Founder and CEO, O'Reilly Media, Inc,
O'RllIlIy'I coll1lany has changed with the times and has become I IOlid onnne publisher. O'RII_
1iIp:I-"--1LU'1 .. lbl .... n..

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Case 2:l4-cv-00445-CW Document 22-3 Filed 06/30/l4 Page 3 of 6
612712014 FaI1Jlrus 15: The Top Digital Mada Inlluencers - ECallentMagazine
helped guide the company from its beginnings as a technology book publisher into a multimedia
publishing channel. RO'Reilly has experimented and succeeded with pre-release content access,
aoss-platform content accessibility, subscription book access and by-the-chapter content
purdlases," says Blossom. "He saw book publishing as a process, not an end product, and
learned how to engage audiences as an active component In the aeatlon of high-quality online
media. His ability to attract the digital media industry's leading and emerging thinkers to his many
events ensures that O'Reilly Is always on the rutting edge ofthe next great thing that will drive
content forward,"
"TIm [O'Reilly] has been an early adopter and a vocal advocate for constant innovation in the
book publishing space/ adds Graubart. RMost Importantly, O'Reilly Media has always eaten Its
own dog food, embracing openness and innovation.
n
Rupert Murdoch, Founder, Chairman and CEO, News Corp.
News Corp. Is a strong media property with assets In television, film, and publishing. Among those
properties are Fox News Channel, Fox Television Studios, Dow Jones &. Co., and The Wall Street
Journal. Murdoch has led the company's evolution as a multimedia digital content provider.
"Love him or hate him, Murdodl has been a relentless seeker of ways to make digital media work
for news organizations in ways that preserve some of the best ideas of print media," says
Blossom, noting the success of The Dally app on IPads and IPhones. nHls takeover of Dow Jones
has challenged that organization to develop more innovative approadles to business news
media, whilst maintaining a freemlum approach to building web traffic that was pioneering In Its
own time and still proving valuable today,n adds Blossom.
Rishad Tobaccowala, Chief Strategy and Innovation Officer,
VivaKi
VivaKi, which is part of Publicis Groupe, comprises digital specialist agendes Digitas and Razorflsh,
as well as media communications companies Starcom Mediavest Group and ZenithOptimedia.
Tobaccowala helps his dients become successful in their endeavors in the digital media space.
"Rishad was an early leader in figuring out digital media and helping clients and conference
attendees understand how to use It and measure It," says Russo Whylly.
Joseph Jaffe, founder and partner of Evol8tion, LLC, dassifies Tobaccowala as a "disruptor,
visionary, provocateur" with a "corporate platfonn and podium, on a globallevel.
R
Jeff Jarvis, Author, Blogger and Educator
Jarvis is the author of Public Parts: How Sharing in the Digital Age Improves the Way We Work and
Live and What Would Google Do? He is also a media blogger at BuzzMachine. Jarvis serves the
academic world as an associate professor and director of the Tow-Knight Center for
Entrepreneurial Journalism at the City University of New York's Graduate School of Journalism. He
also does consulting work for a variety of media companies. Through all of these endeavors,
Jarvis helps provide education and insight into the digital media world. Jaffe refers to Jarvis as na
media scholar and bridge between the old mainstream/established publisher InaJmbency and the
new world of journalism, content creation, and influence."
David Weinberger, Author
Weinberger has helped educate the business world on the value of digital media through a series
of books: The Ouetrain Manifesto, Everything Is Miscellaneous, and Too Big to Know. Weinberger
spent 20 years as a marketing consultant, and he cummtly writes Joho the Blog. "As one of the
authors of The Ouetrain Manifesto, Weinberger helped to coin many of the fundamental concepts
of what makes digital media and ecommerce work on the web," says Blossom. In Everything Is
Miscellaneous, Weinberger addresses digital search as an effective way In which to organize
content, adds Blossom, noting that Too Big to Know "helps us to understand the value of learning
how to have assurance In an era In which an abundance of conflicting sources oflnfonnatlon
dlallenge us to understand what the truth is in a multi-dimensional world of digital media."
Arianna Huffington, President and Editor-In-Chief of the
htIp:ltv.wN.eca1IenImag.carlArliclasJEdi1DriallFe&tureIFabulrus-15-The-Top-Digital-Media-lniluencers-82375.hIm 3/5
Case 2:l4-cv-00445-CW Document 22-3 Filed 06/30/l4 Page 4 of 6
6'27/3)14 F.tUOUI 15: n. Top Olglllll M«h - EConIenI Magm:lr.
Huffington Post Media Group, AOL,. Inc,
Befo ... Joining forces with AOL, Hufflngton made her nalTll! In dlgltallTll!dlll as the founder of The
Hufffngton Ptlst, a news and blog websb. AOL acqul ... d Jhf! HufflngtDn AIst In early' 2011. 'A year
alter Its acquisition by AOL, Jhf! Hufllngton Post has rnal'l! than 36 million unique rnanthly visitors,
and reO!!ive. mare than 6 million mrTml!!nts each ITIDnth. HuflPost ha. mmpletely revolutionized
the mntent aggregation madel," illYI' Graubart. Site visitors an!! drawn to HufW1rat by a variety of
contant topiCl authored by. ranga of subjl!ld: matter axperts. It is an aggn!!gatiDn ITIDdelthat is
followed and en-ulated by mIIny, providing. ona-stop shop fl:Ir content that ITIDst onr.ne users
demand today.
Om Malik, Founder and Senior Writer, GlgaON
Malik Is I veteran wrtter covertng technology, with bylines at Fortles.c:om, RIId Herring, and
Business 2.0. In February 2012, GlgaOM extended Its ruch with the acquisition ofpaldContant,
which covers the digital media spaoe. The deal gave GlgaOM ownel'1lhlp of Content Next Media,
Inc., thUi broildenlng th. scope of GlgaOM's content.
'One otthe eilrly dlgltill medii bloggers and alTlDng the 1'I:lw nlmalnlnglndependent, GlgaOM has
rall1llned raleVllnt, ilnd now Is poind to bilcolTIII an aven bigger player, acqulrtng paldContant,'
iays GlnIubilrt.
Geoff Ramsey, CEO and Co-Founder, eMarketer, Inc,
RliIl1II'ey, Iiong with Terry Chabrowe and Sam AIrstad, founded eMarketer, which hillS evoived
an organization that tn!ldc5 trends In the digital marketing spaCll!. eMarketer's guldano;e helps
COll1'anles be ma'" successti.ll with their digital marketing Initlatllles. 'GI!off, aiong with his two
co-founders, created order out of the chaos that was dlgltallTll!dla I'I!search with the launch of
eMarketer,' says Russo Whylly. 'By pulling .11 Industry I'I!sults together at ill tllTll! when the top
... searchers dlsag ... ed on everything from deflnltions to pl'I!dlctions, eMarketer built b bn!lnd fht
by noting the VlIrtanCll!s and explaining them, then by giving Its own estimates, the ... by
with Its research partners.'
Rob DeMilio, era of Ravlslon3
DoIMIllO desel'Vlls the honor III • top dlgltlll medII Innuenoer, aooording to lBn Ozer, editor of
Streaming Leamlng Centlr Ind. streaming oonauitant. Rl!vlsion3, an Intemat television network,
launched the nnt vldeo-ortented websltl to operate on an HTML5 platform, from
Flash. Tha ooll1'any Iiso oll'l!lnl video app that operates on Android phones and tablets, a. wei
IS GoogleTV. In an artlde for stnlamlng Medlllllilgulna, Ozar notes how Rsvlslan3 has been
able to oonned: with users IcroSS a fIInge of channels, 'not only on their PCs but on mabllls,
In-nlght entertainment systell"B, lind on 1V5 via devices like Roku, Xbox 360, and Sony PS3.'
There's no queltlon that then Inftuenoers, and ooUntlel1 othen, have tlilnsformed the dlgltill
media Industry Into what It II today. Industrywatmen and digital media usel'1l ahe w. await
their next InnOVlltiOni and oontrtbutlonl to the fteld as they shape the future of digital media.
Iii!! AIao poIton F..,..book
1iIp:I-"'--..... I .. lbl .... n.. ..
Case 2:l4-cv-00445-CW Document 22-3 Filed 06/30/l4 Page 5 of 6
6'2712014
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Case 2:l4-cv-00445-CW Document 22-3 Filed 06/30/l4 Page 6 of 6



Exhibit D

Case 2:l4-cv-00445-CW Document 22-4 Filed 06/30/l4 Page l of 4
Case 2:l4-cv-00445-CW Document 22-4 Filed 06/30/l4 Page 2 of 4
Case 2:l4-cv-00445-CW Document 22-4 Filed 06/30/l4 Page 3 of 4
Note: Numbers in some cases do not add due to rounding.
Source: Newspaper Association of America, 04/13

Niche Publications,
Direct Marketing &
Non-Daily Publication
Advertising
GRAND TOTAL
ADVERTISING
Year $Millions %Change $Millions %Change $Millions %Change $Millions %Change $Millions %Change $Millions %Change $Millions %Change $Millions %Change

2012 $3,335 -11.7% $10,984 -7.6% $4,626 -8.0% $18,931 -8.5% $3,370 3.7% $22,314 -6.8% $2,900 -2.2% $25,316 -6.5%
2011 $3,777 -10.5% $11,887 -8.0% $5,028 -11.0% $20,692 -9.2% $3,249 6.8% $23,941 -7.3% $3,000 NA $27,078 NA
$Millions %Change $Millions %Change $Millions %Change $Millions %change $Millions %change $Millions %Change
2010 $4,221 -4.6% $12,926 -9.1% $5,648 -8.6% $22,795 -8.2% $3,042 10.9% $25,838 -6.3%
2009 $4,424 -26.2% $14,218 -24.2% $6,179 -38.1% $24,821 -28.6% $2,743 -11.8% $27,564 -27.2%
2008 $5,996 -14.4% $18,769 -10.7% $9,975 -29.7% $34,740 -17.7% $3,109 -1.8% $37,848 -16.6%
2007 $7,005 -6.7% $21,018 -5.0% $14,186 -16.5% $42,209 -9.4% $3,166 18.8% $45,375 -7.9%
2006 $7,505 -5.1% $22,121 -0.3% $16,986 -1.9% $46,611 -1.7% $2,664 31.4% $49,275 -0.3%
2005 $7,910 -2.2% $22,187 0.8% $17,312 4.2% $47,408 1.5% $2,027 31.5% $49,435 2.5%
2004 $8,083 3.7% $22,012 3.1% $16,608 5.1% $46,703 3.9% $1,541 26.7% $48,244 4.5%
2003 $7,797 8.1% $21,341 1.7% $15,801 -0.6% $44,939 1.9% $1,216 $46,156
2002 $7,210 2.9% $20,994 1.5% $15,898 -4.3% $44,102 -0.5%
2001 $7,004 -8.5% $20,679 -3.4% $16,622 -15.2% $44,305 -9.0%
2000 $7,653 13.7% $21,409 2.4% $19,608 5.1% $48,670 5.1%
1999 $6,732 17.7% $20,907 2.8% $18,650 4.3% $46,289 5.4%
1998 $5,721 7.7% $20,331 5.7% $17,873 6.6% $43,925 6.3%
1997 $5,315 13.9% $19,242 4.9% $16,773 11.3% $41,330 8.5%
1996 $4,667 9.8% $18,344 1.4% $15,065 9.6% $38,075 5.5%
1995 $4,251 2.5% $18,099 3.4% $13,742 10.3% $36,092 5.8%
1994 $4,149 7.7% $17,496 3.8% $12,464 11.7% $34,109 7.0%
1993 $3,853 0.5% $16,859 5.1% $11,157 3.7% $31,869 4.0%
1992 $3,834 -2.3% $16,041 1.3% $10,764 1.7% $30,639 1.0%
1991 $3,924 -4.8% $15,839 -4.9% $10,587 -8.0% $30,349 -6.0%
1990 $4,122 4.4% $16,652 0.9% $11,506 -3.5% $32,280 -0.3%
1989 $3,948 3.3% $16,504 4.5% $11,916 2.9% $32,368 3.8%
1988 $3,821 2.6% $15,790 4.0% $11,586 10.1% $31,197 6.1%
1987 $3,494 3.5% $15,227 6.4% $10,691 14.9% $29,412 9.0%
1986 $3,376 0.7% $14,311 6.5% $9,303 11.1% $26,990 7.2%
1985 $3,352 8.8% $13,443 5.2% $8,375 9.4% $25,170 7.0%
1984 $3,081 12.7% $12,784 8.0% $7,657 27.5% $23,522 14.3%
1983 $2,734 11.5% $11,841 14.0% $6,006 23.8% $20,581 16.3%
1982 $2,452 8.6% $10,390 7.3% $4,852 5.9% $17,694 7.1%
1981 $2,258 15.0% $9,686 12.5% $4,583 8.6% $16,527 11.7%
1980 $1,963 10.9% $8,609 9.7% $4,222 -0.6% $14,794 6.7%
1979 $1,770 14.9% $7,845 11.7% $4,248 16.4% $13,863 13.5%
1978 $1,541 4.7% $7,023 12.5% $3,649 20.1% $12,213 13.6%
1977 $1,472 9.7% $6,241 10.1% $3,038 16.5% $10,751 11.8%
1976 $1,342 21.0% $5,668 14.1% $2,608 20.8% $9,618 16.8%
1975 $1,109 0.4% $4,966 8.8% $2,159 -0.7% $8,234 5.0%
1974 $1,105 5.3% $4,563 7.5% $2,174 -0.6% $7,842 4.8%
1973 $1,049 -1.2% $4,245 7.1% $2,187 14.3% $7,481 7.8%
1972 $1,062 9.3% $3,964 11.2% $1,913 17.4% $6,939 12.5%
1971 $972 9.1% $3,565 8.3% $1,630 7.2% $6,167 8.1%
1970 $891 -5.5% $3,292 4.0% $1,521 -5.2% $5,704 -0.2%
1969 $943 6.1% $3,166 8.5% $1,605 12.7% $5,714 9.2%
1968 $889 5.1% $2,919 5.8% $1,424 9.2% $5,232 6.6%
1967 $846 -4.6% $2,760 4.3% $1,304 -2.2% $4,910 0.9%
1966 $887 13.3% $2,645 8.9% $1,333 9.8% $4,865 9.9%
1965 $783 1.3% $2,429 3.6% $1,214 21.0% $4,426 7.4%
1964 $773 10.1% $2,344 6.0% $1,003 15.7% $4,120 9.0%
1963 $702 -2.8% $2,211 5.1% $867 4.7% $3,780 3.3%
1962 $722 -3.0% $2,103 2.4% $834 3.7% $3,659 1.6%
1961 $744 -4.4% $2,053 -2.2% $804 0.1% $3,601 -2.2%
1960 $778 0.5% $2,100 4.3% $803 8.8% $3,681 4.4%
1959 $774 6.9% $2,014 11.8% $738 13.5% $3,526 11.0%
1958 $724 -4.7% $1,802 -1.8% $650 -2.3% $3,176 -2.8%
1957 $738 0.8% $1,835 1.5% $665 0.6% $3,268 1.4%
1956 $768 5.9% $1,808 3.0% $661 8.4% $3,223 4.7%
1955 $712 17.3% $1,755 14.0% $610 13.2% $3,077 14.6%
1954 $607 0.2% $1,539 5.8% $539 -5.6% $2,685 2.0%
1953 $606 12.8% $1,455 3.1% $571 10.7% $2,632 6.8%
1952 $537 1.5% $1,411 12.1% $516 11.4% $2,464 9.5%
1951 $529 2.1% $1,259 7.1% $463 22.8% $2,251 8.7%
1950 $518 11.9% $1,175 6.3% $377 9.9% $2,070 8.3%
Note: Numbers are rounded.
Source: Newspaper Association of America, 04/13
NATIONAL RETAIL CLASSIFIED
DAILY & SUNDAY
NEWSPAPER PRINT
TOTAL
NEWSPAPER DIGITAL
ADVERTISING
COMBINED DDAILY &
SUNDAY NEWSPAPER
PRINT & ONLINE
TOTAL
NEWSPAPER DIGITAL
ADVERTISING
COMBINED DAILY &
SUNDAY NEWSPAPER
PRINT & ONLINE
TOTAL NATIONAL RETAIL CLASSIFIED
DAILY & SUNDAY
NEWSPAPER PRINT
TOTAL
Case 2:l4-cv-00445-CW Document 22-4 Filed 06/30/l4 Page 4 of 4



Exhibit E

Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page l of 29



www.pwc.com
www.iab.net
IAB internet advertising
revenue report
2013 full year results
April 2014








An industry survey conducted by PwC and sponsored
by the Interactive Advertising Bureau (IAB)

Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 2 of 29

PwC Page 2 of 28

Table of Contents

Background ...................................................................................................................................................................... 3
Executive summary ......................................................................................................................................................... 4
Detailed findings .............................................................................................................................................................. 6
Historical trends ...................................................................................................................................................... 7
Ad formats ............................................................................................................................................................. 12
Industries ............................................................................................................................................................... 15
Pricing models ........................................................................................................................................................ 17
Advertising market share ...................................................................................................................................... 19
Appendix ........................................................................................................................................................................ 22

Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 3 of 29

PwC Page 3 of 28

Background
About the IAB internet advertising revenue report

Conducted by PricewaterhouseCoopers LLP (“PwC”) on an ongoing basis, with results released quarterly, the “IAB
Internet Advertising Revenue Report” was initiated by the Interactive Advertising Bureau (IAB) in 1996. This
report utilizes data and information reported directly to PwC, publicly available online corporate data, and
information provided by online ad selling companies.
The results reported are considered the most accurate measurement of internet/online/mobile advertising
revenues because much of the data is compiled directly from information supplied by companies selling advertising
online. All-inclusive, the report includes data reflecting online advertising revenues from websites, commercial
online services, ad networks and exchanges, mobile devices, and e-mail providers, as well as other companies
selling online advertising.
The report is conducted independently by PwC on behalf of the IAB. PwC does not audit the information and
provides no opinion or other form of assurance with respect to the information. Only aggregate results are
published and individual company information is held in strict confidence with PwC. Further details regarding
scope and methodology are provided in the appendix to this report.

David Silverman
PwC

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Executive summary
'IAB internet advertising revenue report' 2013 full year
highlights

Internet advertising revenues (“revenues”) in the United States totaled $42.8 billion for the full year of 2013, with
Q4 2013 accounting for approximately $12.1 billion and Q3 2013 accounting for approximately $10.6 billion.
Revenues for the full year of 2013 increased 17% over 2012.

Key trends underlying 2013 results
Revenues increase 17% in FY 2013 — Internet advertising revenues in the United States totaled $12.1 billion in
the fourth quarter of 2013, an increase of 14% from the 2013 third-quarter total of $10.6 billion and an increase of
17% from the 2012 fourth-quarter total of $10.3 billion. 2013 full year internet advertising revenues totaled $42.78
billion, up 17% from the $36.57 billion reported in 2012.

“The news that interactive has outperformed broadcast television should come as no surprise. It speaks to the
power that digital screens have in reaching and engaging audiences. In that same vein, the triple-digit growth of
mobile is clearly a direct response to how smaller digital screens play an integral role in consumers' lives
throughout the day, as well as their critical importance to cross-screen experiences.”

— Randall Rothenberg, President and CEO, IAB
Mobile advertising increases 110% in FY 2013 — Mobile advertising in the United States totaled $7.1 billion
during FY 2013, a 110% increase from the prior year total of $3.4 billion.

“Our survey confirms that we are fully in transition to the post-desktop era. Triple-digit advertising revenue
growth from mobile devices contrasted the more tepid 8% growth from traditional computer screens. This is
simply a reflection of the change in how and where consumers are viewing their information -- on the go!”

— David Silverman, Partner, PwC


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Annual revenues show strong growth


2012 vs. 2013, in billions



$36.57
$42.78
FY 2012 FY 2013
17.0%
Source: IAB/PwC Internet Ad Revenue Report, 2013
Annual revenues
for 2013 totaled
$42.8 billion, $6.2
billion (or 17.0%)
higher than in
2012.
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Detailed findings
Revenues total a record $12.1 billion in Q4 2013

Total 2013 fourth quarter revenues broke the prior quarter record of $10.6 billion set in the third quarter of 2013 by
$1.5 billion. Fourth quarter 2013 revenues were $1.8 billion (17.5%) higher than in the fourth quarter of 2012.


Q4 12 vs. Q4 13 ($ billions) Q3 13 vs. Q4 13 ($ billions)



$10.31
$12.11
Q4 12 Q4 13
17.5%
Source: IAB/PwC Internet Ad Revenue Report, 2013
$10.61
$12.11
Q3 13 Q4 13
14.1%
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Historical annual revenue trends
Revenue continues strong growth in 2013

2013 annual revenues increased on a year-over-year percentage and dollar basis. The compound annual growth
rate (CAGR) over the past ten years for internet advertising of 18% has outpaced U.S. current dollar GDP growth of
4%* over that period.
Since 2010, internet advertising growth was fueled by a 123% CAGR in Mobile (compared to 12% growth in non-
Mobile revenue).

Annual revenue 2004-2013 ($ billions)





* Source for GDP growth: U.S. Bureau of Economic Analysis, “Table 1.1.5. Gross Domestic Product,” (accessed
March 31, 2013)

9.6
12.5
16.9
21.2
23.4
22.7
25.4
30.1
33.2
35.7
1.6
3.4
7.1
9.6
12.5
16.9
21.2
23.4
22.7
26.0
31.7
36.6
42.8
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Non-Mobile
Mobile
123%
Mobile
CAGR
12%
Non-mobile
CAGR
Source: IAB/PwC Internet Ad Revenue Report, 2013
1
8
%

O
v
e
r
a
ll
C
A
G
R

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Historical quarterly revenue trends
Quarterly growth continues upward trend

Internet advertising continued to build on the momentum from 2012.
Over the past four years we have seen a clear seasonal trend of strong fourth quarter revenue followed by a first
quarter dip. Despite the seasonal dip, first quarter revenues have outpaced the prior year's third quarter since 2010.

Quarterly revenue growth trends 1996-2013 ($ billions)


$0
$2
$4
$6
$8
$10
$12
$14
Source: IAB/PwC Internet Ad Revenue Report, 2013
1997 1998 1999 2009 1996 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012
$12
2013
Q4 2013 revenues
crossed $12 billion
for the first time
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Historical revenue mix – first half vs.
second half
Second-half revenues reach $22.7 billion

Second-half revenues totaled $22.7 billion in 2013, an increase of $3.2 billion from second-half revenues of 2012,
which totaled $19.5 billion. Second-half revenues in 2013 represented 53% of total revenues in 2013, consistent
with numbers reported in 2012 and consistent with the broader trend of higher revenues in the second-half of each
year. The historically higher proportion of revenues in the second half of the year results from both the continued
growth in the industry and from the seasonality of higher ad spend in the fourth quarter.

Historical revenue mix, first half vs. second half ($ billions)



$4.6
$5.8
$7.9
$10.0
$11.5
$10.9
$12.1
$14.9
$17.0
$20.1
$5.0
$6.8
$9.0
$11.2
$11.9
$11.8
$13.9
$16.8
$19.5
$22.7
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Last 6 months First 6 months
Source: IAB/PwC Internet Ad Revenue Report, 2013
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Historical data findings
Annual and quarterly revenue growth
Revenue
(in mil)
Q/Q
Growth
Y/Y
Growth
Revenue
(in mil)
Q/Q
Growth
Y/Y
Growth
Q1 2002 $1,520 -7% -19% Q1 2008 $5,765 -3% 18%
Q2 2002 $1,458 -4% -21% Q2 2008 $5,745 0%
13%
Q3 2002 $1,452 -1% -18% Q3 2008 $5,838 2% 11%
Q4 2002 $1,580 9% -4% Q4 2008 $6,100 4% 2%
Total 2002 $6,010

-16% Total 2008 $23,448
11%
Q1 2003 $1,632 3% 7% Q1 2009 $5,468 -10% -5%
Q2 2003 $1,660 2% 14% Q2 2009 $5,432 -1% -5%
Q3 2003 $1,793 8% 24% Q3 2009 $5,500 1%
-6%
Q4 2003 $2,182 22% 38% Q4 2009 $6,261 14% 3%
Total 2003 $7,267

21% Total 2009 $22,661 -3%
Q1 2004 $2,230 2% 37% Q1 2010 $5,942 -5%
9%
Q2 2004 $2,369 6% 43% Q2 2010 $6,185 4% 14%
Q3 2004 $2,333 -2% 30% Q3 2010 $6,465 5% 18%
Q4 2004 $2,694 15% 24% Q4 2010 $7,449 15%
19%
Total 2004 $9,626

33% Total 2010 $26,041 15%
Q1 2005 $2,802 4% 25% Q1 2011 $7,264 -2% 22%
Q2 2005 $2,985 7% 26% Q2 2011 $7,678 6% 24%
Q3 2005 $3,147 5% 35% Q3 2011 $7,824 2% 21%
Q4 2005 $3,608 15% 34% Q4 2011 $8,970 15% 20%
Total 2005 $12,542

30% Total 2011 $31,735 22%
Q1 2006 $3,848 7% 37% Q1 2012 $8,307 -7% 14%
Q2 2006 $4,061 6% 36% Q2 2012 $8,722 5% 14%
Q3 2006 $4,186 3% 33% Q3 2012 $9,236 6% 18%
Q4 2006 $4,784 14% 33% Q4 2012 $10,307 12% 15%
Total 2006 $16,879

35% Total 2012 $36,570 15%
Q1 2007 $4,899 2% 27% Q1 2013 $9,806 -5% 18%
Q2 2007 $5,094 4% 25% Q2 2013 $10,260 5% 18%
Q3 2007 $5,267 3% 26% Q3 2013 $10,609 3% 15%
Q4 2007 $5,946 13% 24% Q4 2013 $12,106 14% 17%
Total 2007 $21,206

26% Total 2013 $42,781 17%
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Revenue concentration
Top 10 companies command 71% of revenues in Q4 2013

Online advertising continues to remain concentrated with the 10 leading ad-selling companies, which accounted for
71% of total revenues in Q4 2013, down slightly from the 72% reported in Q4 2012. Companies ranked 11th to 25th
accounted for 10% of revenues in Q4 2013, consistent with the 10% reported in Q4 2012.

Despite the emergence of a few heavyweights in internet advertising publishing, the concentration of top-10
revenue has remained relatively unchanged over the past ten years, fluctuating between 69% and 74%.

% share of total revenues







$0
$2
$4
$6
$8
$10
$12
$14
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Top 10 Top 25 Remaining
19%
10%
71%
2013 Q4
Share
Source: IAB/PwC Internet Ad Revenue Report, 2013
TOP 10
TOP 25
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Ad format – fourth quarter 2013 results
Search continues to lead ad formats, while Mobile eclipses
Display for the first time in a quarter

• Search accounted for 41% of Q4 2013 revenues, down from 44% in Q4 2012, as mobile devices have shifted
Search-related revenues away from the desktop computer. Search revenues totaled $5.0 billion in Q4 2013, up
10% from Q4 2012, when Search totaled $4.6 billion.
• Display-related advertising accounted for $3.7 billion or 30% of total revenues during Q4 2013, up 6% from the
$3.4 billion (33% of total) reported in Q4 2012. Q4 2013 Display-related advertising includes Display/Banner
Ads (19% of revenues, or $2.3 billion), Digital Video (7% or $807 million), Rich Media (3% or $364 million),
and Sponsorship (2% or $227 million).
• Mobile revenues totaled 19% of Q4 2013 revenues, or $2.3 billion, up 92% from the $1.2 billion (11% of total)
reported in Q4 2012.
• Classifieds revenues totaled $664 million or 5% of Q4 2013 revenues, up 2% from the $651 million (6% of total)
reported in Q4 2012.
• Lead Generation revenues accounted for 4% of Q4 2013 revenues, or $484 million, up 9% from the $446
million (4% of total) reported in Q4 2012.

Ad formats – Q4 2012 Ad formats – Q4 2013
Total - $10.3 billion* Total - $12.1 billion*

* Amounts may not equal 100% due to rounding and omission of minor categories.

44%
21%
11%
7%
6%
4%
3%
2%
Search
Display / Banner
Mobile
Digital Video
Classifieds
Lead Generation
Rich Media
Sponsorship
Source: IAB/PwC Internet Ad Revenue Report, 2013
41%
19%
19%
7%
5%
4%
3%
2%
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Ad format – full year 2013 results
Digital video increases share to become fourth largest
format

• Search revenues accounted for 43% of FY 2013 revenues, down from 46% in FY 2012. Search revenues totaled
$18.4 billion in FY 2013, up 9% from FY 2012, when Search totaled $16.9 billion.
• Display-related advertising accounted for $12.8 billion or 30% of total revenues during FY 2013, up 7% from
the $12.0 billion (33% of total) reported in FY 2012. FY 2013 Display-related advertising includes
Display/Banner Ads (19% of FY 2013 revenues, or $7.9 billion), Digital Video (7% or $2.8 billion), Rich Media
(3% or $1.3 billion), and Sponsorship (2% or $766 million).
• Mobile revenues totaled 17% of FY 2013 revenues, or $7.1 billion, up 110% from the $3.4 billion (9% of total)
reported in FY 2012.
• Classifieds revenues totaled $2.6 billion or 6% of FY 2013 revenues, up 7% from the $2.4 billion (7% of total)
reported in FY 2012.
• Lead Generation revenues accounted for 4% of FY 2013 revenues, or $1.75 billion, up 4% from the $1.69 billion
(5% of total) reported in FY 2012.

Ad formats – full year 2012 Ad formats – full year 2013
Total - $36.6 billion Total - $42.8 billion

* Amounts may not equal 100% due to rounding and omission of minor categories.

46%
21%
9%
6%
7%
5%
3%
2%
Search
Display / Banner
Mobile
Digital Video
Classifieds
Lead Generation
Rich Media
Sponsorship
Source: IAB/PwC Internet Ad Revenue Report, 2013
43%
19%
17%
7%
6%
4%
3%
2%
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Historical format trends
Search retains largest share of revenue, while Mobile grows
fastest

• Search remains the leading format, representing a larger amount of the share than the next two closest formats
combined (Display and Mobile). Decline in its overall share is attributed to growth in Mobile and Mobile
Search, which is included in the Mobile category.
• All formats other than Digital Video and Rich Media are down slightly as a percentage of total revenue due to
the substantial growth of Mobile.
• Mobile revenues continued to quickly gain share, representing 17% of total revenues in FY 2013, as compared
with 9% reported in FY 2012 and 5% in FY 2011. While Mobile has eroded share of other formats, the Mobile
format itself is comprised of multiple formats.


Advertising format share, 2006 - 2013* (% of total revenue)


* Format definitions may have changed over the time period depicted, both within the survey process and as
interpreted by survey respondents.

0%
10%
20%
30%
40%
50%
Search Display /
Banner
Mobile Classifieds Digital Video Lead
Generation
Rich Media
2006 2007 2008 2009 2010 2011 2012 2013
Source: IAB/PwC Internet Ad Revenue Report, 2013
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Ad revenues by industry category
Retail drives advertising, as dollars shift to digital

• Retail advertisers continue to represent the largest category of internet ad spending, accounting for 21% of total
revenues in FY 2013, up from the 20% reported in FY 2012.
• Financial Services advertisers accounted for 13% of revenues in FY 2013, consistent with the 13% reported in
FY 2012.
• Automotive advertisers accounted for 12% of revenues in FY 2013, consistent with the 12% of total reported in
FY 2012.
• Telecom companies accounted for 9% of revenues in FY 2013, down from the 11% reported in FY 2012.
• Leisure Travel (airfare, hotels, and resorts) accounted for 8% of revenues in FY 2013, down from the 9% of
revenues reported in FY 2012.
• Consumer Packaged Goods represented 7% in FY 2013, consistent with the 7% reported in FY 2012.
• Computing products advertisers represented 6% of revenues in FY 2013, down from the 8% reported in FY
2012.
• Pharmaceutical/Healthcare accounted for 5% in FY 2013, down from the 6% of revenues reported in FY 2012.
• Media accounted for 5% in FY 2013, consistent with the 5% reported in FY 2012.
• Entertainment accounted for 4% of FY 2013 revenues, consistent with the 4% reported in FY 2012.

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Industry advertising – year-over-year
comparison
Internet ad revenues by major industry category*, year to date: 2012 vs. 2013


* Industry category definitions may have changed over the time period depicted, both within the survey process
and as interpreted by survey respondents. Amounts do not total to 100% as minor categories are not displayed.

20%
13%
12%
11%
9%
7%
8%
6%
5%
4%
21%
13%
12%
9%
8%
7%
6%
5%
5%
4%
Retail
Financial Services
Auto
Telecom
Leisure Travel
Consumer Packaged Goods
Computing Products
Pharma & Healthcare
Media
Entertainment
2012 2013
Source: IAB/PwC Internet Ad Revenue Report, 2013
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Revenues by pricing model
CPM-based pricing shows slight uptick

• Approximately 65% of FY 2013 revenues were priced on a performance basis, down from the 66% reported in
FY 2012.
• Approximately 33% of FY 2013 revenues were priced on a cost per medium/thousand (CPM) or impression
basis, up from the 32% reported in FY 2012.
• Approximately 2% of FY 2013 revenues were priced on a hybrid basis, consistent with the 2% reported in FY
2012.
Pricing models – FY 2012 Pricing models – FY 2013
Total - $36.6 billion Total - $42.8 billion

Pricing models – Q4 2012 Pricing models – Q4 2013
Total - $10.3 billion Total - $12.1 billion


CPM
32%
66%
Hybrid
2%
CPM
33%

65%
Hybrid
2%
CPM
34%
64%
Hybrid
2%
Source: IAB/PwC Internet Ad Revenue Report, 2013
CPM
35%
64%
Hybrid
1%
Performance
Performance
Performance
Performance
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Historical pricing model trends
Performance-based pricing remains the preferred model

• Performance-based pricing, the leading pricing model since 2006, declined slightly to 65% of total revenue
in 2013 from 66% in 2012.
• CPM/impression-based pricing gained in 2013, up to 33% of revenues from 32% in 2012. At 33% of total
revenues, CPM is at its highest point since 2010.
• Hybrid pricing remained at 2% of total revenues in 2013, consistent with the 2% reported in 2012.

Internet ad revenues by pricing model*


* Pricing model definitions may have changed over the time period depicted both within the survey process and
as interpreted by survey respondents.

46%
48%
45%
39%
37%
33%
31%
32%
33%
41%
47%
51%
57%
59%
62%
65% 66%
65%
13%
5% 4% 4%
4% 5% 4%
2%
2%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 2013
%

o
f

t
o
t
a
l

r
e
v
e
n
u
e
s

CPM Performance Hybrid
Source: IAB/PwC Internet Ad Revenue Report, 2013
Hybrid
Performance
CPM
Hybrid
Performance
CPM
Hybrid
Performance
CPM
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Advertising market share by media
Internet advertising surpassed Broadcast Television*
advertising revenue in 2013

Internet has continued to grow in share and significance when compared to other U.S. ad- supported media.†
Internet advertising revenue now represents 57% of all Television (Broadcast and Cable) advertising.
• In 2013, Internet advertising exceeded Broadcast Television.*
• In 2011, Internet advertising surpassed Cable Television.**

Advertising revenue market share by media - 2013 ($ billions)


† The total U.S. advertising market includes other segments not charted here.
* Broadcast Television includes Network and Syndicated and Spot television advertising revenue.
** Cable Television includes National Cable Networks and Local Cable television advertising revenue.

$0.8
$0.9
$7.9
$13.4
$16.7
$18.0
$34.4
$40.1
$42.8
Cinema
Video Game
Out of Home
Magazine (Consumer)
Radio
Newspaper
Cable Television **
Broadcast Television *
Internet
Sources: IAB/PwC Internet Ad Revenue Report, 2013; PwC
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Historical advertising market share
Internet advertising revenue growth outpaces other media
outlets over the past nine years

Two forms of media have positive compound annual growth rates (CAGR) between 2005 through 2013: Cable
Television at 4.8% and Internet at 16.6%.

In every year since 2005, the annual growth rates of Internet advertising have exceeded those of other advertising
media. Internet advertising has experienced double-digit annual growth in every year except 2009; no other media
has experienced double-digit growth in any year.

Advertising revenue market share by media, 2005-2013 ($ billions)


* Broadcast Television includes Network, Syndicated and Spot television advertising revenue.
** Cable Television includes National Cable Networks and Local Cable television advertising revenue.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2005 2006 2007 2008 2009 2010 2011 2012 2013
Internet Broadcast Television *
Cable Television ** Newspaper
Radio Magazine (Consumer)
Sources: IAB/PwC Internet Ad Revenue Report, 2013; PwC
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Historical advertising growth of media
While Mobile’s growth over the past four years is
impressive, the Internet fared even better in its early years

During the first four years of Broadcast TV, Cable TV, Internet, and Mobile, all media experienced tremendous
advertising revenue growth.
While over time Cable TV has emerged as a major advertising medium, due to the capital intensive nature of the
rollout and reliance on subscription fees, advertising revenue growth rates while impressive were not on par with
the other media


Comparative U.S. advertising media annual ad revenue growth for first 4 years
($ billions)

* Adjusted for Inflation


$0
$1
$2
$3
$4
$5
$6
$7
$8
Broadcast TV*
(1949-52)
Cable TV*
(1980-83)
Internet*
(1996-99)
Mobile
(2010-13)
Year 1 Year 2 Year 3 Year 4
123% CAGR
159% CAGR
98% CAGR
72% CAGR
Compound Annual Growth Rate (CAGR)
Sources: IAB/PwC Internet Ad Revenue Report, 2013; McCann-Erickson
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Appendix
Definitions of leading industry categories
The industry categories used in the "IAB Internet Advertising Revenue Report" were sourced from the North
American Standard Industrial Classification (SIC) Manual.†
Retail Includes mail order/catalog, apparel, restaurants/fast food, home furnishings/textiles, toys,
pet food/supplies, appliances, jewelry, drugstores, retail stores, and cosmetics stores.
Automotive Includes all automotive-related categories including sale/purchase of vehicles and parts and
maintenance.
Entertainment Includes film, music, TV, box office, video games, and amusement & recreation.
Consumer
packaged goods
Includes packaged goods, food products, household products, and tobacco.
Leisure travel Includes travel, hotel, airlines, and resorts.
Computing
products
Includes hardware (computers, computer storage devices, and computer peripheral
equipment), consumer electronics, prepackaged software (operating, utility, and
applications programs), local area network systems and network systems integration,
computer processing, and data preparation and data processing services.
Financial Services Includes commercial banks, credit agencies, personal credit institutions, consumer finance
companies, loan companies, business credit institutions, and credit card agencies. Also
includes companies engaged in the underwriting, purchase, sale, or brokerage of securities
and other financial contracts.
Telecommun-
ications
Includes point-to-point communications services, including cellular phone services, paging
services, wireless internet access, and wireless video services. Includes multichannel video
providers on a subscription fee basis (e.g., cable television, wireless cable television, and
direct broadcast satellite services).
Pharmaceutical &
Healthcare
Includes pharmaceutical products, facilities, services, researchers, and biological products.
Also comprises establishments providing healthcare and social assistance for individuals as
well as personal care, toiletries, and cosmetic products.
Media Includes establishments primarily engaged in radio and television broadcasting (network
and station) including commercial, religious, educational, and other radio or television
stations. Also includes establishments primarily engaged in publishing newspapers,
periodicals, and books.

†Survey participants reported results based on the 20 industry categories listed on page 25, which were used
specifically for the "IAB Internet Advertising Revenue Report." This is consistent with other relevant industry
categorization sources that measure advertising spending by industry. For purposes of this report, PwC classified a
number of individual categories under “Retail.”
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Definitions of advertising formats
Display
Advertising
Advertiser pays an online company for space on one or more of the online company’s pages to display a
static or linked banner or logo.
Sponsorship Advertiser pays for custom content and/or experiences, which may or may not include ad elements such as
display advertising, brand logos, advertorial, or pre-roll video. Sponsorships fall into several categories:
• Spotlights are custom-built pages incorporating an advertiser’s brand and housing a collection of
content usually around a theme
• Advergaming can range from an advertiser buying all the ad units around a game or a “sponsored
by” link to creating a custom branded game experience
• Content & Section Sponsorship is when an advertiser exclusively sponsors a particular section of the
site or email (usually existing content) re-skinned with the advertiser’s branding
• Sweepstakes & Contests can range from branded sweepstakes on the site to a full-fledged branded
contest with submissions and judging
Email Banner ads, links or advertiser sponsorships that appear in email newsletters, email marketing campaigns
and other commercial email communications. This includes both ads within an email or the entire email.
Search Fees advertisers pay online companies to list and/or link their company site domain name to a specific
search word or phrase (includes paid search revenues). Search categories include:
• Paid listings – payments made for clicks on text links that appear at the top or side of search results
for specific keywords. The more a marketer pays, the higher the position it gets. Marketers only pay
when a user clicks on the text link.
• Contextual search – payments made for clicks on text links that appear in an article based on the
context of the content, instead of a user-submitted keyword. Payment only occurs when the link is
clicked.
• Paid inclusion – payments made to guarantee that a marketer's URL is indexed by a search engine
(i.e. advertiser isn’t paid only for clicks, as in paid listings).
• Site optimization – payments made to optimize a site in order to improve the site’s ranking in
search engine results pages (SERPs). (For example, site owner pays a company to tweak the site
architecture and code, so that search engine algorithms will better index each page of the site).
Lead
Generation
Fees paid by advertisers to online companies that refer qualified potential customers (e.g., auto dealers
which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer
information (demographic, contact, behavioral) where the consumer opts in to being contacted by a
marketer (email, postal, telephone, fax). These processes are priced on a performance basis (e.g., cost-per-
action, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g.,
sweepstakes) or registrations.
Classifieds
and Auctions
Fees paid to advertisers by online companies to list specific products or services (e.g., online job boards and
employment listings, real estate listings, automotive listings, auction-based listings, yellow pages).
Rich Media Display-related ads that integrate some component of streaming interactivity. Rich media ads often include
flash or java script, but not content, and can allow users to view and interact with products or services (e.g.,
scrolling or clicking within the ad opens a multimedia product description, expansion, animation, video or a
“virtual test-drive” within the ad).
All IAB Rising Stars ad formats are considered Rich Media. Digital audio ads that appear before, during or
after audio content (e.g., streaming radio, podcasts, etc.) are also considered Rich Media.
Video commercials that appear in video players are considered Digital Video Ads, not Rich Media.
“Interstitials” have been consolidated within the rich media category and represent full- or partial-page text
and image server-push advertisements which appear in the transition between two pages of content. Forms
of interstitials can include a variation of the following terms:
• Splash screens – a preliminary page that precedes the regular home page of a website that usually
promotes a particular site feature or provides advertising. A splash page is timed to move onto the
home page after a short period of time.
• Pop-up ads and pop-under ads – an advertisement that appear in a separate window which
automatically loads over an existing content window, without an associated banner.
• Daughter windows – an advertisement that runs in a separate window associated with a
concurrently displayed banner. The content and banner are typically displayed first, followed by the
daughter window.
• Superstitials – ads that are distinct from interstitials because of the much higher ad quality, and
that they play instantly (ads are fully downloaded before they are displayed).

Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 24 of 29

PwC Page 24 of 28

Definitions of advertising formats (cont.)

Digital Video
Advertising
Advertising that appears before, during or after digital video content in a video player (i.e. pre-roll, mid-roll,
post-roll video ads). Digital Video Ads include TV commercials online and can appear in streaming content
or in downloadable video. Display-related ads on a page (that are not in a player) that contain video are
categorized as rich media ads.

Video Overlays are also categorized as Digital Video Advertising. Video overlays include small ads that
appear on top of digital video content. They can appear to be display, video, rich media, text or another ad
format but are contained within the video player.
Mobile
Advertising
Advertising tailored to and delivered through wireless mobile devices such as smartphones (e.g. Blackberry,
iPhone, Android, etc.), feature phones (e.g. lower-end mobile phones capable of accessing mobile content),
and media tablets (e.g. iPad, Samsung Galaxy Tablet, etc.). Typically taking the form of static or rich media
display ads, text messaging ads, search ads, or audio/video spots, such advertising generally appears within
mobile websites (e.g. websites optimized for viewing on mobile devices), mobile apps (e.g. applications for
Smartphones running iOS, Android, Windows Mobile or other operating systems), text messaging services
(i.e. SMS, MMS) or within mobile search results (i.e., 411 listings, directories, mobile-optimized search
engines).


Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 25 of 29

PwC Page 25 of 28

Survey scope and methodology
Survey scope
The Interactive Advertising Bureau (IAB) retained PwC to establish a comprehensive standard for measuring the
growth of internet/online/mobile advertising revenues. The "IAB internet advertising revenue report" is part of an
ongoing IAB mission to provide an accurate barometer of internet advertising growth.
To achieve differentiation from existing estimates and accomplish industry-wide acceptance, key aspects of the
survey include:
• Obtaining historical data directly from companies generating internet/online/mobile advertising revenues;
• Making the survey as inclusive as possible, encompassing all forms of internet/online/mobile advertising,
including websites, consumer online services, ad networks, mobile devices, and e-mail providers; and
• Ensuring and maintaining a confidential process, releasing only aggregate data.
Methodology
PwC performs the following:
• Compiles a database of industry participants selling internet/online and mobile advertising revenues
• Conducts a quantitative mailing survey with leading industry players, including Web publishers, ad
networks, commercial online service providers, mobile providers, e-mail providers, and other online media
companies
• Acquires supplemental data through the use of publicly disclosed information
• Requests and compiles several specific data items, including monthly gross commissionable advertising
revenue by industry category and transaction
• Identifies non-participating companies and applies a conservative revenue estimate based on available
public sources
• Analyzes the findings, identifies and reports key trends

Survey industry categories
Automotive
Beer/Wine/Liquor
Business Products/Services
Computers (Hardware/Software)
and Consumer Electronics
Consumer Packaged Goods, Food,
Non-Alcoholic Beverages and Candy
Educational Services
Entertainment (Film, Music, TV, Box
Office, Video Games,
Amusement/Recreational)
Financial Services (Banks,
Insurance, Securities, Mortgages)
Personal Care, Toiletries, and
Cosmetics
Drugs and Remedies
Manufacturing
Media
Professional Sports and Sporting &
Athletic Goods
Real Estate
Restaurants/Fast Food
Retail, Mail Order, Catalogs and
Apparel
Telecommunications: Telephony,
Cable/Satellite TV Services, ISPs
Toys/Games
Leisure Travel (Airfare, Hotels,
Resorts)
Business Travel (Airfare, Hotels,
Resorts)


Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 26 of 29

PwC Page 26 of 28

About the Interactive Advertising Bureau
The Interactive Advertising Bureau (IAB) is comprised of more than 600 leading media and technology companies
that are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is
dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend,
and of its members’ share of total marketing spend. The IAB educates marketers, agencies, media companies and
the wider business community about the value of interactive advertising. Working with its member companies, the
IAB evaluates and recommends standards and practices and fields critical research on interactive advertising.
Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For
more information, please visit iab.net.
Overall report guidance provided by IAB leadership
Executive Committee
President and CEO
Randall Rothenberg
IAB

Denise Warren
The New York Times Company
Randy Kilgore
Tremor Media
Chairman
Vivek Shah
Ziff Davis

Neal Mohan
Google
David Moore
Xaxis
Vice Chair
David Morris
CBS Interactive

Bill Todd
Conversant Media
Lisa Utzschneider
Amazon.com
Rik van der Kooi
Microsoft Advertising

Board of Directors

Joe Apprendi
Collective
David Brinker
News Corporation
Ned Brody
Yahoo!
Kevin Conroy
Univision
Jory Des Jardins
BlogHer
Eric Franchi
Undertone
Michael Friedenberg
IDG
Joan Gillman
Time Warner Cable Media
Curt Hecht
The Weather Channel
Mark Howard
Forbes.com

Eric Johnson
ESPN.com
Neil O. Johnston
CMG Digital
Mike Keriakos
Everyday Health
Seth Ladetsky
Turner Broadcasting System
David Lawenda
Facebook
Jean-Philippe Maheu
Twitter
Suzanne McDonnell
Discovery Communications
Jim Norton
AOL
Leslie Picard
Time Inc.
Penry Price
LinkedIn


Scott Schiller
NBC Universal Digital Media
Drew Schutte
Condé Nast
Tad Smith
Cablevision Systems Corporation
Mollie Spilman
Millennial Media
Jon Steinberg
Buzzfeed
John Trimble
Pandora
Jacob Weisberg
Slate
Mike Welch
AT&T AdWorks
Troy Young
Hearst Magazines Digital Media


Ex-Officio
Founding Chairman
Rich LeFurgy
Archer Advisors
Treasurer
Bruce Gordon
Disney Interactive Media Group
Secretary
Joe Rosenbaum
Reed Smith LLP
Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 27 of 29

PwC Page 27 of 28

PwC New Media Group with the Entertainment, Media, and
Communications practice
As business, accounting, and tax advisors to many of the world’s leading Entertainment, Media, and
Communications (EMC) and Technology (Tech) companies, PwC (www.pwc.com) has an insider’s view of trends
and developments driving the industry. With approximately 1,200 practitioners serving EMC and Tech clients in
the United States, PwC is deeply committed to providing clients with industry expertise and resources. In recent
years, our pioneering work in EMC and Tech has included developing strategies to leverage digital technology,
identifying new sources of financing, and marketplace positioning in industries characterized by consolidation and
transformation. Our experience reaches across all geographies and segments of the EMC and Tech sectors,
including broadband, wireless, the internet, music, film, television, publishing, advertising, gaming, theme parks,
computers and networking, and software. With thousands of practitioners around the world, we're always close at
hand to provide deep industry knowledge and resources.
PwC’s New Media Group was the first practice of its kind at a Big Four firm. Currently located in New York, Los
Angeles, Boston, Seattle, and the Bay Area, our New Media Group includes accounting, tax, and consulting
professionals who have broad and deep experience in the three areas that converge to form new media: advanced
telecommunications, enabling software, and content development/distribution.
Our services include:
• Business assurance services
• Web audience measurement and advertising delivery auditing and advisory
• IAB Measurement Certification Compliance auditing
• Privacy policy structuring, attestation, and compliance advisory
• Mergers & acquisitions assistance
• Tax planning and compliance
• Capital sourcing and IPO assistance
For more information about our New Media Group, contact one of the following PwC professionals:
New York
David Silverman
Partner, Assurance Services
646.471.5421
david.silverman@us.pwc.com
New York
Russ Sapienza
Partner, Advisory Services
646.471.1517
russell.j.sapienza@us.pwc.com
New York
Michael Altschul
Manager, Advisory Services
646.471.4903
michael.altschul@us.pwc.com

Boston
Vic Petri
Partner, Assurance Services
617.478.1698
victor.petri@us.pwc.com
San Jose
Mike Pearl
Partner, Assurance Services
408.817.3801
michael.pearl@us.pwc.com
Seattle
Suzanne Faulkner
Partner, Assurance Services
206.398.3550
suzanne.faulkner@us.pwc.com

Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 28 of 29

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should
not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express
or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law,
PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any
consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision
based on it.

© 2014 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC
network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

www.pwc.com/e&m
Case 2:l4-cv-00445-CW Document 22-5 Filed 06/30/l4 Page 29 of 29



Exhibit F

Case 2:l4-cv-00445-CW Document 22-6 Filed 06/30/l4 Page l of 3
BY JIM CONAGHAN, NM VICE PRESIDENT OF RESEARCH & INDUSTRY ANALYSIS
The audience engaging with digital content offered by newspaper media reached a n
all-time high, totaling 161 million adult unique visitors in March 2014. The count
represents a 19% increase from the 135 million unique visitors measured by corn'rn,·/:>
in April 2013.
Overall, newspaper digital media reached nearly eight in ten (78%) online adults in the
u.s. last month.
Young adults, those age 18-24, who use only mobile devices to access newspaper
digital content showed the largest increase, rising by 146% in March 2014 from April
last year (see table).
The data show that the increased use of mobile devices among all age groups is
expanding the newspaper digital audience in a significant way. While the use of desktolp
or laptops as the only device for newspaper digital content declined for all age gro
except for those 55 or older, all ages using mobile in some form grew substantially.
Audience growth has pushed up the net reach of newspaper digital content. In April
2013,70% ofthe online adult audience engaged with newspaper digital content.
Following a seasonal drop in May and June, the net reach grew to the new peak of
in March 2014.
By age, the net reach was highest among those 25-34, at 84%. Both the 35-44 and 4:>-:)4
age groups show the identical net reach of79%, while the reach those age 55 or older
was 77%. Among the youngest group, age 18-24, net reach was 71 %.
Compared with April, 2013, net reach rose for all age groups, including the youngest
adults (see chart). The reach percentage grew by 12 points for the 25-34 group, to
from 72%. It increased 10 point to 79% from 69% for the 35-44 group, and 8 points for
the 45-54 group, to 79% from 71 %. For those 55 and older, reach climbed 7 points to
77% from 70%. The 18-24 age group showed a 5 point gain in net reach, to 71 % from
66%.
Case 2:l4-cv-00445-CW Document 22-6 Filed 06/30/l4 Page 2 of 3
comScore's multiplatform measurements - which show combined mobile and
desktop, and mobile-exclusive users - launched early last year. These measurement
offer an unduplicated count ofthe total audience, meaning that a visitor is counted
once, even when they access content on multiple computers or devices.
Note: The term mobile-only or mobile-exclusive refers to using only a smartphone or tablet,
and not a desktop or laptop computer to access newspaper digital content during the month.
Usage of the traditional printed newspaper is not captured in the com Score dataset.
First Published: April 28, 2014
Case 2:l4-cv-00445-CW Document 22-6 Filed 06/30/l4 Page 3 of 3



Exhibit G

Case 2:l4-cv-00445-CW Document 22-7 Filed 06/30/l4 Page l of 3
PewResearch
Journalism Project
Where Americans Get News
CHART
'"
" •


"

• ,
< .,





" •


"
,
=
-
1991 1994 1996 1991 2000 2002 2004 2006 2008 2010 2012
.. TV .. Radio ... Newspaper '" Online Arrf Dlgltlll News
Souree: Pew RelM!areh Center. ""In ChlDpnS Newt Lana-clpe, Even Televition i, Vu1nerlble.
s.ptember 27. 20111..
Note: nw. mrvey is biennial, the next .pdate will be in the fill oi2014
Case 2:l4-cv-00445-CW Document 22-7 Filed 06/30/l4 Page 2 of 3
PewResearch
Journalism Project
Where Americans Get News
CHART
<-
-

P4_
,.,
0
• •
,
• •
"

..
'*
• • •
-
• • •
-

" "
-
• • •
-
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-
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"
." •
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... _-



"
Source: Pew Beleuch Center. ChIDP"1 New. Llmdlcape, EnD TelevWOD it Vulnerable.
September 27. 11012.
Note: Thill survey i& biennial, the ned update will be in the fall Ofl1014

..
Case 2:l4-cv-00445-CW Document 22-7 Filed 06/30/l4 Page 3 of 3



Exhibit H
Case 2:l4-cv-00445-CW Document 22-8 Filed 06/30/l4 Page l of 2
PewResearch
Journalism Project
Newspaper Circulation
In Million.
CHART
"
=
-
": ....
• • • • • • • • • • • • •
. . . . . ......
" -.
20 "" I
• •
... ..
• • • • • •
• • •
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1 \1\15
'"00
2005 2010
.. Weekday Momlng .. Weekday Ewnlng .. Total Weekday Sunday
Souree: Editor lIld Poblither Yearbook
Note: 2010 and 2012 fllunure elll:lmatM by RickEdmondl! and Emily GIukIn baed on the period
endinJ; Sept. 30. 2011 ill NAA data extrapolated from AAK, billed OIl new auditinr; rules. 2013 ficurel
are blled OIl an &.Daly .. by NAA'. John Marray.
Case 2:l4-cv-00445-CW Document 22-8 Filed 06/30/l4 Page 2 of 2

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