the media monthly media sector activity report … monthly_jan2014.pdf · media sector activity ......

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INVESTMENT BANKING

Report Summarizing Media Sector Activity

JAN-FEB 2014

Fred SeegalVice Chairman

212.508.1626 (w)917.992.5027 (m)[email protected]

Juan MejiaDirector

212.508.1659 (w)917.716.8143 (m)

[email protected]

Mark BoidmanDirector

212.508.1661 (w)917.526.1092 (m)[email protected]

Media, Entertainment, Communications & Technology

Joe SteinManaging Director212.508.1662 (w)203.550.2184 (m)

[email protected]

Capital Markets

Rich BrailHead of Media, Ent.,

Comm. & Tech212.508.1628 (w)646.458.1570 (m)

[email protected]

The Media Monthly*Formerly Known as The Advertising Market-At A Glance

Special Highlights in This Issue:

International CES 2014 Key Takeaways

Panasonic Connected Experiences Demonstration (CES 2014)

NRF 2014 Annual Convention and Expo – Key Takeaways

Super Bowl Advertising Recap

Mobile Advertising Update

PJSC’s Mark Boidman has been elected to the board of directors of the Digital Signage

Federation. The DSF is the only not-for-profit independent voice of the digital signage industry, reflecting its diverse constituencies. Its goal is to continue building a strong foundation for the

advancement of the industry. To this end, the DSF partners with its members and key

organizations to provide education, networking, and advocacy to enhance the

growth of the industry.

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Wearable Technology

(a) Source: Notes from Consumer Electronics Show 2014 and Gartner Research.

International Consumer Electronics Show 2014 - Key Takeaways

Provides users with tools for health, entertainment, sports and communication

By 2017, wearable wireless devices are projected to reach ~170M units globally

Wearable technology accounted for $8B in sales in 2013, and is expected to increase to $20B by 2017

– Fitness watches accounted for 97% of 2013 wearable tech sales– ABI Research projected that by 2016, wearable medical device

market will exceed $2.9B

Driverless Cars & Smart Glasses

Driverless cars are already on the road in California, Nevada and Florida

Connected cars will allow “drivers” to pursue other activities, including reading, working and sleeping

Many different auto companies are vying to enter the space first, while start ups and technology companies, including Google, are also entering the industry

Google Glass will be brought to the masses later this year with a deal struck between VSP and Google

– It will offer prescription lenses and subsidized frames for Google Glass to appeal to a wider range of consumers

Sales expected to reach $133M in 2014, up from $87M in 2013 (a)

Highly competitive environment dominated by start-ups

Used in a multitude of industries, including space exploration, where objects can be manufactured on demand, avoiding costly transportation to Earth’s orbit

3D Printing

Internet of Things / Connected Devices

Connecting any object to the Internet and enabling devices to engage with each other

– Forecasted to generate $14.2 trillion by 2022– With Google’s recent acquisitions of Boston Dynamics,

Nest, and DeepMind, Google is front-running to an ecosystem of Artificially Intelligent robots and objects that are able to improve transportation, manufacturing and ease day-to-day consumer life create

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Aupeo, a leader in HD-audio solutions, operating as a wholly owned subsidiary of Panasonic, is working to create the first audio platform capable of streaming music in DTS-HD surround sound in the automobile

― The addition of multi-channel audio willfurther enhance the technology and brand relationship tools for its automotive customers

― 50 million installed devices

― Partners include 7 of the top 10 car brands and all major mobile consumer devices

Source: Wall Street Research.

Panasonic Connected Experiences Demonstration (CES 2014)

Panasonic Connected Screens in Retail

Panasonic Connected Out-of-Home

Panasonic Connected in the Air

In-flight companion app provides in-flight entertainment experience, allowing an airline passenger to preview flight entertainment options from anywhere and at anytime, increasing customer engagement

Enables passengers to access and control entertainment, navigate on-board shopping and purchase content

Airlines can also build companion app functionality within their own customer facing mobile apps

Interactivity and content based on what the screen receives in the environment

Sensor-enabled perceptive screens will allow media buyers to place unique responsive content, derived from the information about appearance, attributes, possible interests, and even moods of the viewer or passerby

Panasonic Connected in the Car

With its partner Branded Cities Network, Panasonic is building the digital-out-of-home network for delivery of real-time dynamic content to displays across all leading DMAs in North America

― Media placement and management system for all digital-out-of-home environments

― Targeted recommendations would provide effective media buys and inventory information across all digital channels

― A brand’s message would go out over the entire network in targeted, contextual ways

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NRF 2014 Annual Convention and Expo – Key Takeaways

Whether brick-and-mortar or online stores, the importance of an engaged customer community is what provides a unique strength to retail business

OpenSky, STORY and LittleBlackBag.comare companies with unique “aspects of retail innovation”

― OpenSky offers over 35,000 products and has over 3M members, connecting through the company’s website, which resembles a social media site. It allows members to follow updates, share their opinions about brands, and “like” them in a Facebook-like fashion. The company was recognized as Fast Company’s Most Innovative in 2013

― STORY is a retailer with another unique concept, which takes a magazine’s point of view, and updates in its entirety every eight weeks like a gallery

― LittleBlackBag.com’s concept is loosely based on Japanese tradition known as the “Lucky Bag sale,” where retailers fire-sell mystery bags of products, which are usually changing hands among buyers thereafter

Besides the focus on customer experience, personalization and customization, conference panelists stressed the significance of retailers’ concentration on a seamless delivery of products

― Optimal inventory availability and transportation of merchandise from anywhere with record speeds empowered by mobile technologies

― Chairman of Twitter and CEO of Square Jack Dorsey indicated another way to innovate retail – through rethinking the concept of receipt

― Dorsey described Square’s Square Wallet as a receipt in the form of an application. Customers who walk into a Square Wallet merchant can be greeted by name, get special service and pay without taking out their phone or wallet

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Source: Company press releases and Wall Street Research.

This year’s Super Bowl was more than just about TV ads. Out-of-home advertising in areas of New York saw a significant increase

The majority of Clear Channel Outdoor’s Times Square billboards were sold to NFL sponsors

BPI Sports, the fastest growing sports nutrition company, partnered with CBS Outdoor to make its Super Bowl ads campaign debut in Times Square

Branded Cities Network used the Super Bowl to demonstrate its interactive capabilities allowing advertisers to incorporate social media

– Viewers of a Verizon campaign would tweet their response/vote to a football question about their favorite Super Bowl team and each night the Empire State Building's spire turned the colors of the team with the most votes. Axe Body Spray's #kissforpeace campaign (http://www.axepeace.com/) utilized Branded Cities Network’s NASDAQ sign to provide Times Square pedestrians a call to action to Instagram, or tweet pictures of themselves kissing, to have it posted on the company's website

Experiential marketing also benefitted from the Super Bowl as Times Square was converted into Super Bowl Boulevard with a 180-foot toboggan ride

Macy’s styled its Herald Square location entrance with a big football to lure its customers shopping for NFL merchandize

2014 Super Bowl TV ad rates averaged $4M per 30 seconds, totaling $300M for commercials during this year’s game

A survey of 504 TV-viewers of the Super Bowl showed that the average viewer could recall only 5.4 brands advertised during the game. The most memorable brands were Budweiser, Doritos, Coca-Cola, PepsiCo and GoDaddy.

Super Bowl Advertising Recap

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Mobile Ad Spending Update

Independent research firm Gartner estimated that global mobile ad revenue is expected to hit $18B in 2014, compared to $13B in 2013. Gartner analysts cite an improved economy and maintained interest in the mobile medium to be conducive to further increases in spending that may reach $42B by 2017. Despite a clear growing trend in all regions, North America is expected to be the most vibrant, while saturated markets in Asia/Pacific and Japan are projected to see the slowest growth of all regions

Amazon and EBay Launch in India

After several years of sluggish economic growth, India’s government decided to abandon the strict rules preventing foreign companies from warehousing their inventory in the nation’s territory

– Earlier this month, the country’s Department of Industrial Policy published a report considering options to relax rules for online retailing and requested e-commerce companies to register their opinions

– U.S. companies, nonetheless, found a way to conduct business in India while waiting for the government’s ruling by delivering and storing goods on behalf of Indian merchants

– On January 20th, Amazon announced its plans to open a 150,000 sq. ft. warehouse in Bangalore to complement its Mumbai facility

– Even active lobbying does not guarantee that foreign companies will be able to expand into direct sales

Among the most used social platforms, Facebook continues its lead despite a decelerating level of its active usage. Google’s YouTube was placed second, while Google+ with its 6% increase in website activity trailed right after. Twitter’s growth at 2% positioned it the last out of the big four

Management consulting firm OC&C teamed up with Google to estimate the value of cross-border online trade. The research predicts that booming e-commerce will drive the value to $130B by 2020, a 5x increase from the current levels

Connecting consumers across a variety of platforms represents the focus of marketing executives, attending the AdExchanger’s Industry Preview 2014

– Executives indicating an accelerating shift to cross-device targeting included Bill Simmons, the CTO of DataXu, and Bob Lord, CEO of AOL Networks. Mr. Lord made a comment that around 45% of AOL’s clients’ display budget is allocated towards cross-device linkage campaigns

– Despite the growing trend, the main challenge of employing a multi-platform strategy –accurately measuring efficiency – still remains unsolved due to limited cross-device recognition capabilities

Power of Cross-Platforms

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Benjamin Mathieu joined Astral Out-of-Home as senior director, business development

Daktronics appointed Reece Kurtenbach its President and CEO, while Peter Egart will become the VP of Daktronics EMEA and LatAm.

The Governor’s Office of Energy (GOE) approved a partial property tax incentive to build the world’s largest light–emitting diode (LED) digital screen in Las Vegas


Sector News

January Out-Of-Home Media

Grandi Stazioni, owner of the GrandiStazioni Media digital signage network, plans to convert to BroadSign International’s cloud-based digital signage platform

China’s largest auto-dealership AKD Luxury Cars Mall, decorated the walls of its 120,000 sq. ft. store with 700 42-inch displays showing content form manufacturers as well as AKD’s own

Standard & Poor’s Ratings Services assigned CBS Outdoor Americas a BB- corporate credit rating with a stable outlook

Outcast Media Network was acquired by Gilbarco Veeder-Root, a leader in retail petroleum technology. Outcast Media, which owns close to 20,000 screens nationwide at gas and pumps, will operate as the media business unit of Gilbarco

JCDecaux announced it has been awarded a 15-year contract for advertising bus shelters in Paris as well as ad spaces on Brussels public transport operator

Lamar Advertising announced a private $510M offering of senior notes

DynaScan introduces World’s Brightest 84” LCD with 4K Resolution producing a sunlight viewable 2,500 nit image

Clear Channel Airports, a division of Clear Channel Outdoor, launched advanced digital media at Philadelphia International Airport to provide an improved and engaged experience

White Castle opened a restaurant in Ohio with self-ordering touch-screen stations

McGavren Guild Malls plans to expand offerings in the mall industry, representing backlit inventory in 19 malls along with a Sky Banner within the Mills Properties

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Sector News

January Radio

AOL bought Gravity, a content optimization company, for $83M

Mood Media announced an agreement to sell its Latin American music operations to its long-term independent affiliate and operating partner Stingray Digital

Pandora launched its first in-cast ads, signing deals with BP, Ford, State Farm and Taco Bell. It announced its plans to offer advertisers the ability to buy in-stream spots targeting in-car listeners

Clear Channel announced new automotive partnerships: iHeartRadio digital app will be available in new Jaguar, Land Rover, Volvo and Kia vehicles

AOL agreed to sell its SHOUTcast broadcasting server technology and Winamp media playerservices to online radio aggregator Radionomy

Free Lance-Star Publishing, newspaper publisher and radio broadcaster, has filed for Chapter 11 with plans to sell its assets after defaulting on secured debt

Clear Channel plans to stage its first iHeartRadioCountry Festival March 29 in Austin, Texas

Nielsen estimated that European advertisers decreased their spending by 6.5% on radio; LatAmboosted its investments in radio ads by 12.4%

Wireless providers topped radio advertiser counts, airing ~80,168 commercials on stations, tracked by Media Monitors

Cumulus Media announced its purchasing of two radio stations in Chicago from Merlin Media

Nielsen reported that music streams expanded 32% in 2013 reaching 118-billion streams. By Nielsen’s estimates, 68% of U.S. consumers streamed music in the past year, boding well for continued growth in 2014

Radio/TV station deal volume in 2013 reached pre-crisis levels

Global Radio’s revenue rises 5%, but profit slides due to higher interest expense and charges

Congressman Henry Waxman, a longtime advocate of a performance royalty for over-the-air radio will not seek re-election after 20 terms

Bob Pittman extended his contract as the CEO of Clear Channel through 2019

After more than a decade, John Hogan finished his decade-long tenure as chairman and CEO of Clear Channel Media and Entertainment

Darren Davis will head the new group at Clear Channel Networks, which includes Premier Networks, Total Traffic and Weather Network, and the iHeartRadio Network

The Radio Advertising Bureau’s managing director Simon Redican is appointed CEO of the National Readership Survey

TalkSport forms Daily Mail partnership ahead of World Cup to produce on-air features with Sportsmail journalists and big-name columnists

A study conducted by programmers showed that country music radio maintains its broad demographic appeal, attracting 18-34 year-olds

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Sector News

January Broadcasting / Distribution

TiVo agreed to acquire Digitalsmiths, a cloud-based content recommendation service for the pay TV industry, for $135M in cash

Liberty Global buys the Dutch cable operator Ziggo for $13.6B, allegedly outbidding Vodafone. The deal values Ziggo at ~11x 2014E EBITDA

Hemisphere Media bought 3 Spanish cable networks – Pasiones, Centroamerica TV, TV Dominicana – for $102M

21st Century Fox agreed to sell its 47% stake in Star China to China Media Capital and Star China’s management team

21st Century Fox pays up to $900M for YES Network, increasing its stake in the company to 80%

LG Electronics is negotiating terms with FOX to buy the content for LG’s WebOS TV

AllDigital declined to enter merger talks with Abacast, which intends to control AllDigital’sstreaming video services

Amazon dismissed reports about its plans to launch an over-the-top pay-TV service

The FCC is set to launch a major spectrum auction that could attract nearly $46B in investment from wireless carriers and satellite-TV operator Dish

Google launched a new app for Apple’s iOS App Store that lets users watch Google’s media content directly on iPhone or iPad devices

Dish Network’s Chairman Charles Ergendefended his acquisition of $700M of LightSquared’s secured debt, claiming that he bought it on his own behalf and not for Dish

Comcast added 43,000 video subscribers in 4Q’13, up from a loss of 7,000 last year

Pearson’s profits for FY’13 were below expectations due to continued problems in its education business

DirectTV stopped carrying The Weather Channel after the two sides failed to reach a new deal

Netflix is working to stream original 4K programming to Ultra HD televisions through its app

Online-video start-up Aereo that offers access to local TV stations announced it was raising $34M to further expand

Sony announced plans to launch a cloud TV service business

Viacom’s Paramount Pictures plans to stop releasing movies on 35-mm film in the US. The move renders it the first major studio to go all-digital

World Wrestling Entertainment announced a launch of the WWE Network, its first-ever 24/7 streaming network in the U.S

YouTube and DreamWorks Animation teamed up to produce an original series that will run on the Google-owned video platform

Viacom launched a customized children’s TV channel

CBS and Amazon extended their content licensing agreement under undisclosed terms

Tribune appointed Katchy Clements as COO of its broadcasting division

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Google acquired Nest Labs, the company behind the Nest Learning Thermostat and the Nest Protectsmoke carbon monoxide detector, for $3.2B

Keynote Systems acquired Meucci Solutions NV, a provider of mobile fraud detection and end-to-end quality of service monitoring

AXS, the digital ticketing and media brand, acquired content creation network Examiner.com

Groupon announced acquisition of ideeli, a flash fashion retailer for $43M

The FTC seeks comment on Nielsen Holdings’ plan to sell its LinkMeter cross-platform audience measuring services to comScore under Nielsen’s antitrust settlement with the FTC clearing the company’s $1.25B acquisition of Arbitron

Discovery Communications and Scripps Networks Interactive reported to have called off negotiations about a possible merger

Activist investor Carl Icahn made public comments about potential benefits of eBay divesting its PayPalpayments unit

Alipay, the e-payment affiliate of Alibaba, reported that online spending in China’s poorer provinces, such as Guangxi, grew 156% between 2012 and 2013, faster than in more developed regions in China

Care.com’s shares up 43% after its $91M IPO

Google reported advertising revenue totaled $14B in 4Q’13, up 17% from the previous year. The number of ad clicks jumped by 31% year-over-year while the average price-per-click fell 11%. eMarketer estimated YouTube’s revenue at ~$5.6B

Taiwanese contract manufacturer Foxconn reportedly shipped nearly 1.5 million iPhone 5S devices to China Mobile. The move is indicative of the scope of demand for Apple devices in China, and may reportedly boost Apple's market share in the country

Verizon Communications revealed that FBI made at least 1,000 requests for information about the company’s subscribers in 2013

Yahoo! announced that Chief Operating Officer Henrique De Castro has left the company

Other Key Digital Media, Entertainment, Tech Headlines

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FCC’s End of Net Neutrality - Possible Consequences for Advertisers

With the Federal Court ruling to abandon net neutrality, Internet services providers like Verizon, AT&T, Comcast might be able to charge higher rates for higher speeds of content delivery

– The extra cost paid to ISPs would hurt media companies prompting them to spend less on the content creation leading to lower quality content

– Instead, viewers might be charged fees for access to some data-heavy content sites

– AT&T recently announced a sponsored-data program that could replace the existing business model

• In early January, AT&T proposed that advertisers should pay for the data needed to access content on a smartphone or a tablet

• A company could subsidize the bill for AT&T’s wireless customers, thus paying for the users’ content consumption

• United Health Group indicated its plans to sponsor the cost of streaming video on a mobile device

• Time Warner and Verizon Wireless made no comments about their plans to sponsor data plans in the future

PJSC’s Mark Boidman’s article titled: Out-of-Home Media as the Gateway to Mobile Commerce and Retargeting

will be published in the upcoming issue of PRI’s Journal of Retail Analytics

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Source: Capital IQ, Bloomberg and Wall Street research.

Market Indicators

Share Price Performance

Performance% of 52 1- Day 1-Week 1-Month YTD

Week % % % %1/31/14 High Change Change Change Change

Nasdaq Composite 4,104 97% (0.5%) (1%) (2%) 32%Dow Jones Industrial 15,699 95% (0.9%) (1%) (5%) 17%S&P 500 1,783 96% (0.6%) (0%) (4%) 22%

Bloomberg Economic Forecast1Q14E 2Q14E 3Q14E 4Q14E 1Q15E

Real GDP 2.50 2.80 3.00 3.00 3.00Core CPI 1.30 1.70 1.70 1.90 2.00Fed Funds 0.25% 0.25% 0.25% 0.25% 0.25%3 Mo. LIBOR 0.27% 0.30% 0.33% 0.38% 0.45%10 Yr Treasury 3.01 3.15 3.29 3.43 3.51Unemployment 6.80 6.60 6.50 6.40 6.30

Stock Price 1-Week % 1 - Month % YTD % Stock Price 1-Week % 1 - Month % YTD % Out-of-Home Media 1/31/14 Change Change Change Radio 1/31/14 Change Change ChangeAPG|SGA CHF 267.00 (0%) 9.0% 8% Beasley Broadcast Group $9.14 (1%) 1% --AirMedia Group $2.06 (2.8%) (3%) (5%) CC Media 6.80 (3%) (6%) (3%)Clear Channel Outdoor 9.45 (1%) (9%) (7%) Cumulus Media 6.69 (2%) (16%) (16%)Clear Media HK$7.10 (1%) 1% 7% Emmis Communications 2.97 (3%) (0%) 8%Goldbach Group CHF 19.05 1% (0%) 2% Entercom Communications 9.43 (3%) (14%) (13%)JCDecaux €31.66 3% 6% 6% Radio One 5.50 11% 8% 35%Lamar $48.68 (2%) (6%) (6%) Saga Communications 49.34 (1%) (4%) (2%)Mood Media CAD 1.05 38% 30% 31% Salem Communications 8.60 -- (5%) (6%)National CineMedia $18.68 (4%) (5%) (5%) Sirius XM Radio 3.58 (2%) 0% 2%RMG Networks 4.75 (8%) (9%) (0.1) Spanish Broadcasting System 4.18 5% 15% 15%Ströer €13.17 (2%) 2% 6%

Out-of-Home Median (1%) (0%) 2% Radio Median (1%) (2%) (1%)Out-of-Home Mean 2% 1% 3% Radio Mean 0% (2%) 2%

Broadcasting Advertising/MarketingEntravision $6.03 3% (6%) (0%) Dentsu ¥4,085.00 0% (5%) 77%Gray Television 11.38 4% (22%) (22%) Havas $5.82 1% (4%) (4%)LIN Media 24.71 7% (12%) (11%) Interpublic 16.32 (3%) (7%) (7%)Media General 17.83 0% (20%) (20%) Omnicom 72.58 0% (2%) (2%)Nexstar Broadcasting Group 48.05 7% (11%) (13%) Publicis €65.78 1% (1%) (2%)Sinclair Broadcast Group 31.42 4% (14%) (11%) Valassis Communications $34.00 (0%) (0%) (0%)

WPP £12.77 (2%) (8%) (7%)Broadcasting Median 4% (13%) (12%)Broadcasting Mean 4% (14%) (13%) Advertising/Marketing Median 0% (4%) (2%)

Advertising/Marketing Mean (0%) (4%) 8%Diversified MediaCBS $58.72 1% (7%) (7%) New MediaDiscovery 79.78 1% (10%) (10%) eBay $53.20 (2%) (0%) (1%)Disney 72.61 (0%) (5%) (5%) Google 1,180.97 5% 7% 6%Hemisphere Media Group 11.50 0% (2%) 0.0 Marchex 9.36 (4%) (3%) (5%)News Corp. 15.96 (1%) (10%) (0.1) Millennial Media 7.94 18% 6% 8%Scripps Networks 72.52 (1%) (15%) (15%) Yahoo! 36.01 (5%) (10%) (9%)Time Warner 62.83 (1%) (9%) (9%)Viacom 82.10 1% (5%) (6%) New Media Median (2%) (0%) (1%)

New Media Mean 2% (0%) (0%)Diversified Media Median (0%) (8%) (8%)Diversified Media Mean (0%) (8%) (8%)

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10.5 x

9.0 x

5.8 x

9.9 x 8.8 x

8.1 x 7.9 x 7.4 x 6.5 x

10.8 x

7.9 x 7.7 x 7.7 x 6.8 x

--

5.0 x

10.0 x

15.0 x

Take-Two ElectronicArts

Activision DISH Network Charter Comast CablevisionTime WarnerCable

DIRECTV Cineplex RegalEntertainment

Cinemark AMC Theater Carmike

12.6 x 11.6 x

10.5 x 10.4 x 10.2 x 10.1 x 9.3 x 9.3 x 9.3 x

12.3 x

10.1 x 9.3 x

10.8 x 10.1 x 10.0 x

9.2 x 8.2 x

--

5.0 x

10.0 x

15.0 x

LibertyMedia

Six Flags Viacom WaltDisney

21st CenturyFox

CBS LibertyInteractive

CedarFair

Time Warner Discovery Scripps AMC Entravision Nexstar LIN TV GrayTelevision

Sinclair

Median: 10.1x

Cable Networks/Content

Median: 13.4x

Music / EventsOnline Media and Ad Services

Median: 11.8x

* Broadcasting 2014 is 2013E – 2014E.(a) EBITDA numbers are based on RMG’s FY13 Q3 guidance.

EV / 2014E EBITDA *

12.3 x 11.8 x 11.1 x 10.9 x

9.1 x

4.4 x 3.0 x

17.3 x

10.9 x 9.6 x 9.1 x

--

5.0 x

10.0 x

15.0 x

20.0 x

NationalCineMedia

Lamar Clear ChannelOutdoor

JCDecaux Daktronics Outerwall RMG Networks(a)

Sirius XM CC Media CumulusMedia

Salem

Median: 10.9x

Out-of-Home Media

Median: 10.3x

Radio

Median: 8.0x

Diversified Media and Entertainment Broadcasting

Median: 10.2x Median: 10.0x

Theaters

Media trading comparables produce a median range of 7.7x – 13.4x 2014E EBITDA, with ~10x being the mid-point

Median: 9.0x

CableVideo Games

Median: 7.7x

23.3 x 21.2 x

19.8 x

13.4 x 10.6 x 9.6 x

8.0 x

12.5 x 11.8 x 9.0 x

NM --

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

30.0 x

35.0 x

Amazon Millenial Media Marchex Google Ebay Shutterfly Yahoo CTS Eventim SFXEntertainment

LiveNation

Pandora

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Source: Capital IQ.* Broadcasting 2014 is 2013E-2014 E.(a) Equity value and enterprise value in applicable stock price currency.(b) Pro forma for acquisitions completed in 2013.

Valuation Metrics

(b)

55.326241 113.8400023 Valuation Multiples GrowthStock Price 52-Week 52-Week Equity Enterprise EV / Revenue EV / EBITDA '12A - '14E CAGR

Out-of-Home Media 1/31/14 Low High Value (a) Value (a) 2014E 2014E Revenue EBITDAClear Channel Outdoor USD $9.45 7.02 10.69 3,376 8,104 2.7 x 11.1 x 1% 2%JCDecaux EUR €31.66 19.17 32.37 7,033 7,090 2.5 x 10.9 x 3% 8%Lamar USD $48.68 41.30 52.33 4,607 6,567 5.1 x 11.8 x 3% 3%National CineMedia USD 18.68 13.38 20.22 2,127 3,011 6.5 x 12.3 x 1% 9%RMG Networks 4.75 4.32 21.75 57 52 0.5 x 3.0 x 16% 51%

Global / U.S. Median 2.7 x 11.1 x 3% 8%Global / U.S. Mean 3.5 x 9.8 x 5% 15%

APG|SGA CHF CHF 267.00 190.30 270.00 786 732 2.4 x 11.1 x (2%) (23%)Ströer EUR €13.17 6.96 15.07 644 1,016 1.5 x 7.8 x 8% 13%Goldbach Group CHF 19.05 17.75 21.60 112 93 0.2 x 2.7 x 2% 6%

Europe Median 1.9 x 9.5 x 3% (5%)Europe Mean 1.9 x 9.5 x 3% (5%)

AirMedia Group USD $2.06 1.50 3.20 123 20 0.1 1.0 0% 1%Clear Media HKD -- 4.74 7.50 3,809 2,974 NA NA (1.0) (1.0)

China Median 0.1 1.0 (50%) (50%)China Mean 0.1 1.0 (50%) (50%)

Mood Media USD CAD$1.05 0.40 2.07 180 761 1.3 x 5.0 x 9% 11%

Total Out-of-Home Advertising Median 2.5 x 11.0 x 1% 3%Total Out-of-Home Advertising Mean 2.8 x 8.9 x (9%) (8%)

RadioBeasley Broadcast Group USD $9.14 3.60 10.00 210 308 NA NA (1.0) (1.0)CC Media USD 6.80 2.20 7.20 596 20,563 3.2 x 10.9 x 1% (0%)Cumulus Media USD 6.69 2.90 8.19 1,373 4,000 3.1 x 9.6 x 6% 5%Emmis Communications USD 2.97 1.43 3.61 124 299 NA NA (1.0) (1.0)Entercom Communications USD 9.43 6.90 11.47 353 872 2.3 x 7.8 x (0%) 1%Radio One USD 5.50 1.18 5.82 261 1,246 NA NA (1.0) (1.0)Salem Communications USD 8.60 5.59 10.14 214 507 2.1 x 9.1 x 2% 4%Sirius XM Radio USD 3.58 2.95 4.18 21,965 24,956 6.0 x 17.3 x 7% 8%Spanish Broadcasting System USD 4.18 2.31 4.97 30 367 NA NA (1.0) (1.0)

Radio Median 3.1 x 9.6 x (0%) (0%)Radio Mean 3.3 x 10.9 x (43%) (42%)

BroadcastingEntravision USD 6.03 1.78 7.27 531 852 3.4 x 10.8 x 4% 5%Gray Television USD 11.38 3.25 15.17 657 1,447 2.9 x 9.2 x 8% 5%LIN Media USD 24.71 9.71 29.24 1,356 2,284 2.9 x 10.0 x 13% 10%Nexstar Broadcasting Group USD 48.05 13.53 56.42 1,461 2,448 3.2 x 10.1 x 26% 29%Sinclair Broadcast Group USD 31.42 13.63 37.50 3,148 5,402 2.6 x 8.2 x 25% 25%

Broadcasting Median 2.9 x 10.0 x 12.6% 10.1%Broadcasting Mean 3.0 x 9.7 x 14.9% 14.7%

Advertising/MarketingHavas EUR €5.82 4.48 6.32 2,346 2,814 1.5 x 9.3 x 1% 3%WPP GBP £12.77 9.91 13.91 17,206 20,189 1.7 x 9.9 x 4% 5%Publicis EUR €65.78 47.83 68.23 14,026 14,716 2.0 x 10.7 x 4% 3%Interpublic USD $16.32 11.91 17.85 6,793 7,940 1.1 x 7.9 x 2% 7%Omnicom USD 72.58 53.76 75.36 18,679 21,861 1.4 x 9.6 x 2% 3%Dentsu JPY ¥4,085.00 2,489.00 4,375.00 1,178,155 1,376,750 0.6 10.4 0.1 NA

Advertising/Marketing Median 1.5 x 9.8 x 3.1% 3.1%Advertising/Marketing Mean 1.4 x 9.6 x 3.3% 4.2%

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63 71

18

33 3

12

14

15

19

13

13

9

15

16

7

9

23

14 $177 $175 $182 $184

$194 $196

--

$40

$80

$120

$160

$200

2012E 2013E 2014E 2015E 2016E 2017E

$6.7 $6.9 $7.3

$7.7 $8.1

$8.6

--

$2

$4

$6

$8

$10

2012E 2013E 2014E 2015E 2016E 2017E

Emerging OOH Traditional OOH

Source: MagnaGlobal as of May 3, 2013.

U.S. Advertising Spending Forecast

(Amounts in billions)

(Amounts in billions)

Directories / Direct Mail

Television Paid Search Online Video Mobile

Display Internet Newspapers Magazines Radio

Out-of-Home

U.S. Advertising Out-of-Home Media Forecast

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Upcoming Events

Dates Name Location Description

February 4, 2014 @AopenEurope Forum Amsterdam, Netherlands

Emphasis on connecting the dots between digital and design

February 4–6, 2014 Social Media Strategies Summit Las Vegas Workshop and network with reps from Do Something and BuzzFeed

February 5, 2014 Apps World North America San Francisco Summit on multiplatform apps

February 11–13, 2014

Digital Signage Expo Las Vegas, NV PJSC’s Mark Boidman will be speaking at the conference titled “Mobile and Digital Signage: how to Reach the Distracted Consumer” and will be a panelist on “Building Investable Value in a Network”

PJSC’s Rich Brail and Marc Cooper will attend


Mobile Marketing Summit San Francisco, CA

Discover growing trends for 2014 and beyond Learn to develop cutting-edge apps and mobile websites


Social Media Week London, United Kingdom

Social media and digital marketing event Focuses on how brands are using social media as

marketing tool

March 16–19, 2014 4As Transformation: The Idea Effect

Los Angeles, CA

Annual conference drawing ~1,300 advertising and entertainment industry professionals

PJSC’s Mark Boidman will attend

March 18–19, 2014 Social Media World Forum New York, NY A leading media platform event with global reach across five continents

March 19, 2014 TMT M&A Forum 2014 London, United Kingdom

Leadership and strategy event Attended by TMT executives, financiers, investors and

professional advisors

March 24–27, 2014 CinemaCon 2014 Las Vegas, NV Largest annual gathering of motion picture theater industry professionals

PJSC’s Rich Brail will attend

March 26–27, 2014 ad:tech 2014 San Francisco, CA

In-depth educational content in a variety of formats to cater everyone: from in-the-classroom panels to hands-on-workshops on the expo floor

March 26–28, 2014 Social Media Marketing World San Diego, CA Discover useful social media marketing techniques from the world’s top executives

March 30–April 1,2014

Interop Las Vegas Las Vegas, NV Attendance requires an application, which ensures attracting the industry’s best and brightest leaders to successfully address challenge of application governance, management, and monitoring

March 30–April 1,2014

2014 ANA Media Leadership Conference

Boca Raton, FL Conference presented by Google will bring together the leaders in media industry to share insights on the newest ways of reaching consumers and optimizing media spend


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Upcoming Events

Dates Name Location Description

April 6-8, 2014 TAB-OAAA Out-of-Home Media Conference & Marketing Expo

Orlando, FL Discover how out-of-home business processes and information are aligning with the needs of advertisers


April 24-26, 2014 Digital Signage Orlando, FL Annual International Sign Expo and education conference

May 4–7, 2014 2014 ANA Advertising Financial Management Conference

Naples, FL Event brings together top marketing finance and procurement professionals interested in cost savings, return on investment, and delivering greater value to organizations

May 13, 2014 DailyDOOH Media Summit London, United Kingdom

Conference will update investors on the latest trends in Digital Signage and Digital Out-of-Home

May 14–15, 2014 NEC Showcase 2014 London, United Kingdom

Event dedicated to presenting the latest advances in display technology across key vertical sectors.


June 16–June 17, 2014

The Corporate Social Media Summit New York, NY Largest corporate gathering for all the latest social media insight and practice

June 28–July 1, 2014

International Society for Technology in Education 2014

Atlanta, GA Conference features an broad array of professional learning and collaborative networking opportunities

July 14–16, 2014 Fortune Brainstorm TECH Aspen, CO Marketplace of ideas that assembles people from the world’s top technology and media companies: thinkers, operators, entrepreneurs, innovators, and influencers

Speaker: Mobile and Digital Signage: How to Reach the Distracted Customer

Panel: Building Investible Value in a DOOH Network

PJSC’s Mark Boidman: Conference: February 11-13 Sands Expo, Las Vegas

18

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MediaNews Group - Brief Overview

MediaNews Group is one of the largest newspaper companies in the U.S. operating 57 major newspapers in 11 states

Key Papers: Denver Post, San Jose Mercury News and St. Paul Pioneer

Daily and Sunday circulation of ~2.3 and ~2.5 million, respectively

Transaction Rationale

Scale operations

– Opportunity to meaningfully increase scale of operations and cash flow

– Added important geographic clusters and markets

– Created opportunities to efficiently pursue digital initiatives

Cost synergies

– Cost savings from reduction of corporate overhead, improved purchasing power for materials and syndicated content

21st Century Media Brief - Overview

21st Century Media operates in 10 states and serves a monthly audience of 21 million

Produces 18 daily newspapers and 117 non-daily publications

– Key newspapers: New Haven Register, Oakland Press and The News-Herald

– Emerged from bankruptcy on April 5, 2013

December 2013

PETER J. SOLOMON COMPANY

The undersigned served as advisor to the Special Committee

of MediaNews Group

Has acquired

2.4 x

5.3 x 5.6 x 6.4 x

4.0 x 3.4 x

6.7 x 6.1 x 6.0 x 6.4 x

A. H. Belo Gannett LeeEnterprises

McClatchy The NewYork Times

5-Apr-13 13-Dec-13

TEV / LTM EBITDA

4.9 x 6.0 x 5.9 x

8.3 x

5.0 x 6.3 x

7.3 x 6.4 x

8.0 x 7.0 x

A. H. Belo Gannett LeeEnterprises

McClatchy The NewYork Times

TEV / Pension Adjusted LTM EBITDA– Production efficiencies and reduction of digital costs

Revenue synergies

– Enhanced ad sales and technology partnership opportunities

– Centralized news distribution and access to new distribution channels

Newspaper Industry

Recent Peter J. Solomon Company Transaction

19

PJSC Overview

www.pjsolomon.com

Providing Sound, Unbiased Advice to Clients for 25 Years

Focused advisory business, providing high-quality advice and execution, free from conflicts of interest

Founded in 1989, Peter J. Solomon Company (PJSC) is one of the original independent investment banks and financial advisory firms with approximately 75 professionals

PJSC is a trusted advisor to chief executives, principal shareholders, Boards of Directors and Special Committees

PJSC develops long-term client relationships based on trust and independent advice

Our senior bankers bring knowledge and experience to each client matter and are involved in each engagement

PJSC is at the forefront of media, technology and retailing, with a focus on distribution of

goods and services, and content, via both traditional and online channels

PJSC has completed over $175 billion of M&A,

restructuring and financing advisory assignments

PJSC is a truly independent advisor and does not

underwrite or trade securities, publish research, manage or

invest capital

PJSC focuses on a diverse set of industry verticals including

Media / Technology, Retail / Distribution, Consumer

Products, Restaurants and Healthcare

Mergers & Acquisitions

Special Committee

Advisory

Restructuring / Recapitalization

Financing and Capitalization

Advisory

Financial Opinions

Family / Private Business Advice

PJSC

If you wish to subscribe/unsubscribe to The Media Monthly, please contact:

Prior issues available online:http://www.pjsc.com/pjsc-commentaries

Jason LiaoAnalyst

[email protected]

Marina MikheevaAnalyst

[email protected]

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