Overview and Status of Radio RevenueJuly 16, 2008

AD SPENDING FORECAST LOWERED AGAINBy STUART ELLIOTT | July 9, 2008Leland Westerfield, a senior analyst at BMO Capital Markets in New York, sliced in halfhis forecast for growth in ad spending this year. In a report on Monday, Mr. Westerfieldrevised his prediction to a gain of 1.8 percent, compared with his previous forecast foran increase of 3.6 percent citing …

CONSUMER SPENDING SLIDE KILLING MADISON AVENUE By HOLLY M. SANDERS | July 9, 2008Coen predicts US ad spending will rise just 2 percent in 2008, down from his earlier estimate of 3.7 percent, despite the double boost of political spending and the Olympics. In a report released yesterday, Coen didn't mince words:

"The advertising industry is presently in a severe slump."

“… slowdowns in ad spending by major marketers in large categories like automobiles and financial services.”

MAGNA CUTS AD GROWTH FORECAST TO 2%By SUZANNE VRANICA | July 9th, 2008Among the marketers cutting ad spending are those whose businesses are being hit hard by higher gas prices or the housing-market downturn, such as automotive, retail and financial-services companies, ”according to TNS Media Intelligence. Magna says,“Ad-spending growth of 2% would make 2008 one

of the worst years for advertising since 1990.”

2008 Forecasts

“… Because consumers’ disposable income has failed to improve … we have lowered the 2008 forecast…”

– Bob Coen’s Insider’s Report, December 2007 and July 2008

“U.S. advertising cycle recovery unlikely before 2010.” – Lee Westerfield ‘s Broadcasting Report, November 2007 and July

2008

Sales Results: Q1 2008 vs. 2007

Source: Company Reports

2003 20072003 2007

$190.3b

$337.7b

$213.4b

$164.9b

Traditional AdvertisingAlternative Advertising

and Marketing

Source: Veronis Suhler Stevenson, Communications Industry Forecast 2007-2011

Advertising and Marketing Growth+

+

Radio Revenue 2004 to 2008Year Over Year Quarterly Revenue Change

Source: Miller, Kaplan, Arase & Co.

7%

-7%

0%

Q32%

Q4-1%

Q14%

Q22% Q3

1%Q41%

Q12%

Q20%

Q31%

Q4-3%

Q10%

Q2-1%

Q30%

Q43%

Q11%

Q2-1% Q3

-5%

Q4-4% Q1

-5% Q2-6%

2003 2004 2005 2006 2007 2008

San Antonio Austin Las Vegas Sacramento

Housing Appreciation* 5.8% 2.0% -22.8% -8.2%

Overall*** 7.7% 15.1% -7.0% -14.9%

Real Estate ** -10.9% -9.9% -50.9% -46.1%

Financial Services** -24.7% 21.6% -29.6% -38.7%

Furniture** -3.8% 37.1% -13.1% -36.5%

Home Improvement** -18.5% -20.8% -38.1% -34.9%

Automotive** 15.1% 17.1% -10.2% -37.7%

Effect of Housing on Radio Revenue Growth

Source: Miller, Kaplan, Arase & Co. * Based on 02/08 data from FISERV ** X-Ray data for the 3 months ended March 2008*** Market revenue data for the 4 months ended April 2008

• Represents $1B opportunity for Radio• Key categories of importance for the industry due to declining or disproportionate share/spend levels• Spent $3.5MM less in Radio in 1st half ‘07 vs. 1st half ’06• Spent $11.6MM more in Radio FY ‘07 vs. FY ’06• 2% key account total increase as compared to a 2% industry decline

Key Accounts

• Since 2006, media spending by Key Advertiser Focus clients has decreased $773 million for the January through April time period.

• During that same 4 month time period, 2007 vs. 2008, AT&T's total media spend dropped by $88 million and Johnson & Johnson's by $61 million.

Key Accounts – Total Media Spending2006 - 2008

Key Accounts 

Allstate Corp. Miller BrewingAmerican Express Co. NestleAnheuser-Busch Cos Inc. Pepsico Inc.AT&T Inc. Procter & Gamble Co.Best Buy Co Inc. Sprint Nextel Corp.BMW Target Corp.Campbell Soup Co. Time Warner Cable Inc.Capital One Financial Corp. T-MobileCircuit City Stores Inc. ToyotaCoca-Cola Co. UnileverDIRECTV Group Inc. Visa USA Inc.Federated Wachovia CorpFord Wal-Mart Stores Inc.General Motors Washington Mutual Inc.Hewlett-Packard Co. Wendy’s Intl. Inc.Johnson & Johnson Wrigley Kraft (Altria) Yum Brands

Lowes Cos Inc.

“Advertising growth is

closely correlated with the

economy.”- Bob Coen’s Insider’s Report, July

2008 

2004-2007 Dollar Diff: $828,019.5m2004-2007 Percent Diff: 3%

--

Source: TNS AdSpender

Key Accounts – Total Media Spending2004 - 2007

Engagement Progress• Katz, Interep, RAB joint venture kicked off

– Hyundai/Kia– McDonald’s– Wal-Mart

• Goals:– Increase Radio’s share of budgets– Generate incremental revenue activity for National and Local

Radio• Strategies:

– Elevate the dialogue with clients and agencies– Immerse their corporate culture and infrastructure with the

power of Radio– Create innovative and impactful marketing programs born our

of their brand challenges

Hyundai/Kia Progress• Hyundai Genesis Brand Launch

– The Art of Dollar$ & Sense– A New Beginning & Suite Ending– I Can’t Believe it’s a Hyundai!– Hyundai’s Genesis of Radio

• Kia Borrego Brand Launch– Drive-In Movie– Your DJ’s Favorite Ride– Summer of Surprises– Borrego at the Ballpark– Kia Borrego Adventure– Kia’s Ultimate Summer Friday

• Status:– Borrego “Drive-In Movie” idea well-received, not activating due to budget– Opportunity to expand a local Interep “win” on Hyundai to national

efforts– Currently exploring opportunities for 2009 model launches (4Q 2008

support)

McDonald’s Progress

• “McCafe” Opportunity– McCafe Customer Network– The McCafe Show– McCafe Hot & Chillin’ Hangout

• Status:– McCafe Customer Network concept well-received by client

teams– Client is engaged and intrigued with the Nationally focused

possibilities– Working towards solidifying “National” relationship with OMD

Wal-Mart Progress• Programs in Progress

– VOICES My Voice. My Story. My Wal-Mart– America I AM – Game Time

• Cookin’ for Game Time• Party in a Box• Ultimate Party Place

– Home• Radio Goes Wild for Wal-Mart Better Homes &

Gardens• Wal-Mart Home & Garden Radio Network• Save Money and Help Others Live Better

– Holiday• Random Acts of Holiday• Deck the Home• Holiday Music Network

Wal-Mart Progress• Status:

– Significant increase in radio spend:• +139% (full year ’06 vs. ’07)• +135% (1Q ’07 vs. 1Q ’08)

– Increase in incremental assignments– Positive client feedback received by RAB lead

• “Radio is performing very well for us and as long as we continue to see strong ideas on activation our investment will continue to increase.” Stephen Quinn, CMO