Presentation for

AAPS

May 6, 2014

ACI Media Group

Has Print Peaked?

OR…

“A little about ACI Media Group and what we see happening in our businesses”

About ACI Media Group

Family owned for since 1965 Nationwide Corporate Group –

leading provider of multi-channel distribution services

Experienced in 7-Day Paid Home Delivery, Single Copy, TMC, SMC, Directories, Niche Publications

Leader in passing AAM audit for Branded Editions in major markets

Our Group’s Services

Home Delivery – Newspapers 7-day paid, weekly, other FODs

Single Copy – Paid, free, rack, retail TMC –Total Market Coverage (free pubs and

ad packs) Niche publications, magazines Telephone Directories Product Sampling

Operational Stats

1MM products received, broken down and delivered to homes each day Within a 4-5 hour window

22 locations with 150 employees More than 1300 ICs Over 1500 vehicles Over 50,000 miles driven 99.97% accuracy

ACI’s Publishing PartnersKey Publishing Clients The Los Angeles Times The Atlanta Journal-Constitution The San Diego Union-Tribune Orange County Register Palm Beach Post South Florida Sun-Sentinel Rockford (IL) Register-Star &

Freeport (IL) Journal-Standard Peoria Journal-Star Chicago Suburban Life Shaw Media The Daily Herald (Chicago) La Opinion – Los Angeles Chula Vista Star News &

East Californian Yellow Book USA

Regional Operations

Southern California Chicago Suburbs, Northern IL Atlanta South Florida

Varied Structure Employee Distributor

Strategy and Differentiation

Turn-Key Outsourcing Solution Multi channel strategy– bundling of all our services

Quality Audit Scores, Complaint Stats, Verification

Technology GPS MD.net

Leadership Hired most talented and trusted execs in industry

Scale Largest independent group

Launch Strategy – Do No Harm™ Trademarked

Management Team

ACI Media Group CEO – Keith Somers CSO – Bob Somers President and COO – Jack Klunder CFO – Anne Plechner CRO – Randall Brant

ACI California – same ACI Midwest – same, except

COO - Barry Berg ACI Southeast – same, except

President and COO – Barry Berg

What’s driving growth?

Loss of advertising revenue at newspapers Digital conversion and circulation declines Publishers’ increased focus on core business Cost savings – publishers need to save

money Risk mitigation Significant improvements in quality through

technology, data, verification “Get out of distribution”

Recent Developments

LA Times expansion U-T San Diego expansion Palm Beach Post and South Florida Sun-

Sentinel (ACI SE merge with Viking Distr) Peoria, IL Shaw Media and the Daily Herald Currently in talks with other potential partners

– TBA Creation of 6 Regional LLCs

Internal Issues and Considerations

Risk Management Lawsuit Risk Regulatory Risk Operations Risk

Selecting right opportunities – “kiss the right frogs”

Manageable Growth Right Team in a rapidly changing environment

Future Challenges

Print Declines – Advertising and Circulation

Economic Shifts

Legal Risks

Launch Risks

Newspaper Ad Revenues Declining

Next-Gen Media Buyers

24/24/24

Didn’t grow up with print

Don’t use print

Don’t know print

Almost never recommend print

Advertisers Talk of Moving On

“Nobody gets hired in these key marketing jobs by saying, ‘I want to spend more money on print.’”

“I don’t see anybody adding a bunch of print to their budget…”

“Universally biased against newspaper…”

Publishers Attempt Transition

“Trading print dollars for digital dimes.”

“The next shiny thing…”

“Nobody’s really found the magic bullet.”

Online Revenues Still Elusive

What’s a Publisher To Do?

Newspaper websites change their talk “Our brands” “Multi-platform” Local news and information sources

Newspaper companies changing their names Media Co Newsmedia Co “Anything but ‘newspaper co’”

Current State

Advertisers shuffle media mixes Keep what works Experiment with new media

Publishers respond “Extend the print runway” Cut costs to fund digital exploration

Circulation declines Routes thinning Single Copy struggles

At the Market Level

Advertisers reduce TMC spending, shift toward more targeted and Opt-In programs

“Opt-In is the new Paid” Growth in Sunday Select

AKA “Subscriber Non-Paid” Growth of weekday Opt-In vs TMC Importance of requested delivery

Opt-In vs Opt-Out Passing audits is critical

At the Market Level

Publishers seek to “variablize costs” Print declines accelerated by ability to more

finely target, combine print/digital and “own the neighborhood”

Publishers scramble to preserve/grow preprint dollars Sunday Select Promoting Sunday-Only and Weekend FODS Widening route-size gap between Daily and

Sunday

Opportunities and Some Good News

USPS rates increasing Conversion of TMCs and weeklies

Some publishers want to outsource TMC, Sunday Select, other Opt-Ins Niche Publications (geo, vertical, demo,

ethnic) Retailers still rely on print, not digital

“field guys like to see circulars” Even small newspapers want to save money

and reduce liability

Opportunities and Some Good News

Commercial Publications Help even out the route-size gap among days Improve carrier earnings and retention

Product Sampling “Everyone has to open their door.”

Magazines, Catalogs Still early but economics point to change

Small Package Delivery Even earlier, but change is eventual Crowdsourcing, Shutl

What Business are We In?

Companies – even entire industries – have learned painful lessons from disruptive innovations

Q: “Are we in THIS business or THAT business?”

A: “Yes!”

Summary and Key Points

There is STILL money in print Growth areas could help offset declines in

traditional distribution Be open to diversification and trying new

business models Fail early, fail cheaply Differentiate with quality, service and

innovation