The Media Monthly

INVESTMENT BANKING

The Media Monthly

Report Summarizing Media Sector Activity  APRIL-MAY 2014

In This Issue: Strategic Market Update: ―

 TV vs. Mobile Advertising  Current Trends in Digital Signage  NEC Showcase 2014 – Highlights

― ― ― ― ― ― ―

 Digital Media Retail Opportunity

―

Q1’14 GDP contracted 1.0% below economist expectations of 1.1% Q4’13 GDP grew 2.6% U.S. unemployment decreased to 6.3% in April, the lowest since September 2008 The participation rate is at 63% Nasdaq is +0.2% YTD Nasdaq Technology is +6.4% YTD S&P Retail is down 7.7% YTD Current environment supports robust M&A activity: o Financing availability due to low interest rates o Record-high corporate cash balances • $1.64 trillion at the end of 2013 o Sizable assets that may be unable to monetize through IPO will look increasingly to strategic sale options Magna Global projects U.S. Advertising Spend to reach $44.6B in Q2

Media, Entertainment, Communications & Technology Fred Seegal Vice Chairman 212.508.1626 (w) 917.992.5027 (m) [email protected]

Rich Brail Head of Media, Ent., Comm. & Tech 212.508.1628 (w) 646.458.1570 (m) [email protected]

Mark Boidman Managing Director 212.508.1661 (w) 917.526.1092 (m) [email protected]

Juan Mejia Director 212.508.1659 (w) 917.716.8143 (m) [email protected]

Capital Markets Joe Stein Managing Director 212.508.1662 (w) 203.550.2184 (m) [email protected]

1

The Media Monthly TV vs. Mobile Advertising

Publicis-Omnicom Mega-Merger’s Fall

 Research now showing: ― Americans spend ~37% of their media time with TV ― ~24% of media consumption is spent with mobile devices ― Marketers spend ~10% of their budgets targeting smartphones and tablets ― Advertisers spend $0.14 on TV per every hour spent of US consumption and $0.83 for an hour of mobile engagement ― Ironically, AT&T, major wireless communications provider, spends most of its $2B advertising budget on TV • Charlie Hinton, executive director of marketing analytics at AT&T highlighted the appeal of TV advertising’s wide reach and predictability of audiences during recent Mobile Marketing Association conference, saying: “We’re TV-first. Literally, you need 365 plans for mobile a year… It’s the wild, Wild West.” ― Prevalence of mobile apps presents a problem for brands as they are expensive to build and maintain • $500,000 investment on average • Tracking users requires deals and third-party agreements

 $35B deal proposed on July 27, 2013, claiming to have $500M savings  Complexity arising from attaining U.K. tax domicile and transaction closing delays, and lack of consensus about management structure and top personnel decisions are cited as reasons for the failed merger ― ~$100M paid in professional fees  According to Dealogic, Omnicom, Publicis and WPP combined made only six acquisitions over $100M since 2009 ― The biggest was Publicis’ $575M acquisition of Rosetta Marketing Group  David Cooperstein of Forrester Research on the deal: “There are probably more reasons why this didn’t work than reasons why it should have worked. The minimal advantages of the merger – scale and succession planning – were likely outweighed by the disadvantages of being able to execute on such a complex and hastily arranged deal. Media-buying power and backoffice saving do not outweigh client service and the cultural barriers of two global holding companies. Most clients and partners will be relieved.”  As of today, the largest deal among ad companies is Dentsu’s $4.9B acquisition of Aegis Group in 2013 ― Expanded Dentsu’s reach beyond Asia  Current lukewarm 3-5% industry growth bodes well for further consolidation  Likely for smaller companies in the bottom  WPP CEO noted that his company made ~60-80 acquisitions since last summer, but “few are material enough to disclose”

Source: Wall Street Research.

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2

The Media Monthly Verizon Enters Mobile-Ad Business 



BrandZ Top Most Valuable Global Brands 2014

Verizon Wireless’ marketing arm partnered with BlueKai, Brightroll, Run and Turn, ad-tech companies to let advertisers target its 103M retail subscribers with ads Online ads are typically placed targeting users’ cookies, which do not work well on smartphones and tablets, making it challenging for marketers to track who is reached by their ads and the effect they are having on consumers

 The BrandZ Top 100 Most Valuable Global Brands 2014 increased value by $310B to reach $2.9 Tr  The Top 100 added ~6% or $125B in value  Only 18 brands of the Top 100 brands lost value compared to an average of 31 brands since 2008  Economies in North America and Europe are responsible for the brand value increase as the BRIC markets showed a decline  Technology continued to dominate with close to a third of the total brand value ― Google’s 40% gain in brand value moved it to the top position in the ranking, held by Apple since 2011 ― Twitter, LinkedIn and Paypal appeared in the BrandZ for the first time



Verizon believes it can avoid the problem by tracing unique identifiers assigned to its subscribers ― The company will be able to share these identifiers with advertisers through a product called PrecisionID ― Identifiers are anonymous, which will preclude from leaking out the information itself, while helping advertisers to improve targeting ― The solution will be able to track users as they move between platforms ― Users have a right to opt-out of PrecisionID

 Verizon is the 5th largest U.S. advertiser in 2012, having spent ~$2.4B on advertising campaigns

 Tencent, the Internet portal and social network led the fastest risers, almost doubling in value  Baidu, the search engine appreciated 46%, indicating the growing influence of Chinese brands  Apparel led all categories in growth of overall brand value ― Consumers changed their buying habits post recession, waiting to purchase goods on sale ― Nike’s brand value increased 55%, as the company successfully used social media to stimulate a culture of activity ― Adidas’ brand rose 47%, benefitting from the momentum achieved since its sponsorship of the London 2012 Olympic Games


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3

The Media Monthly Current Trends in Digital Signage

Interactive Displays

 The transition from static to digital is ongoing – digital is no longer nice to have  Empowered consumer is changing the game via technology – blurs definitions of digital signage / DOOH  Current Digital Signange Industry Trends: ― Positive sector trends will accelerate growth, which should translate into strong revenue growth ― Consumer more mobile and spending 70-80% of their waking hours away from their homes ― Integrating social media to encourage greater interaction  Key trends for Digital Signage / Visual Communications ― Interactive Displays ― 4K Displays ― Experiential Shopping Environments

 Digital signage can help facilitate an omnichannel shopping experience  Interactive digital signage can enhance the shopping experience in many ways: ― Customizable advertising ― Consumers can further research products before buying ― Mobile payments / e-commerce

4K Displays

Experiential Shopping Environments

 More pixels ― Approximately 4x higher pixel density than Full HD 1080p  Aggressively being introduced to the consumer, commercial and broadcast markets  Consumer adoption of 4K displays is expected to drive demand for 4K signage  Higher-end digital signage uses such as luxury brand marketing or high-end retail will likely be the first users of 4K displays  A challenge facing the introduction of 4K signage is the need for content at 4K resolutions (especially video content)

 Retail (experiential shopping environment) and Wayfinding (malls / airports / other public spaces) are primary drivers  Advances in multitouch technology enable multiple users to use the same display  Smartphone services such as mobile payments or social networking facilitate interaction


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4

The Media Monthly NEC Showcase 2014

Digital Media Retail Opportunity

 ~10% of U.S. retail purchases are expected to be made online by 2017 – double the current levels  ~60% of all purchases will involve online media consumption through online search or the actual transaction  Consumer expectations of in-store shopping experiences have dramatically changed due to prevalence and convenience of online purchases ― Consumers expect a personalized experience as they walk into stores wellequipped with product knowledge through online research ― Pressure on marketers to find ways to reach consumers and allow them to engage with brands in different way as in-store traffic declines  Digital Signage has the ability to enhance customer in-store experience through enabling mobile payments and offering wayfinding solutions  2014 NEC showcased Scala’s capabilities to locate customers within stores and send personalized notifications about sales nearby directly to their smartphones  Signage from AMX with audience measurement capabilities can identify age and gender of the viewer and deliver appropriate content  Smartsign’s concept store (Bubble Room) showed using a rain sensor to switch content when it is raining

 Many retailers are addressing the increase in online transactions and exploring ways to create more “experiential” shopping environments to retain consumers  Consumer expectations have evolved as a result of digital media ― They expect digital access to product information, personalized recommendations and the ability to shop “socially” (share and compare)  “Brick and mortar” retailers must “level the playing field” through digital screens and mobile technology, including Wi-Fi and beacons, and enable retailers to communicate with consumers and develop/introduce brands ― Make retail environments ‘smarter’, open up mobile interactivity and web access and create a significant convergent media and technology opportunity ― Better monetize retail footfall ― Revitalized point-of-purchase displays through shelf-mounted signs and hanging posters


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5

The Media Monthly Sector News Out-Of-Home Media  5/27: Astral Out-of-Home launched a new digital OOH network of 8 screens in the center of Montreal  5/23: FIAT extended its campaign, adding ~21,000 HD screens on Outcast’s network  5/23: New York’s mayor de Blasio offered to collect 6% commercial-rent tax from billboard advertisers, mostly in Times Square  5/22: Lamar Advertising’s board approved a quarterly cash dividend of 83 cents per share  5/19: Publicis Groupe struck a multi-year partnership with Facebook focused on co-creation of a product around data, video and images  5/16: Wireless Ronin Technologies is reportedly in merger negotiations with Delphi Display Systems  5/16: BrightSign reported that its digital signage media players are being used at 175 Cheesecake Factory’s locations

 5/7: Lamar Advertising reported a 3.0% increase in Q1 revenues to $285M and a 1.2% increase in adjusted EBITDA  5/6: JCDecaux reported adjusted revenues up 1.5%  5/5: National Cinemedia agreed to acquire Screenvision for $375M

― The deal implies a multiple of 11.8x LTM EBITDA ― The purchase is expected to result in $30M of cost synergies ― The combined network will cover 210 DMAs across 50 states, delivering content to ~3,900 theaters with over 34,000 screens

 5/15: Access Sports Media partnered with Blue Bite, a mobile marketing solutions provider, to enable its ~110M viewers to upload their content from Twitter, Facebook, and Instagram to screens via Blue Bite’s social media platform  5/15: Spending by banks on DOOH advertising increased by ~200% in Ireland in Q1, according to a review by PML Group  5/12: Cisco launched connected billboard in San Francisco, delivering specific messages based on a driver’s speed  5/8: Oakley, a sport and lifestyle brand opened its 6,800 sq. ft. flagship store at 560 Fifth Avenue with its ceiling featuring a multimedia installation of 27 HD screens  5/8: CBS Outdoor reported a 3.1% y/y growth in Q1 revenue, and AFFO of $0.34, a growth of 6.3%

 5/5: National Cinemedia reported a 14.2% y/y decrease in its revenues  4/29: Veterinary DOOH network PetCare TV converted its network of 1,750 screens to BroadSign International’s digital signage software platform  4/28: Clear Channel announced plans for $400M debt offering  4/28: CBS Outdoor announced its first quarterly dividend of 37 cents a share  4/24: Clear Channel Outdoor reported Q1 revenue decreased 2% y/y

Source: Company press releases and Wall Street Research.

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6

The Media Monthly Sector News Radio / Music  5/21: Spotify reported that it doubled the number of its subscribers in 18 months to over 10M  5/19: Former Sirius XM Holdings executive Jay Clark joined CUR Media, a music streaming company  5/19: Cox Media teamed up with TagStation data service to supplement its FM radio programming with enhanced hybrid content  5/19: Streaming music service Rdio launched in Indonesia, Philippines, Thailand, Singapore, Greece, Croatia, Cyprus, Slovakia, Slovenia  5/17: Clear Channel agreed to buy all assets of Quantum Communication’s 29 radio stations  5/16: The Radio Advertising Bureau reported that Q1 industry revenues were equal to last year’s, marking a fifth consecutive year of flat revenue. Digital and Off-Air each increased 16%, compared to the same period last year  5/15: Sony’s Music Entertainment, Access Industries, and Vivendi’s Universal Music Group bought stakes in the music-recognition app Shazam Entertainment, which is reported to be valued at ~$500M  5/15: Volkswagen launched a service supporting HD Radio’s Artist Experience, giving broadcasters an ability to deliver images and station logos along with their digital audio programming  5/14: Sony Music acquired a 26% stake in Indent, a unit of Indian online retailer Infibeam  5/13: NextRadio, FM radio app, reported a 13% growth in the number of smartphone downloads

 5/12: Geico named Radio Marketer of the Year, having aired more radio commercials than any other marketer in three of the past four years  5/12: CBS Radio News connected with Compass Media Networks to exclusively sell on-demand audio programming  5/8: Clear Channel launched Hispanic radio network, promising advertisers the ability to reach 90% of the U.S. Spanish and Englishspeaking Hispanic population  5/7: Streaming radio aggregator TuneIn reported that it reached 50M monthly active users around the globe, rendering it the world’s largest audio network  5/6: Salem Communications reported a 12.1% increase in its Q1 revenue  5/5: Digity Media agreed to buy 48 stations from Three Eagles Communications giving it a footprint in IA, MN, NE, and SD  5/2: Sirius XM Radio announced plans to raise $750M in notes that would not be due for repayment until 2024  4/29: Cumulus Media reported a 34% increase in Q1 revenues, mostly attributable to its acquisition of WestwoodOne completed in December 2013  4/28: Magna Global reported its upgraded forecast for radio revenues to be flat in 2014  4/24: Sirius XM reported a 11% y/y increase in its Q1 revenue  4/24: CC Media reported $1.3 in 1Q revenues, including 2% growth at Media+Entertainment and 2% decrease at Outdoor


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7

The Media Monthly Sector News Broadcasting / Telecommunications  5/17: CBS Corp. revealed details around its 24hour digital news channel

 5/28: Vubiquity, a provider of multiplatform video services, bought FilmFlex Movies, a JV between Sony Pictures and Walt Disney Co.

 5/16: French operator Orange reported discussions with Bouygues Telecom, regarding a possible acquisition

 5/27: Netflix struck a deal for Sony Picture Animation feature films, including “The Smurfs 2” and “Cloudy with a Chance of Meatballs 2”

 5/16: WWE reached a deal with NBCUniversal for its Raw and SmackDown programs, sending its stock down 43%

 5/27: Time Warner Cable launched My Wi-Fi, a new online portal enabling customers to automatically connect to the operator’s Wi-Fi hotspots when in range

 5/15: America Movil made a cash offer for the shares of Telekom Austria that it does not already own

 5/23: Google Fiber announced it would not charge online video providers for a superior performance  5/22: Vodafone offers six months of free access to Netflix content for certain subscribers  5/21: Netflix reported a launch of its services in Austria, Belgium, France, Germany, Luxemburg and Switzerland

 5/19: AT&T agreed to buy DirecTV in a stockand–cash transaction valued at $48.5B net of debt

 5/19: Nexstar Broadcasting purchased Enterprise Technology Group, a provider of cloud-based content management services  5/19: T-Mobile announced plans to offer two new cellular-enabled tablets, with up to 200MB of free 4G data every month available for $179 and $229

 5/15: 21st Century Fox formed a partnership with affiliates of Apollo Global, comprised of Endemol, Shine and Core Media  5/14: Canadian provider Xplornet leased broadband capacity on Hughes Network Systems’ Echostar XIX

 5/20: Yahoo Japan sent its stock 15%, after the announcement that it quit the plan to buy a mobile phone carrier eAccess from SoftBank, for ~$3.2B

 5/19: Liberty Media announced acquisition of 3.7M shares of Live Nation Entertainment thorough the company’s $250M offering of convertible bonds

 5/15: Carmike Cinemas agreed to buy Digital Cinema Destinations in a stock-for-stock transaction

 5/8: Dish announced rolling out an online video service aimed at customers cancelling their “cord” services  5/8: Time Warner scheduled a spin-off date for Time Inc. for June 6th  5/8: Liberty Media announced a spin-off of Liberty Broadband, which is planned to include Liberty Media’s interest in Charter Communications, True Position, and a minority stake in Time Warner Cable  5/8: Entravision Communications reported a 7% y/y increase in revenues  5/8: Comcast launched X1 DVR with cloud technology and live in-home streaming TV to new Xfinity TV customers


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8

The Media Monthly Sector News Broadcasting / Telecommunications  5/7: Discovery Communications re-launched Fatafeat, an Arabic language cuisine channel in the Middle East  5/7: NBCUniversals Media struck a $7.7B deal to broadcast the Olympic Games in the U.S. through 2032  5/7: Time Warner’s HBO renewed the news magazine series “Vice” for two more seasons  5/7: Virgin Media announced a roll-out of service that will allow U.K. customers to gain access to 152 Mbps broadband, TiVo service with over 230 channels, 40 of which are in HD, and a home phone service  5/7: Sinclair reported Q1 revenue up 48% y/y, benefitting from the Super Bowl and Olympics  5/6: Greece launched a new state broadcaster Rapid TV News  5/2: Time Inc. unveiled partnerships with Scripps, Net2TV, and Roku  5/1: Spanish broadcasters shut down nine digital terrestrial TV channels to comply with a Supreme Court ruling  5/1: Grupo Televisa and Sony Corp. struck a deal to produce 12 series covering 840 hours of programming  5/1: Viacom agreed to acquire Channel 5 Broadcasting from Northern & Shell Media Group for £450M

 4/30: Hulu reported being in talks for carriage with pay TV operators  4/28: Netflix and Verizon Communications have struck an interconnection agreement to improve performance for customers  4/28: LIN Media reported an 18% rise in revenues, compared to Q1 2013  4/28: Media General announced a 16% increase in Q1 sales  4/25: Online ticketing company Fandango acquired Movieclips, composed of 25 channels on YouTube  4/21: Netflix, with a subscriber base of ~50M, is planning to increase the price of its streaming service for new subscribers  4/16: Lightpath, a unit of Cablevision Systems, expands fiber network to7,000 more locations  4/15: Verizon expands deployment of 100G technology  4/11: Vodafone entered two deals enabling the company to take full control of its unit in India  4/10: Amazon agreed to buy digital comics technology firm comiXology  4/9: Verizon launched cloud interconnection service

 5/1: Telephone and Data Systems acquired BendBroadband for $261M

 4/9: T-Mobile introduced the Simple Starter value plan, offering a single line of 4G data service for $40 a month

 4/30: DigitasLBi acquired exclusive advertising rights to 2 AOL shows

 4/8: Discovery Communications has invested in DOGTV, a TV network created for dogs

 4/30: Google Fiber struck a deal with ESPN to carry the SEC Network

 4/8: Digital Cinema signed an asset purchase agreement to acquire an eight-screen multiplex in Illinois


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9

The Media Monthly Sector News Other Key Digital Media, Entertainment, and Tech Headlines  5/28: Google unveiled a prototype of its driverless vehicle

 5/14: Yahoo acquired Blink, a mobile app letting users share self-destructing messages

 5/28: Apple agreed to buy Beats Electronics for $3B

 5/14: Channel One News acquired by Houghton Mifflin Harcourt, a global education company

 5/28: Alibaba acquired a ~10% stake in Singapore Post, a publicly traded mail carrier, for $250M

 5/14: Facebook initiated FbStart, providing mobile developers with free tools and services

 5/28: Microsoft agreed to buy Capptain, a mobile push analytics provider

 5/14: Yelp launched Yelp Reservations, a free restaurant reservation platform

 5/28: Amazon debuted Collectible Coins store, a marketplace for over 10,000 unique coins from ~75 dealers

 5/13: Vantiv bought Mercury Payment Systems, which processed ~1.2B transactions in 2013, for $1.7B

 5/22: Amazon announced a plan to deploy 10,000 robots in the company’s warehouses by the end of 2014

 5/13: TPG Capital reported its intentions to sell RentPath, a mobile-powered rental marketplace, for over ~$1.5B

 5/22: Cox Communications announced a plan to roll out gigabit Internet speeds nationwide, starting with Phoenix, Las Vegas and Omaha

 5/8: Zillow introduced a predictive tool Zestimate, allowing its users to estimate the future value of individual homes

 5/21: Google plans to invest ~$20-$30B in projects overseas

 5/7: Google acquired Appetas, a restaurant site builder

 5/20: Microsoft unveiled Surface Pro 3, its newest tablet featuring a 12-inch HD display

 5/8: Google acquired Stackdriver, a startup letting developers monitor apps and services that are built and run in the cloud

 5/20: Amazon bought a minority stake in Yummy77, a Shanghai-based food delivery website  5/20: Facebook launched premium video ads for a group of advertisers in seven markets: Australia, Brazil, Canada, France, Germany, Japan, the U.K.  5/19: Google’s YouTube acquired live videostreaming service Twitch and mobile device management startup Divide  5/19: Groupon unveiled Gnome, a tablet-based platform providing customer relationship management tools

 5/8: Amazon reported expansion of its Sunday delivery service to 15 additional cities through a partnership with the USPS  5/8: Twitter introduced a feature letting advertisers target promoted tweets and accounts in 20 different languages  5/8: MediaSpan Group acquired Newcycle Solutions, a provider of software and services for the global news and media industry


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10

The Media Monthly Sector News Other Key Digital Media, Entertainment, and Tech Headlines  5/6: Google tested a feature that would let Glass users voice command money transfers via Google Wallet  5/6: LiveDeal, online listing services provider, acquired DealTicker, a platform offering discounted products and services in the U.S.  5/6: U.K. retailer Tesco announced launch of its own smartphone in 2014

 4/29: Amazon launched a wearable technology store  4/29: eBay committed to bring $6B of overseas profits back to the US  4/28: Alibaba Group invested $1.2B in Chinese internet video company Youku Tudou  4/24: Apple filed for patent on interactive 3-D display system

 5/6: Interpublic Group acquired Genuine Interactive, a Boston-based digital mobile and social firm

 4/14: Alibaba agreed to buy AutoNavi, a digitalnavigation provider

 5/6: Former Yahoo CFO joins Auciton.com

 4/14: Google bought Titan Aerospace, a solarpowered drone startup

 5/6: Chinese e-commerce site Alibaba filed for IPO  5/5: Apple bought LuxVue Technology Corp., a micro-LED display maker  5/5: National CineMedia agreed to acquire New York-based cinema advertising company Screenvision for $375M in cash and stock  5/2: News Corp. agreed to acquire Harlequin Enterprises from Torsar for C$455  5/2: Amazon expanded its same-day service to Dallas and San Francisco  5/1: T-Mobile users received access to Allpoint Network’s surcharge-free network of 43,000 ATMs  5/1: TripAdvisor acquired vacation rentals site Vacation Home Rentals for an undisclosed sum  5/1: Amazon acquired a 25% stake in a French delivery company Colis Privé 

5/1: Google introduced new ad tools to guarantee audiences for advertisers on YouTube

 4/14: Apple acquired the 45 Mile Hydroelectric power plant to power its data center facility  4/10: News Corp.’s U.K. unit acquired Handpicked Cos., owner of luxury shopping website  4/10: Six Flags Entertainment and Meraas Leisure Entertainment entered a strategic partnership to develop a Six Flags-branded theme park in Dubai  4/8: Time Inc. plans to raise $1.4B of debt to finance the purchase of its U.K. publishing business  4/8: Gogo unveiled next generation in-flight Internet technology 2Ku  4/8: Azoff MSG Entertainment, a JV between Madison Square Garden and Azoff Music Management, bought 50% of celebrity marketing agency Burns Entertainment  4/7: SFX Entertainment said it has acquired management and creative agencies TMWRK, The Meta Agency and Learned Evolution


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11

The Media Monthly Market Indicators

5/30/14 4,243 16,717 1,924

Nasdaq Composite Dow Jones Industrial S&P 500

Real GDP (%) Core CPI (%) Fed Funds 3 Mo. LIBOR 10 Yr Treasury Unemployment (%)

% of 52 Week High 97% 100% 100%

1- Day % Change (0.1%) 0.1% 0.2%

Performance 1-Week % Change 1% 1% 1%

1-Month % Change 3% 1% 2%

YTD % Change 36% 25% 32%

2Q14E 3.50 1.80 0.25% 0.25% 2.81% 6.40

3Q14E 3.00 1.80 0.25% 0.28% 3.04% 6.30

Bloomberg Economic Forecast 4Q14E 3.10 2.00 0.25% 0.34% 3.24% 6.15

1Q15E 3.00 2.00 0.25% 0.42% 3.36% 6.10

2Q15E 3.05 2.00 0.38% 0.55% 3.50% 6.00

Share Price Performance Out-of-Home Media APG|SGA AirMedia Group Clear Channel Outdoor Clear Media JCDecaux Lamar Mood Media National CineMedia RMG Networks Ströer

Stock Price 5/30/14 CHF 324.86 $2.09 8.16 HK$0.96 €39.86 $49.34 CAD 0.53 $15.67 1.64 €19.57

Out-of-Home Median Out-of-Home Mean Broadcasting Entravision Gray Television LIN Media Media General Nexstar Broadcasting Group Sinclair Broadcast Group

$5.36 11.44 25.14 17.73 46.46 29.58

Broadcasting Median Broadcasting Mean Diversified Media CBS Discovery Disney Hemisphere Media Group News Corp. Scripps Networks Time Warner Viacom Diversified Media Median Diversified Media Mean

$59.61 76.96 84.01 11.36 17.06 76.46 69.83 85.33

1-Week % 1 - Month % Change Change 2% (4.9%) 0.5% (3%) 2% 2% (1%) (4%) 1% (3%) (2%) (1%) (3%) (6%) (1%) 5% 3% (57%) 0.1 10%

YTD % Change 18% (3%) (20%) 12% (2%) (4%) (29%) (20%) (0.7) 15%

Radio Beasley Broadcast Group CC Media Cumulus Media Emmis Communications Entercom Communications Radio One Saga Communications Salem Communications Sirius XM Radio Spanish Broadcasting System

1% 1%

(3%) (6%)

(4%) (10%)

Radio Median Radio Mean

2% 4% 2% 4% 4% (2%)

2% 2% 7% 16% 19% 11%

(11%) (22%) (9%) (20%) (16%) (16%)

Advertising/Marketing Dentsu Havas Interpublic Omnicom Publicis WPP

3% 2%

9% 9%

(16%) (16%)

Advertising/Marketing Median Advertising/Marketing Mean

(2%) (2%) 1% (0%) (0%) (0%) (1%) 0%

4% 2% 7% (6%) (1%) 3% 8% 2%

(6%) (14%) 10% (0.0) (0.0) (11%) 2% (2%)

New Media eBay Google Marchex Millennial Media Yahoo! Facebook Amazon Zulily

(0%) (0%)

2% 2%

(3%) (3%)

New Media Median New Media Mean

Stock Price 5/30/14 $6.99 7.20 6.32 2.79 10.44 4.45 46.19 8.54 3.28 5.94

¥39.45 $8.62 19.12 71.15 €86.30 £21.58

$50.73 571.65 10.33 4.02 34.65 63.30 312.55 34.73

1-Week % 1 - Month % Change Change 0% (10%) 4% 1% (2%) 0% (6%) (13%) (1%) (2%) 9% (1%) 4% 1% 4% (4%) 0% 7% 7% (7%)

YTD % Change (24%) 3% (21%) 2% (4%) 10% (8%) (6%) (6%) 63%

2% 2%

(1%) (3%)

(5%) 1%

(3%) 4% 3% 2% 1% 0%

(5%) 10% 12% 7% 4% 4%

(1%) 4% 9% (4%) (6%) (4%)

2% 1%

5% 5%

(2%) (0%)

(2%) 1% (1%) 2% (1%) 3% 0% (6%)

(7%) 7% 11% (36%) (3%) 9% 4% (17%)

(6%) 3% 5% (45%) (12%) 16% (21%) (14%)

(0%) (1%)

0% (4%)

(9%) (10%)

Source: Capital IQ, Bloomberg and Wall Street research.

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12

The Media Monthly EV / 2014E EBITDA * Online Media and Ad Services

Music / Events

Median: 12.0x

Median: 11.7x

30.0 x 24.5 x 24.0 x

20.6 x

18.0 x 13.8 x

12.7 x

11.3 x

12.0 x

11.7 x

10.0 x

9.3 x

8.8 x

6.0 x --

--

-Marchex

Amazon.com

Google

Yahoo!

eBay

Shutterfly

Millennial Media

CTS Eventim

SFX Entertainment

Live Nation Pandora Media Entertainment

Diversified Media and Entertainment

Out-of-Home

Median: 11.6x

Median: 11.6x

25.0 x

20.0 x

19.2 x

13.6 x

15.0 x

12.9 x

13.4 x

12.2 x

11.6 x

10.5 x

10.5 x

10.5 x

12.8 x

11.9 x

11.2 x

10.1 x

9.9 x

10.0 x

7.7 x

5.0 x --Liberty Media

21st Century Six Flags Liberty The Walt Fox Entert. Interactive Disney

Time Warner

Cable / Content 20.0 x

CBS Corp.

Viacom

National CBS CineMedia Outdoor

Lamar Clear ChannelJCDecaux Daktronics RMG Outdoor Networks

Broadcasting

Video / Games

Radio

Median: 9.3x

Median: 10.5x

Median: 10.6x

Cedar Fair

Median: 8.7x

16.5 x 15.0 x 12.3 x 10.6 x

11.3 x

10.2 x

9.7 x

10.0 x

10.1 x 8.9 x

9.5 x

9.3 x

5.0 x

8.8 x

8.7 x

7.8 x

7.6 x

2.9 x

-Discovery

AMC

Scripps

Sirius XM CC Media Cumulus Media

Salem

Electronic Activision Take-Two Arts Blizzard

Nexstar

LIN Media Entravision Sinclair

Gray Television

Cable

Theaters 15.0 x

Median: 7.7x

Median: 8.3x

12.3 x

10.9 x

10.6 x

9.3 x

10.0 x 8.3 x

8.2 x

8.0 x

7.8 x

7.7 x

7.6 x

Comcast

Cablevision Systems

Time Warner Cable

7.1 x

5.0 x

-Cineplex

AMC Entert.

Carmike Cinemas

Cinemark Holdings

Regal Entert.

Dish Network

Charter Communications

DIRECTV

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

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13

The Media Monthly Valuation Metrics 55.326241 Out-of-Home Media CBS Outdoor Americas Inc. Clear Channel Outdoor JCDecaux Lamar National CineMedia RMG Networks

USD USD EUR USD USD

113.8400023

Stock Price 5/30/14 $32.47 $8.16 €39.86 $49.34 15.67 1.64

52-Week Low 27.88 7.14 26.34 41.30 13.94 0.89

52-Week High 33.25 10.69 44.40 54.48 20.22 12.47

Equity Enterprise Value (a) Value (a) 3,896 5,381 2,932 7,793 8,909 8,813 4,694 6,572 953 2,005 20 24

Global / U.S. Median Global / U.S. Mean APG|SGA Ströer

CHF EUR

CHF 324.86 €19.57

238.74 10.04

339.63 20.50

958 956

828 1,464

Europe Median Europe Mean AirMedia Group Clear Media

USD HKD

$2.09 HK$0.95

1.53 0.61

3.24 1.00

125 507

44 399

China Median China Mean Mood Media

USD

CAD$0.53

0.37

1.17

94

675

Total Out-of-Home Advertising Median Total Out-of-Home Advertising Mean Radio Beasley Broadcast Group CC Media Cumulus Media Emmis Communications Entercom Communications Radio One Salem Communications Sirius XM Radio

USD USD USD USD USD USD USD USD

$6.99 7.20 6.32 2.79 10.44 4.45 8.54 3.28

6.56 3.50 3.21 1.58 7.68 2.07 7.00 2.98

10.00 8.00 8.19 3.67 11.47 5.82 10.34 4.18

161 632 1,376 120 408 211 215 19,791

252 20,628 3,936 290 895 1,208 505 23,121

Radio Median Radio Mean Broadcasting Entravision Gray Television LIN Media Nexstar Broadcasting Group Sinclair Broadcast Group

USD USD USD USD USD

5.36 11.44 25.14 46.46 29.58

4.27 5.35 11.24 26.25 23.28

7.36 15.17 29.24 56.42 37.50

478 667 1,393 1,423 2,881

795 1,483 2,335 2,440 5,600

Broadcasting Median Broadcasting Mean Advertising/Marketing Interpublic WPP WPP Omnicom Publicis Havas

EUR GBP EUR USD USD JPY

€8.62 £21.58 €86.30 $19.12 71.15 ¥39.45

6.16 17.61 70.07 13.67 59.70 29.61

8.69 26.22 95.72 19.50 76.87 42.76

3,533 28,052 17,893 8,100 18,388 11,376

Advertising/Marketing Median Advertising/Marketing Mean

3,818 32,244 17,158 9,261 21,027 9,394

Valuation Multiples EV / EBITDA EV / Revenue 2014E 2014E 12.8 x 4.0 x 11.2 x 2.6 x 9.9 x 2.3 x 11.9 x 5.1 x 9.6 x 4.8 x NA NA

Growth '12A - '14E CAGR Revenue EBITDA NM NM 0% (2%) 4% 9% 3% 3% (3%) 1% 31% 19%

12.8 x 11.1 x

4.0 x 3.8 x

3% 7%

3% 6%

10.8 x 8.1 x

2.5 x 1.5 x

(2%) 9%

8% 16%

9.5 x 9.5 x

2.0 x 2.0 x

4% 4%

12% 12%

3.2 x NA

0.2 x NA

(1%) --

(17%) --

3.2 x 3.2 x

0.2 x 0.2 x

(1%) (1%)

(9%) (9%)

1.5 x

1.5 x

2%

1%

9.7 x 8.3 x

2.5 x 2.7 x

0% 1%

1% 2%

NA 11.3 x 9.7 x NA 8.7 x NA 8.9 x 16.5 x

NA 3.2 x 3.0 x NA 2.3 x NA 1.9 x 5.6 x

-1% 9% (1.0) (0%) (1.0) 5% 7%

-(1%) 7% (1.0) 1% (1.0) (3%) 8%

9.7 x 11.0 x

3.0 x 3.2 x

0% (22%)

(0%) (24%)

8.7 x 7.6 x 8.8 x 9.5 x 7.8 x

3.2 x 3.0 x 2.9 x 3.6 x 2.9 x

4% 7% 13% 22% 23%

6% 3% 8% 20% 20%

8.7 x 8.5 x

3.0 x 3.1 x

13.1% 13.6%

7.6% 11.4%

9.5 x 10.1 x 9.4 x 9.7 x 9.3 x 7.2 x

1.5 x 1.7 x 1.7 x 1.2 x 1.4 x 0.4 x

2% 4% 4% 2% 2% 1%

4% 4% 3% 5% 2% 16%

9.5 x 9.2 x

1.5 x 1.3 x

2.3% 2.6%

4.2% 5.9%

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

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14

The Media Monthly Upcoming Events Dates

Name

Location

Description

June 3, 2014

31st Annual SNL Kagan TV and Radio Finance Summit

New York, NY



A stellar lineup of broadcast owners, investors, strategic advisors and professionals from across the industry will explore the issues and questions that are most pressing in today's environment

June 3, 2014

iMedia Entertainment Summit

Los Angeles, CA



This event brings together elite senior-level executives in TV, film, gaming and music marketing and their agency partners

June 3, 2014

The Visual Marketing Summit

New York, NY



The event will explore the rise of the Visual Web and the role it is playing in creating a more dynamic and flexible approach to digital marketing and native advertising

June 5, 2014

AMA 2014 Marketing & Public Conference

Boston, MA



Premier national and international event for marketing academics, public policy makers, and marketers interested in social and public policy

June 8-11, 2014

Media Post’s Content Marketing Insider Summit

Kiawah Island, NY



The Summit will bring together brands, agencies and publishers that are reinventing an age old model via new digital opportunities

June 9, 2014

Audience Measurement 2014

New York, NY



The Advertising Research Foundation will convene industry leaders to share innovative methods that cultivate growth and answer measurement challenges

June 10, 2014

Videonomics New York Roundtable

New York, NY



June Roundtable is all about working sessions. There will be no presentations. It is an organized roomful of executives working on creating a stronger marketplace

June 16–17, 2014

The Corporate Social Media Summit

New York, NY



Largest corporate gathering for all the latest social media insight and practice

June 18–20, 2014

InfoComm 2014

Las Vegas, NV



Largest professional AV show in the world, with more than 950 exhibitors and 35,000+ attendees from over 110 countries

June 18-19, 2014

Gigaom Structure 2014

San Francisco, CA



The event will explore what the infrastructure powering tomorrow’s killer applications will look like, the use of cloud technologies to design, build and ship physical products, value of instant access to computer and storage for enterprises, and how enterprise technology will be upside down in just a few years

June 19–22, 2014

16 Annual Allied Media Conference 2014

Detroit, MI



The conference is a collaborative laboratory of mediabased organizing strategies for transforming our world, held every Summer in Detroit

June 23-25, 2014

iMedia Commerce Summit: The Future of Shopping

Salt Lake City, UT



Join senior brand and agency marketers to discuss strategies and tactics related to the challenges of omnichannel marketing

June 28–July 1, 2014

International Society for Technology in Education 2014

Atlanta, GA



Conference features a broad array of professional learning and collaborative networking opportunities

th

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15


Name

Location

Description

July 13-15, 2014

ANA Digital & Social Media Conference

Dana Point, CA



A must-attend event for anyone who is trying to navigate their brands through this ever-changing media landscape

July 14-16, 2014

MozCon

Seattle, WA



Three days of forward-thinking, actionable sessions on SEO, social media, community building, content marketing, brand development, CRO, the mobile landscape, analytics, and more

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

July 17-18, 2014

Social Fresh Conference

Orlando, FL



The social media conference focusing on quality content with actionable insights. Speakers include social media strategist and Youtility author Jay Baer

July 21-23, 2014

AMA Nonprofit Marketing Conference

Arlington, VA



Engage with a diverse group of peers from nonprofits of all types and sizes, including foundations, charities, education, museums, associations and more

July 23, 2014

DSF “Meet & Greet” Evening Program: Chicago

Itasca, IL



Opportunity to network with Digital Signage Federation members and the attending board of directors. Who will share their business experience., enumerate industry opportunity and discuss the benefits of DSF membership

August 1-3, 2014

AMA 2014 Summer Marketing Educators Conference

San Francisco, CA



This year’s conference is being organized by co-chairs Rebecca Hamilton and Alberto Sa Vinhas and supported by a team of distinguished track chairs

September 8-11, 2014

Content Marketing World 2014

Cleveland, OH



An opportunity to learn and network with the best and brightest in the content marketing industry.


Inbound 2014

Boston, MA



Provides attendees with the inspiration, education, and connections needed to transform their businesses to match the way purchasing behaviors are evolving in a connected and digital world


Social Shake-Up

Atlanta, GA



The event is an exploration of how entrepreneurs shake up traditional to create a brand new form of business: the Social Enterprise


Social Brand Forum

Iowa



Top 10 social media conference, bringing national social media and digital marketing thought leaders to Iowa’s Creative Corridor for two days of impactful discussions

September 30, 2014

40 Under 40 – Emerging Leaders Award

New York, NY



Celebrate young marketing leaders who are excelling despite the challenges they are faced with today

October 8-9, 2014

C3

New York, NY



The conference will gather 1,000 marketers from around the world to work together and share tactics, insight, and ideas in a collaborative environment

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16


Name

Location

Description

October 15-16, 2014

PivotCon

New York, NY



The event will examine the landscape of problems faced by today’s most active Social Businesses

October 15-18, 2014

ANA Masters of Marketing

Phoenix, AZ



The event will examine the landscape of problems faced by today’s most active Social Businesses

October 22, 2014

DailyDooh Investor Conference

New York, NY



Showcase of key technologies that are enabling new markets and impacting global display ecosystems

October 27-29, 2014

Brands-Only Summit

Orlando, FL



The event is focused on the core skills one needs to be a successful social media executive

November 3-5, 2014

Sustainable Brands ’14

London, UK



The Sustainable Brands London conference convenes to drive innovation that leads to enhanced brand value

November 3, 2014

Ad operations: IAB Summit

New York, NY



Conference exploring challenges and solutions in a multiscreen world

November 5-6, 2014

Ad:tech New York

New York, NY



Interactive advertising and technology conference and exhibition

November 19-20, 214

SMX Social Media Marketing

Las Vegas, NV



A two-day, tactic-rich conference that covers all key issues for getting the most out of social marketing

December 7-10, 2014

iMedia Agency Summit: The ReDefined: Balancing Scale, Scrappiness & Innovation

Bonita Springs, Florida



Agency leaders will converge to discuss the latest tools, tactics, and strategies for finding the right balance between experience and experimentation

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17

PJSC Overview Providing Sound, Unbiased Advice to Clients for 25 Years 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

Mergers & Acquisitions

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

Special Committee Advisory

Financial Opinions

PJSC PJSC develops long-term client relationships based on trust and independent advice Family / Private Business Advice

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

PJSC is a truly independent advisor and does not underwrite or trade securities, publish research, manage or invest capital

Restructuring / Recapitalization

Financing and Capitalization Advisory

PJSC focuses on a diverse set of industry verticals including Media / Technology, Retail / Distribution, Consumer Products, Restaurants and Healthcare

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

Prior issues available online: http://www.pjsc.com/pjsc-commentaries If you wish to subscribe/unsubscribe to The Media Monthly, please contact:

Marina Mikheeva Analyst 646.708.8471 [email protected]

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18