Star Tribune Publisher/CEO Michael Klingensmith's presentation at The 2014 ROUNDTABLE in Vail, CO.

1. Star Tribune Business Model
Mike Klingensmith | August 20, 2014

2. Star Tribune business model strategy
•Diversify the revenue base: Core product
•Find new revenue streams
•Reduce legacy costs over time
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3. Star Tribune business model strategy
1.Diversify the revenue base: Core product
A.Increase contribution from reader
•Change the nature of the subscriber relationship
•Implement pay meter
•Use digital to support higher “all-access” subscription pricing (added value, e.g., Washington Post digital)
•Introduce digital-only consumer revenue
•Raise single-copy prices on daily
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4. Star Tribune business model strategy
1.Diversify the revenue base: Core product
B.Shift in ad mix to digital and pre-print
•Let daily circulation migrate to digital without reducing ROP rates
•Maintain print volume on Sunday paid through content enhancements (Science + Health, Washington Post insert), price caution and digital up-sells
•Add opt-in product to fill in print declines and augment distribution
•Grow digital ad revenue through yield optimization, audience extension, and third-party services
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5. Unmatched reach online
MyFox29 (8)
City Pages
(2)
KSTP ABC (4)
Digital First (TC.com) (3)
CBS MN
(4)
Kare 11 NBC (3)
Yelp (2)
Xfinity (6)
CNN (2)
Huffington Post
(4)
Weather Channel (2)
ESPN (8)
LinkedIn
(4)
Star Tribune (8)
167
181
249
364
394
413
514
588
621
648
725
751
774
843
•More reach in-market than any local site
•The most daily and monthly unique visitors
•Engaged readers spend more time with content
Monthly Uniques in NDM (000s)
2013 comScore, 6 Month Average (June – November).
(Minutes) spent per visit
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Other local media

6. Star Tribune business model strategy
2.Find new revenue streams
–Expand ad-driven niche products (Top Workplaces, The Good Life, Best of MN)
–Ad-supported apps (HS sports, Going Out Guide)
–Third-party distribution and printing (Pioneer Press)
–Digital marketing services for SMB (Star Tribune Radius)
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7. Star Tribune business model strategy
3.Reduce legacy costs over time
–Smaller, but higher priced daily print circulation
–Fill daily net paid gap with digital
–Leverage newsroom costs across multiple platforms, including video
–Improve efficiency through technology (cloud-based software, outsourcing)
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8. Revenue component and trends
2010
2012
2014
2016
ROP Advertising
39.6%
31.4%
26.2%
24.1%
Pre-Print Advertising
24.5
23.0
20.7
19.3
Total Print
64.1
54.4
46.9
43.4
Digital Ad Revenue
7.5
9.0
11.0
12.7
Print & Digital Circ Rev
26.2
28.5
33.5
35.0
3rd Party Dist & Other
2.0
3.1
4.3
6.3
Total “Growth” Revenue
35.9
40.6
48.8
54.0
Total Revenue
100.0%
95.0%
95.6%
97.5%
All numbers indexed to 2010 Total Revenue
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9. Circulation: Five-year financial summary
2010
2011
2012
2013
2014 est.
Y/Y Revenue Growth
(1.3%)
5.3%
3.1%
6.6%
10%
Circulation Margin
62.7%
64.4%
64.9%
67.0%
67.5%
Circulation Revenue
Circulation Expense
EBITDA Contribution
($ in 000’s)
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10. 2010
2011
2012
2013
2014 est.
Home Delivery Volume (print)
Daily volume (5-day)
190.9
183.1
173.8
165.5
154.9
Daily YOY volume decline
-4.1%
-5.1%
-4.8%
-6.4%
Sunday volume
356.9
350.7
344.2
334.8
318.4
Sunday YOY volume decline
-1.7%
-1.9%
-2.7%
-4.9%
Home Delivery Prices by Year
Seven Day Price
$4.33
$4.75
$5.25
$5.75
$5.75
YOY change
9.7%
10.5%
9.5%
0.0%
Sunday price
$1.90
$2.07
$2.30
$2.55
$2.55
YOY change
8.9% (April)
11.1% (October)
10.9% (October)
0.0%
Circulation: Home delivery revenue & volume
Revenue
Delivery expense (contra rev)
Net Revenue
($ in 000’s)
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11. Circulation: Digital subscriber volume & revenue
16,233
26,192
33,371
8,712
14,705
19,451
-
10,000
20,000
30,000
40,000
2012 52 wks
2013
2014 est.
Daily non-replica
Up 61% 2013 YOY
Up 27% 2014 YOY
Sunday non-replica
Up 61% 2013 YOY
Up 32% 2014 YOY
Digital subscription volume has increased each year
Total digital subscriber revenue has increased each year
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
2012 52 wks
2013
2014 est.
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12. Circulation: Single copy revenue & volume
2010
2011
2012
2013
2014 est.
Single Copy Volume (print circ)
Daily volume (5-day)
51.6
47.7
43.8
39.5
35.9
Daily YOY volume decline %
-9.5%
-6.2%
-9.7%
-5.9%
Sunday volume
122.4
121.8
118.7
109.6
100.2
Sunday YOY volume decline %
-0.5%
-2.6%
-7.7%
-8.6%
Single Copy Price Increases by Year
2010: Metro - Daily & Early Sun
2012: Metro - Daily & Early Sun
2013: Sunday Final
Revenue
Delivery expense
Net Revenue
($ in 000’s)
12
$0.50 to $0.75
$0.75 to $1
$1.75 to $2

13. Daily circulation: Print vs. digital
2011
2014 est.
CAGR
Home Delivery
189.7
160.5
(5.5)%
Single Copy
48.9
40.3
(6.2)%
Verified Print
8.6
7.6
(4.0)%
Total Print
247.2
208.4
(5.6)%
Digital Subscriptions
8.0
33.7
61.5%
eEdition
38.6
30.0
(8.2)%
Verified Digital
4.3
26.0
na
Total Digital
50.9
89.7
21.0%
AAM Daily Avg Circ
298.1
298.1
n/c
(circulation in 000’s)
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14. Sunday circulation: Print vs. digital
2011
2014 est.
CAGR
Home Delivery
354.2
314.2
(3.9)%
Single Copy
129.5
112.4
(4.5)%
Opt-In (StribExpress)
25.8
79.1
46.5%
Verified Print
7.6
13.6
22.0%
Total Print
517.1
519.3
0.1%
Digital Subscriptions
8.6
20.3
33.5%
eEdition
15.1
29.3
24.0%
Verified Digital
3.0
18.7
na
Total Digital
26.7
68.3
37.0%
AAM Sunday Avg Circ (Exc. Opt-In)
518.1
508.6
(0.5)%
(circulation in 000’s)
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15. Distribution Revenue
Distribution Expense
Circulation: Alternate products distribution
2010
2011
2012
2013
B2014
EBITDA Impact YOY growth
-6%
19%
11%
6%
Margin
68%
67%
64%
65%
65%
($ in 000’s)
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Does not include EBITDA impact from Pioneer Press production

17. Launch objectives
•Protect and grow pre-print revenue
•Provide additional & non-duplicated HH penetration in key advertiser ZIPs
•Reduce footprint of expensive USPS-distributed opt-out program
•Act as a feeder program to convert into paid readers
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18. Advertiser participation & financials
•Nearly 60% of our largest pre-print accounts are in the product (and 42% of revenue per copy)
•Majority of major retail brands across all top categories utilize routinely
•Revenue
–2012: $2.1MM
–2013: $2.5MM
–2014: $3.0MM (est.)
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19. Sunday StribExpress financials
2011
2012
2013
2014 est.
Margin
57%
44%
49%
49%
Year-Ending Weekly Volume
30,000
65,000
65,000
85,000
Pre-Print Revenue
Total Expense
Contribution to EBITDA
($ in 000’s)
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