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L.E.K. Media Consumption Survey (2009)
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January 2010
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Agenda
 Background and Executive Summary
 Opportunities to Consider
 Myths Exploded
 Big Wisdoms Confirmed
 Winners and Losers
2
Background
L.E.K.’s research covers a breadth of media platforms and behavioral responses
 L.E.K. conducted an online survey of 2,000+ households to measure changes in media

consumption and the underlying motivations behind those changes
- Consumers’ current media “diet” across 28 media types (e.g. the Internet, cable TV, etc.)
- Directional changes in behavior compared to that of a year ago, and reasons for change
- Current lifestyle habits and media enablement, including new media usage (1)
 Our survey targeted several top-of-mind questions from L.E.K.’s media and entertainment clients:
- How do media consumption habits change as new media technologies emerge?
- Where are the real opportunities in new media?
- How has the recession affected media consumption, and what’s secular vs. cyclical?
- Are traditional consumer segmentation approaches still relevant in understanding today’s
environment?
 Survey responses measure:

- Directional change in consumption (compared to that of a year ago) across media platforms
- Average time spent on the Internet, watching TV, listening to music and radio, playing games,
and reading newspapers, books and magazines
- Average monthly buy rate for movies across all windows
Note: (1)
New media hours includes time spent: watching movies via EST, streaming, playing mobile, online casual and MMO
games, and listening to satellite and Internet radio
3
Opportunities to Consider
Six Opportunities to Consider
$ 1. You can get paid for online video content, but you have to go through the cable bill
- Up to 38% of consumers reported they would definitely or probably pay a fee on
top of their cable bill to get access to their cable content online and on their mobile
phone
4
Respondents cited they are willing to pay $19 to $28 for only video through
cable provider, with 38% claiming to be probable buyers at the bargain price
of $19 per month
Willingness to Pay for OTT Service (1) Interest in Subscribing At
“Mildly Expensive” Price (2)
% of Respondents
Too Expensive, 100
$41
Would Never Use 19%
80
28%
60
Mildly Expensive, $28 40 36%
but Interested 20
11%
0 Definitely Would Not
Probably Would Not
Bargain / Good Interest in Subscribing At Might or Might Not
$19
Value “Bargain” Price (2) Probably Would
% of Respondents Definitely Would
100 10%
Too Cheap, Doubt
$12 80 17%
Quality of Service
60 35%
0 5 10 15 20 25 30 35 40 45 40
23%
20
Average Dollars Paid in Addition
15%
to Current Cable/Satellite Bill 0
Note: (1) “At

what price would this service be [too expensive / mildly expensive / a bargain / too cheap]?” (n = 2,008); (2) “What would
your interest be in this service at [this price]?” (n = 2,008)
Source: L.E.K. Media Consumption Survey (December 2009)
5
phone
2. Internet radio is finally becoming relevant

- 32% of respondents had used Internet radio services, logging 5.8 hrs per week per
user
6
32% of respondents use Internet radio services on a weekly basis and

spend just as much time on Internet radio as active users of satellite radio
% of Respondents who are Active Radio Listeners (1)
% of Respondents
100
90
80
70
60
50
40 83%
30
20
32%
10 21%
0
Traditional Radio Satellite Radio Internet Radio
Average # of Hours per Week

8.1 5.7 5.8
per Active Listener (1)
Note: (1) “Howmuch of the following do you watch / consume in a typical week?” (n = 2,008); “Active” listeners indicated at least
some consumption of the respective radio type per week
7
phone
2. Internet radio is finally becoming relevant

- 32% of respondents had used Internet radio services, logging 5.8 hrs per week per
user
3. E-readers are driving readership and becoming a growth driver for the mature book
and magazine market
- Of the 10% of consumers who own e-readers, 48% reported reading more books
versus just 7% who decreased their book reading (44% vs. 9% for magazines)
- 36% percent of the books read by people with e-readers are incremental
consumption
- 40% of respondents indicated that affordability of books on e-readers was driving
their increased consumption, and 47% indicated that more interesting books were
being released (likely due to better discovery on e-readers)
8
E-readers appear to drive incremental reading, as ~36% of books read on e-

readers would not have been read otherwise (i.e., as a print book)
“Do you own an e-reader?” Incremental Book Readership from e-reader (1)
% of Respondents (n=2,008) # books read on e-reader (n = 199)
100 100
90 90
Would Not Have
80 80 36%
Read as Print Book
70 70
60 60
90% No
50 50
40 40
Would Have Read
30 30 64%
as Print Book
20 20
10 10
10% Yes
0 0
2009 2009
Note: (1) “Of

the books you read on your e-reader, how many would you have ordinarily read as a print book if you didn’t have an e-
reader?” (n = 199)
9
E-readers appear to significantly increase print media consumption across all

major print segments
Change in Print (Newspaper) Change in Print (Book) Change in Print (Magazine)

Consumption (1) Consumption (1) Consumption (1)
% of Respondents % of Respondents
% of Respondents
60 50
40
50 40
30
40
30
30 48% 20 44%
59%
20
20 10 23%
10 15%
10 10% 15%
7% 11% 0 0
0 -7% -9%
-12% -10% -15% -14% -10 -19% -17%
-10 -16% -10
-20 -20 -20

Non E- Active Active Non E- Active Active Non E- Active Active
Readers Readers, Readers, E- Readers Readers, Readers, E- Readers Readers, Readers, E-
Non E- Readers Non E- Readers Non E- Readers
Readers Readers Readers
Less
More
Net variance
Note: (1) “Howdoes your [current consumption] compare to that of a year ago?” (n = 2,008)
10
Lower costs and better content (or discovery of content) were cited as the
primary reasons active e-readers are spending more time reading
Reasons for Spending More Time Reading Print Media (1)

% of Active Readers(2) Owning e-  Active e-readers claim
readers affordability / value as
Response Options Newspaper Magazine Book the primary reason to
More affordable to me 43% 41% 36%
increase time reading
I get better information here than

30% 47% N/A
 47% of e-readers state
through other alternatives that there are more
More books being released that I interesting books being
N/A N/A 47%
am interested in released
I prefer getting information here - This is likely
rather than through alternative 10% 6% 6% attributed to better
methods
discovery via e-
More free time in general 10% 4% 5% reader devices
I am spending less time
consuming other forms of media, 4% 2% 2%
giving me more free time to read
Other 3% 0% 4%
Note: (1)“What would you say is the primary reason that you are spending less time reading [the newspaper / magazines / books]?”
(n = 105, 83, 83 respectively); (2) “Active readers” refers to those reading >0 hours / month of each respective media type
Source: L.E.K. Media Consumption Survey (December 2009), L.E.K. Analysis
11
Six Opportunities to Consider (Continued)
4. “The iPod Nation” consumer segment is good, but the “e-reader Republic”
is even better in terms of being a great target for new media services
- iPod owners consume ~14% more new media (8.9 hours vs. 7.8 hours per
week) than the general population; e-reader owners, on the other hand,
consume a whopping 18.2 hours of new media in comparison
$
12
iPod Nation and Facebook Fanatics are generally high consumers of new
media, but the e-reader group is in a class by itself
New Media Consumption by Technology-based Consumer Segments (1))
New Media Hours per Week = Significantly higher

consumption levels
Media iPod Facebook e-reader Overall = Ave. consumption
Type Nation Fanatics Republic Population levels
Movies 1.5 1.6 2.8 1.2
Games 3.7 4.7 9.3 3.5
Radio 3.7 3.9 6.1 3.1
Total 8.9 10.2 18.2 7.8
Note: (1) New media hours includes time spent: watching EST / streaming movies, playing mobile, online casual and MMO games, and
listening to satellite and Internet radio; iPod Nation are respondents for whom the iPod is their primary portable music device;
Facebook Fanatics are those that self-report to update their social networking pages daily; e-reader Republic are respondents who
own an e-reader device
Source: L.E.K. Media Consumption Study (December 2009)
13
People owning e-readers were 4 times more likely to report increases in

their usage of new media in 2009
Increase in New Media Consumption (1,2)
% of Respondents
50
45
40
35
30
25
44%
20
15
10 19%
16%
5 11%
0
iPod Nation Facebook Fanatics E-Reader Republic Overall
Note: (1) “Howdoes your [current consumption] compare to that of a year ago?” (n = 2,008);
(2)
New media hours includes time spent: watching movies via EST, streaming, playing mobile, online casual and MMO
games, and listening to satellite and Internet radio; data shown is the average increase across these categories
14
$
5. Don’t forget about new media for people over age 50, a potential new growth
area
- Average reported time spent online increases with age, although activities
differ (while 25-39 year olds report 6.8 hours/week, the 50-64 year old age
group reports 8.3 hours/week)
15
Average reported time spent online increases with age, although activities
differ (social networking for younger demos; emailing, games and getting info
for older demos)
Average hours spent online per week for specific activity by age cohort (1)
% of hours online
100
90 24 26 22 20 24 Other (3)
32
80
8 8
70 8 8 8 Doing Online Tasks
7 8 9 8
60 10 8 Shopping
7 13 12
7 13 12 11 Getting Info
50
10 8 12 13 11 Playing Online Games
40 10
30 14 7 14 Social Networking
23 19 16
20
25 29 23 E-mailing
10 14 19 20
0
18-24 25-29 30-39 40-49 50-64 Total
Average # Hours
7.9 6.8 6.9 8.0 8.3 7.7
Online / Week (2)
Note: (1) “Yousaid on average you spend [number of hours] online in a typical week. How many are spent on the following?” (n = 1,949)
(2) Reported Internet usage time per week adjusted in a ratio of average time spent as measured by 3rd party sources to reported
Internet usage time within survey, given that survey was sampled from online panels
(3) Other includes responses such as “watching TV online,” “watching movies online,” “online dating sites,” etc.
Source: L.E.K. Media Consumption Survey, L.E.K. Analysis

16
$
5. Don’t forget about new media for people over age 50, a potential new growth
area
- Average reported time spent online increases with age, although activities
differ (while 25-39 year olds report 6.8 hours/week, the 50-64 year old age
group reports 8.3 hours/week)
6. Consumers are rampantly multi-tasking while online, specifically with TV

watching and/or listening to music – advertisers should note and take advantage
- 33% of the time during which consumers are online at home are
simultaneously spent watching TV
- 19% of their online time is spent listening to music at the same time
17
Online users are rampant media multi-taskers
Multi-Tasking On Other Media Types

While Online at Home (1)  Most revenue-generating Internet
% of Hours Online from Home
content relies on advertisements
and/or user engagement
35
30  However, respondents indicated

that for roughly one-third of the
25 time they spend online, their
attention is split with the TV
20
- ~11% of their online time is
33% spent talking on the phone
15
10
- ~19% of their online time is
19% spent also listening to music
5 11%
0
Watching TV Listening to Music Talking on the
Phone
Note: (1) “What

percentage of the time you spend online at home in a typical week is also spent doing something else?” (n=1,987)
18
As expected, younger people are generally better multi-taskers than their

older counterparts, although all demos multi-task with TV at high levels
Multi-Tasking on Other Media Types While Online at Home, by Age(1)

% of Respondents
60%
55%
50%
45%
40%
35%
Watching TV
30%
25%
20%
15%
Listening to Music
10%
5% Talking on the Phone
0%
18-24 25-29 30-39 40-49 50-64
Age Range
Note: (1) “Whatpercentage of the time you spend online at home in a typical week is also spent doing something else?” (n=1,987)
Source: L.E.K. Survey and Analysis
19
Myths Exploded
Three Media Myths Exploded

1. Myth – TV is “old media” that will get its clock cleaned by Internet cannibalization
- TV still rules and remains the largest media form by far in terms of time spent by
consumers (~38 reported hours per week vs. 7.6 hours for the Internet )
- DVRs are powering growth in TV, with a reported 39% of TV viewing time-shifted and
23% of DVR owners indicating they are viewing more cable TV, vs. 10% less
- However, local TV programming is not faring as well, and may get caught in the
downward spiral that newspapers are experiencing (Local TV was only TV category
with reported viewing decline)
- Online TV is still very small, accounting for only ~1% of total TV hours viewed
2. Myth – This year’s rosy box office numbers means that everything is “just fine” for the
movie theater business (~3% increase in admissions)
- It seems that the box office is up this year because casual movie goers surged
- Active movie goers (those that see over 1 movie per month) are self-reporting a 10%
drop in the number of movies they watch in a theater, with 56% (of those going to
fewer movies) indicating that the cost is too expensive
- The “success” is modest and fragile
3. Myth – DVD softness is just a recession thing
- DVDs may not “snap back” after the recession, with 80% of consumers indicating they
would not return to “pre-recession” DVD purchase levels
- 34% of consumers indicated they feel DVDs are too expensive, and 27% indicated
renting is more convenient and/or a better value than buying
- Studios need new pricing models and
20 windowing strategies
Wisdoms Confirmed
Four Wisdoms Confirmed
1. Newspapers are going nowhere fast

- Physical newspapers are lacking relevance as consumers can access the same
content more conveniently from online sources (16% of consumers decreased
newspaper reading vs. only 12% increased)
2. Flat-priced “all-you-can-eat” media work better in recessions than transaction-

based media
- Consumers do not cut back on key subscription services, even when times are
tough
- A net 6% of consumers increased viewing of cable TV, and 27% increased their
online activities (both require subscriptions)
3. “Life requires a soundtrack”

- Music is #2 to TV and ahead of Internet in terms of the amount of time spent on
a medium
- 52% of music is consumed via radio
4. Internet usage continues to eat into other media categories, as well as personal
time
- Increases in online usage pressure other media categories given a limited
amount of available “free time” for entertainment
- 57% of consumers with more free time stated they would increase Internet time;
the next most popular media to which consumers would devote additional free
time was network and cable TV, at 38%
21
Agenda
 Myths Exploded
22
Winners and Losers
No one can claim to know with certainty, but major trends currently in place
NOW and likely to remain in place over the next five years include:
1. HDTV
2. On Demand
3. Preference for Free (Ad-supported or Pirated) Content
4. Ad Dollar Shift from TV to Internet and other New Media
5. Advertiser Move to Targetability
6. Consumer Inertia
7. Fragmentation of Audiences
8. Growth of UGC / “Pro-sumer” Content
9. New Media Features Increasingly Understood and Accepted
10. Customer Dislike of Walled Garden
11. Choice Proliferation
23
Winners and Losers
How will these trends affect industry participants?
 L.E.K. looked at key industry participants

- Media Delivery Platforms
- Traditional Content Aggregators
- Internet-based Content Sites
- Professional Content Creators
 L.E.K. assessed
- The degree to which each of the 11 trends positively or negatively
affected each key industry participant
- The overall combined effect
24
Winners and Losers
Among media platforms, broadcast TV and Satellite face strong headwinds,
2
whereas IPTV and ISPs* are poised to benefit
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Broadcast TV - - ++ -- -- + - - - - -7
Cable MSO* + ++ - -- + + + + -- - 1
Media Platforms Satellite ++ - - -- -- + - + - - -5
IPTV ++ ++ - -- ++ - + + + - + 5
ISP* ++ ++ + + - + + 7
Mobile -- + - + + - + + + - + 2 Net effect of
Traditional Big 4 Networks + + - - + - - - + -1 Multiple Trends
Aggregators Affiliate Stations - - + - - - - - - -7 on Industry
Basic Cable Networks - - + - - -3 Participants
Pay Cable Networks - + - - - -3
Internet Sites Network/Cable Website - ++ ++ ++ ++ - + - ++ - + 8
Web Aggregator/Destination site3 - ++ ++ ++ ++ - ++ ++ ++ + + 14
Piracy Sites - ++ ++ + ++ ++ ++ + + 12
Profes. Content Creators + -- + + -- -- + + + 0
Consumers + ++ ++ + + + + + + 11
Note: 1Ratings and dollars-per-hour of delivered content continue to decline; 2Acceptance occurs both because consumers get more comfortable
with new tech., and because providers make their products easier to understand/use; 3E.g. Google, etc.; 4Choice Proliferation both in
platforms & access point *Cable MSOs and ISPs frequently combined
25
Winners and Losers
Based on these trends, there will be relative winners and losers
Potential Winners Could Go Either Way Potential Losers

 MSOs (esp. those with  Radio stations  TV stations / groups
broadband ISPs)
 Concert promoters  Newspapers
 IPTV providers
 Web aggregators  Sports leagues / teams  Most general-interest

magazines
 Cable networks (with strong  Premium pay cable
franchises) networks  High-cost rentailers
(Blockbuster)
 Low-cost rentailers (Netflix,
Red Box)  Broadcast networks
 Studios
 Out-of-home media  Book publishing
companies  Satellite radio
 Video game developer /  Movie Theaters
publishers
 Differentiated content
creators
- Branded
- Cost-efficient
- Multiplatform
 Subscription Models
26
Winners and Losers
Future scenarios – we would not be surprised if any of the following

happened over the next five-plus years
1. Internet ad growth accelerates out of current recession as “tipping point” is reached with decline
in traditional media
2. TV service provider will develop premium Internet options that unlock value in online video
3. Broadcast networks go cable only and adopt cable-like pricing (we had this one last year)
4. Book sales will rise
5. Companies that best serve iPhone nation and e-reader republic prosper (think kid-oriented game
companies)
6. Consolidation happens among the major studios (6 to 4 or 3?)
7. Valuations of Internet radio companies rise again
8. Distribution (cable / IPTV) again makes a play to buy a major studio (we had this one last year
as well!)
9. Media targeted at older demographics does surprisingly well
10. Major metro newspapers and national magazines go online only
11. Plus more we can’t foresee…
27
Appendix
28
Myths Exploded
Agenda
 Myths Exploded
1. TV is an “old media” quickly losing relevance
2. Film box office numbers imply a healthy theatrical industry
3. DVD softness is just a recession thing
29
Overall Media Consumption Trends
Consumers report spending 37.6 hours watching TV, dwarfing all other
media categories (online usage still only 7.6 hours per week)
Average Consumption by Major Media Type
(2009 vs. 2008)
Mean Hours per Week Consumed (1, 2)
YoY 2008-09
Media Type 2008 2009
Change (%)
Internet 7.3 7.6 4.4%
TV 37.8 37.6 (0.5%)
Radio 9.2 9.8 6.5%
Movies 2.7 2.9 8.8%
Games 7.1 7.5 5.3%
Print 7.1 7.1 (0.3%)
Note: (1)
Reported Internet usage time per week adjusted in a ratio of average time spent as measured by 3rd party sources to
reported Internet usage time within survey, given that survey was sampled from online panels. Reported TV usage time per
week adjusted to mean time as measured by Nielsen in Q3 2008 (2) Numbers shown are rounded to the nearest decimal
point
Source: L.E.K. Media Consumption Survey (n = 2,008), Nielsen, L.E.K. Analysis
30
Myths Exploded
Cable TV is showing strong growth in terms of both average hours viewed

and the percentage of the population increasing viewing; online TV viewing
is still small, but ~38% of consumers report some online viewing
Time Spent Watching TV (1) Net % of all Respondents

YoY Change in Increasing / (Decreasing) % of all Respondents
# of Hours Spent per Week Hours Consumption who are Active Users
40 38
Online TV(2) N/A +4.2% 38%
35
30 14 Cable 8.3% +6.2% 82%
25
20 7 Local Broadcast (3.4%) (0.3%) 81%
15
10
17 Network Broadcast (5.3%) +4.1% 95%
5
0
2009
Note: (1) “Howmuch of the following do you watch / consume in a typical week?” (n = 2,008); (2) Reported online TV time per week
was adjusted using the ratio of average time spent online as measured by 3rd party sources to reported time within survey
31
Myths Exploded
In contrast to local TV programming, consumers are spending more time

watching cable and network TV mainly due better programming and DVRs
Reasons for Watching MORE Cable / Network Programming (1) (2)
Response Options % Cable % Network
I found more programs on cable / network

55% 52%
television that I want to see
I have a DVR / PVR and am able to record more
23% 24%
TV that I want to see
I have more free time in general to spend on
12% 13%
media activities
I am spending less time consuming other forms

5% 6%
of media
Other (please specify) 5% 5%
Note: (1) “Whatwould you say is the primary reason that you are watching more cable TV?” (n = 383); (2) “What would you say is
the primary reason that you are spending more time watching network broadcast TV?” (n = 384)
32
Myths Exploded
Agenda
 Myths Exploded
33
Myths Exploded
While more people went to the movies in 2009, the average active movie goer
attended fewer movies per month
% of Respondents who are Movies Watched in Theaters per

Active Movie Goers (1) Active Theater Goer (2)
# of Movies Watched in Theaters # of Movies Watched in Theaters
60 3.0
55
50 2.5 -10%
45
40 2.0
35
30 1.5
25 51%
20 41% 1.0 2.0
1.8
15
10 0.5
5
0 0.0
2008 2009 2008 2009
Note: (1)
Active theater goers are respondents who watch more than 1 movie a month in theaters
(2) “Howdoes your [current consumption] compare to that of a year ago?” (n = 2,008)
34
Myths Exploded
For those consumers cutting back on theater-going, the predominate main

reason appears to be cost / price sensitivity
Reasons for Watching FEWER Movies in Theater (1)
% of Respondents watching FEWER

movies in the theater
I feel that the cost is too expensive 56%
I am too busy / I have less free time overall 18%
I am not as interested in the content being released 12%
I feel quality of my experience at home is

5%
comparable to that of the theater
I am spending more time consuming
2%
other forms of media
Other 7%
0 5 10 15 20 25 30 35 40 45 50 55 60
Note: (1) “What would you say is the primary reason that you are watching fewer movies in the theater? (n = 563)
35
Agenda
 Myths Exploded
36
Myths Exploded
Only ~20% of respondents cited they would buy DVDs at pre-recession rates
given a better economy; the majority do not plan to return to pre-recession
buy rates even with a restored economy and personal finances
Change in Movie (DVD Buying) Consumption (1) Likelihood to Buy DVDs In Better Economy (2)
% of Respondents (n=2,008) % of Respondents Citing Less DVD Buying (n=581)
More – didn’t consume
100 2% 100
much/any last year, but Yes, would buy more
9%
90 did this year 90 20% today, at pre-recession
More rate
80 80
Yes, would buy more
70 70 25% today, at lower rate than
60 61% 60 pre-recession
About the same
50 50
40 40
30 30 No, would not buy
55%
Less more today
20 20% 20
Less – consumed last
10 year but stopped this 10
9% year
0 0
2009 2009
Note: (1) “How does your [current consumption] compare to that of a year ago?” (n = 2,008);
(2)“If current economic conditions were to improve and supposing you were in the same financial situation that you were in
prior to the recession, would you then buy more DVDs than you are today?”
37
Myths Exploded
Although 34% of respondents cite cost as the main reason to cut back on
DVD buying, 27% indicate substitution for rentals due to convenience
Reasons for Buying FEWER DVDs (1)

% of Respondents buying FEWER DVDs
I feel that the cost is too expensive 34%
I feel the benefit of buying vs. renting

15%
isn’t worth the extra cost
It is more convenient for me to rent movies
12%
on DVD than it is to buy and watch them
I am not as interested in the content being released 11%
I am too busy / I have less free time overall 10%
I am spending more time consuming

5%
other forms of media
Other 13%
0 5 10 15 20 25 30 35
Note: (1) “What
would you say is the primary reason that you are buying fewer DVDs?” (n = 581)
38
Wisdoms Confirmed
Agenda
 Myths Exploded
 Common Wisdoms Confirmed

2. Subscriptions work in recessions
3. Life requires a soundtrack
4. Internet crowding out other media in personal time budget
39
Wisdoms Confirmed
Newspapers are hardest hurt by new media; declines in magazine and book
consumption are primarily attributed to having less free time
Reasons for Spending Less Time Reading Print Media (1)  Consumers appear to be shifting
from newspapers due to other
% % accessible and affordable news
Response Options % Book
Newspaper Magazine outlets
I get the [content I want] - Although only ~16% of
through alternative 31% 16% N/A consumers cited alternative
methods (e.g. Internet, etc.) means as a reason to read
fewer magazines, this pool has
I am too busy 21% 33% 51% grown from ~9% in 2008
 Time pressures add to consumer

I feel that the cost is too shift from print media across all three
18% 27% 10%
high categories
I get better information - Use of Internet and blogs

from other alternatives (e.g. 12% 10% N/A allows consumers to multitask
cable news networks) as they get the news
I am spending more time  Books are seen more as leisure

consuming other forms of 6% 10% 18% items than sources of information
media and experience a decrease in
consumption among busy
Other 12% 4% 21% consumers
Note: (1)“What would you say is the primary reason that you are spending less time reading [the newspaper / magazines /
books]?” (n = 312, 296, 359 respectively)
40
Wisdoms Confirmed
Agenda
 Myths Exploded

41
Wisdoms Confirmed
In terms of the breadth of consumers increasing or decreasing different

types of media, Internet and TV consumption appear to be more resilient in
today’s weak economy compared to media with incremental fees per usage
Change in Consumption across Media Types (1)
% of Respondents
40 Subscription-based / Free Transaction-based More
Less
30
20
34%
10 19% 19% 18%
11% 10% 10% 12% 13%
8%
0
-7%
-15% -13% -16% -15%
-10 -22% -18%
-28% -29% -32%
-20
-30
-40
Internet Network TV Cable TV Theater DVD Sell- Traditional VOD Newspaper Book Magazine
Through Rental
Online TV Categories Movie Categories Print Categories

Note: (1) “Howdoes your [current consumption] compare to that of a year ago?” (n = 2,008); all more/less charts include “Less” as a
% of Respondents as a negative number
42
Wisdoms Confirmed
Agenda
 Myths Exploded

43
Wisdoms Confirmed
Music is second to TV and ahead of Internet in terms of time spent, and 52%
of music is consumed via radio (vs. 48% via recorded music)
Share of Overall Media Time (1) Share of Music Time (1)
% of Respondents (n=2,008) % of Respondents (n=2,008)
100 4 Movies 100 4 Recorded - Live
90 9 Print 90
9 Games 23 Recorded - Digital
80 80
9 Internet
70 70
11 Music - Recorded 21 Recorded - Physical
60 60
50 12 Music - Radio 50
10 Radio - Internet
40 40 6 Radio - Satellite
30 30
46 TV
20 20 36 Radio - Traditional
10 10
0 0
2009 2009
Note: (1)Based on # of hours spent on each medium; (2) Reported Internet usage time per week adjusted in a ratio of average time
spent as measured by 3rd party sources to reported time within survey. Reported TV usage time per week adjusted to mean
time as measured by Nielsen in Q3 2009
44
Wisdoms Confirmed
Agenda
 Myths Exploded

2. TV and radio are still bigger than the Internet
45
Wisdoms Confirmed
Internet usage as a percentage of free time entertainment still lags music

and TV consumption, although much of that is multi-tasked
% Allocation of Hours in a Typical Week (1) % Allocation of Free Time to Entertainment
Percent Estimated Percent
Music - Live
100 100 1
4 Movies
9
90 90 Print
27 Free Time
9 Games
80 80
54
Commute
9 Internet (2)
70 70
10 Music - Recorded
60 60
24 Work
12 Music - Radio
50 50
4 4 Grooming
40 8 8
40
Eat
30 30
46 TV(2)
20 20
33 33 Sleep
10 10
0 0
Unemployed Employed All survey respondents
Population Population
Note: (1)
Assumptions made on breakdown of time for Unemployed vs. Employed (question was not asked in survey)
(2)
Reported Internet usage time per week adjusted in a ratio of average time spent as measured by 3rd party sources to
reported time within survey. Reported TV usage time per week adjusted to mean time as measured by Nielsen in Q3 2009
Source: L.E.K. Media Consumption Survey (n = 2,008), L.E.K. Analysis
46
Wisdoms Confirmed
Internet appears to be the main media form people with more free time turn
to ahead of TV, games and reading; film is less popular
Change in Consumption across Media Types for Those with More Free Time (1)
% of Respondents with More Free time for Entertainment (2)
60
Less
50 More
Net variance
40
30 57%
20 38% 38%
32% 33% 30%
27% 27% 23% 23% 25%
10 20%
0
-6% -10% -11% -13% -13%
-10 -17% -18% -21% -21%
-25% -24% -29%
-20
-30
Internet Network Cable TV Console Newspaper Books Magazines Theater VOD Subscrip- DVD Sell- Traditional
TV Games tion Rental through Rental
Note: (1) “How does your [current consumption] compare to that of a year ago?” (n = 537); (2) “How much more free time do you have
available to spend on entertainment as compared to a year ago?”
47
Wisdoms Confirmed
Agenda
 Myths Exploded
 Survey Sample Detail
48
Survey Sample Detail
Demographics of respondents for L.E.K. Media Consumption Survey (1)
Respondents by Age Respondents by Marital Status

% of Respondents L.E.K. Survey % of Respondents L.E.K. Survey
25 23 U.S. Census Bureau 60 55 U.S. Census Bureau
22 (2008) (2008)
21 50
19 19 50
20 17 18 17
16 15 40
15 34 31
13
30
10
20
13
5 9 6
10
0 2
0 0
18-24 25-34 35-44 45-54 55-64 65+ Not Married Married Divorced/ Widowed
Separated
Respondents by Gender Respondents by Income
% of Respondents L.E.K. Survey
% of Respondents L.E.K. Survey
U.S. Census Bureau
60 25 23 23 U.S. Census Bureau
50 49 50 51 (2008)
(2008)
50 19 19
20
40
15 14 14
30 12 13 12 12
11 11
20 10
5 5 4 4 4
10
0 0
Male Female < $25- $35- $50- $75- $100- $150- >
$25K 34K 49K 74K 99K 149K 199K $200K
Note: (1) L.E.K.

Survey figures are from a balanced sample, re-weighted on age, gender and HH income.
Source: L.E.K. Media Consumption Survey (n=2,008), U.S. Census Bureau
49

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Auckland

& Myths Debunked Los Angeles

 Background and Executive Summary

 Big Wisdoms Confirmed

 Winners and Losers

L.E.K.’s research covers a breadth of media platforms and behavioral responses

 L.E.K. conducted an online survey of 2,000+ households to measure changes in media

 Survey responses measure:

Six Opportunities to Consider

Note: (1) “At

Six Opportunities to Consider

2. Internet radio is finally becoming relevant

32% of respondents use Internet radio services on a weekly basis and

Average # of Hours per Week

Six Opportunities to Consider

2. Internet radio is finally becoming relevant

E-readers appear to drive incremental reading, as ~36% of books read on e-

Note: (1) “Of

E-readers appear to significantly increase print media consumption across all

Change in Print (Newspaper) Change in Print (Book) Change in Print (Magazine)

-20 -20 -20

Reasons for Spending More Time Reading Print Media (1)

I get better information here than

Six Opportunities to Consider (Continued)

New Media Consumption by Technology-based Consumer Segments (1))

New Media Hours per Week = Significantly higher

Movies 1.5 1.6 2.8 1.2

Games 3.7 4.7 9.3 3.5

Radio 3.7 3.9 6.1 3.1

Total 8.9 10.2 18.2 7.8

People owning e-readers were 4 times more likely to report increases in

Six Opportunities to Consider (Continued)

Source: L.E.K. Media Consumption Survey, L.E.K. Analysis

Six Opportunities to Consider (Continued)

6. Consumers are rampantly multi-tasking while online, specifically with TV

Online users are rampant media multi-taskers

Multi-Tasking On Other Media Types

30  However, respondents indicated

Note: (1) “What

As expected, younger people are generally better multi-taskers than their

Multi-Tasking on Other Media Types While Online at Home, by Age(1)

Three Media Myths Exploded

Four Wisdoms Confirmed

1. Newspapers are going nowhere fast

2. Flat-priced “all-you-can-eat” media work better in recessions than transaction-

3. “Life requires a soundtrack”

 Background and Executive Summary

 Big Wisdoms Confirmed

 Winners and Losers

How will these trends affect industry participants?

 L.E.K. looked at key industry participants

Among media platforms, broadcast TV and Satellite face strong headwinds,

Based on these trends, there will be relative winners and losers

Potential Winners Could Go Either Way Potential Losers

 Web aggregators  Sports leagues / teams  Most general-interest

Future scenarios – we would not be surprised if any of the following

4. Book sales will rise

6. Consolidation happens among the major studios (6 to 4 or 3?)

7. Valuations of Internet radio companies rise again

9. Media targeted at older demographics does surprisingly well

10. Major metro newspapers and national magazines go online only

11. Plus more we can’t foresee…

 Background and Executive Summary

 Big Wisdoms Confirmed