ITN Networks

Board MeetingMarch 11, 2009

ITN Networks

2009: Begins a Multi-Year Period Where ITN Will Face its Greatest Challenges

Unprecedented Risk / Uncharted Waters / No Playbook

Economy

Management / Sales / Planning / Buying Research / Marketing / Technology

Success Will Require An All-Out-Effort:

Rapid Declines in Broadcast Ratings: Inventory

Potential Rise of “Unwired” Competition

Wide Changes in Local to National Audience Conversions

ITN Networks

2009: Begins a Multi-Year Period Where ITN Will Face its Greatest Challenges

Economy

Rapid Declines in Broadcast Ratings: Inventory

Potential Rise of “Unwired” Competition

Wide Changes in Local to National Audience Conversions

Leverage Relationships

Execute Short and Long-Term StrategiesAgencies - Clients - Television Stations

Key:Unprecedented Risk / Uncharted Waters / No Playbook

ITN Networks

2009:Rapidly Diminishing Supply of Broadcast TV Ratings

Challenges

NetworksPrimetime

Daytime

Morning News Evening News

- 13% to - 16%

Syndication

- 12%

- 9% - 5%

Late Night

- 2%

Across All Primary Demographics

Off-Network

- 9%

First Run

- 12%

Daytime

- 17%

Year-to-Year Declines: 4Q 2008 vs. 4Q 2007

National Measurements

ITN Networks

2009:

NetworksPrimetime

Daytime

Morning News Evening News

Syndication

Late Night

Across All Primary Demographics

Off-Network

First Run

Daytime

- 24% to - 32%

- 26%

- 23% - 24%

- 27%

- 28%

- 23%

- 25%

Last 3 Years of Declines: Last 3 Years of Declines: 4Q 2008 vs. 4Q 2005

ChallengesRapidly Diminishing Supply of Broadcast TV Ratings

1/41/4thth of Broadcast Television Audience of Broadcast Television AudienceHas Disappeared in Only 3 YearsHas Disappeared in Only 3 Years

National Measurements

ITN Networks

2009:

Local Measurements

ChallengesRapidly Diminishing Supply of Broadcast TV Ratings

Most Markets’ Broadcast TV Declines Have Been Even GreaterKey Factor: Changes in Nielsen Measurement

Technologies from Diaries to Local People Meters

Top 21 Markets / Top 25 by Dec 2009 Decline in Available Broadcast GRPsDecline in Available Broadcast GRPs

Last 3 Years: Last 3 Years: 4Q 2008 vs. 4Q 2005

New York Chicago Philadelphia Boston Atlanta Houston-33% -28% -30% -33% -41% -40%

Tampa Seattle Miami Denver Orlando St. Louis-42% -30% -36% -29% -33% -37%

W18-49:

ITN Networks

2009:

Digital Transition is Creating a New, Accelerated Decline

9.4%% of U.S. Homes

Completely Unready:

7.4%July ’08November ’08

Represented~16%

of Total Broadcast Television Audience

3.9%

Represented~14%

of Total Broadcast Television Audience

Represents~ 8%

of Total Broadcast Television Audience

With No Other Options, These Homes Watch Disproportionately More Broadcast TVDigital Unready Homes have No Cable, No Satellite, No Converter Box

March ’09

ChallengesRapidly Diminishing Supply of Broadcast TV Ratings

ITN Networks

2009:

Nielsen Oct. ‘08: Random Sampling of Homes Recently Converted to “Ready”26%

Elected to Get “Ready”by Subscribing to Cable

-50%Decline in Viewing toBroadcast Television

+9%Increase in Total

Television Viewing

9.4%% of U.S. Homes

Completely Unready:

7.4%July ’08November ’08

3.9%March ’09

ChallengesRapidly Diminishing Supply of Broadcast TV Ratings

Digital Transition is Creating a New, Accelerated Decline

Network Pipeline for New Off-Net Syndicated Shows is Drying Up

• Economy Has Cut 2009 Production Plans

• NBC: Leno M-F 10p-11p: 1 Hour of Broadcast Prime: No Future Syndication Potential

• Low-Cost Reality Programs Have No Syndication Shelf-Life

Fall 2006 Fall 2007 Fall 2008

# of New Prime Shows: 29 22 15Avg. RTG A18-49: 3.1 2.7 2.2

ABC/CBS/NBC/FOX

Total GRPs: 89.9 59.4 33.0-44% vs 2007-63% vs 2006

(Example: 1x in Each Program)

Off-Network Syndication: 75% of ITN’s Entertainment & Consumer Networks

2009:

ITN Networks

ChallengesRapidly Diminishing Supply of Broadcast TV Ratings

ITN Networks

2009:Local to National Conversion Factors are ChangingMore Rapidly, by Market and by Station

Individual Market Factors• % of Homes Converting to Digital Readiness• Speed of DVR Penetration • Local Appeals to Current Network & Syndicated Programs

Nielsen Initiated Factors• Local People Meter Expansion• A/P Meter Technology• National Sample & Weighting Changes

Challenges

Lower Ratings Are Significantly More Volatile• Average Rating Per Clearance in a Market: ~1.0 on Most Demographics• 0.3 Change in Rating is 30% Difference from a 1.0

ITN Networks

2009:Potential Rise of “Unwired” Competition

- New and Significant Threat to ITN: Non-Factor for over 10 Years- Largest Threat to ITN’s Future Revenue and Profitability

Challenges

• Much Publicized Local Market Softness: Fuels Belief in Opportunity

Station Groups & Reps Agencies / Agency GroupsSeeking Dollars Seeking Efficiencies

ITN Networks

2009:Potential Rise of “Unwired” Competition

Challenges

• Rush to Develop “Cheap” Unwired Alternatives Threatens ITN’s Category• Brands the “Unwired” Category as “Cheap”, Not Strategic • No Expertise – No Investment in Technology • Failures Negatively Affect the “Unwired” Concept

ITN’s Success is Built on Expertise to Manage Through Challenges

•Developing “Unwired” Threats: Metro, Telemerica, TVAS, Tribune•Increased Agency “Spot” Threats: MediaVest, Group M Agencies

Pure Price Play – No Strategic Value Beyond the Lowest Cost

ITN Networks

2009:

EconomyChallenges

Marketers Seek Both Significant Cutbacks in Dollarsand Greater Efficiencies on Committed Dollars

Rapid Decline in Consumer Spending

•Are Under Extreme Pressure to Respond•Seek to Consolidate Dollars with Fewer Players, Seeking More Incentives, Upgrades & Values • Identify ITN’s Upfront Pricing Does Not Pass On Emerging Local Market Efficiencies

Agencies

ITN Networks

2009:

EconomyChallenges

Marketers Seek Both Significant Cutbacks in Dollarsand Greater Efficiencies on Committed Dollars

Rapid Decline in Consumer Spending

Premium Strategic Value is Being Replaced with Cost Efficiency

The ITN “Brand” is Being Replaced with Relationships

Leverage ITN – Client & Agency Relationships

ITN Networks

2009:

2Q 2009 Optional Dollars

3Q 2009 Optional Dollars

$59.7 Million

First Priority: Secure 2Q & 3Q 2009 Optional Upfront Dollars

Calculated Responses

ITN Networks

2009:

• ITN Offered 10% CPM Rollbacks on All 2Q & 3Q Upfront Activity, on the Condition Advertisers Firm Up Optional Dollars

Adjust Prices While Re-Affirming ITN’s Strategic Value

Leverage ITN – Client & Agency Relationships

- Sought to Minimize Overall Cancellations - Secure Most Profitable Dollars / Forfeit Less Profitable

Calculated Responses

• Re-Affirm ITN’s Strategic Value- Key Strategies of Custom Networks: Ratings – Programs – Dayparts – Consumers

- Pro-Active: Maintain Strong Delivery Track Record from 4Q – February, Despite Significant Audience Declines

Strengthen ITN’s Position for Scatter Opportunities

ITN Networks

2009:

Results: ITN Maintained and Slightly Grew 2009 Billing

Leverage ITN – Client & Agency Relationships

Minimized Upfront Cancellations:• 2nd Quarter: 37% of Optional Dollars Were Cancelled / Projected ~60%

Various Agencies-Clients Rejected CPM Rollbacks / Required Full Cancellations (Economy)

Calculated Responses

2nd Quarter Dollars Cancelled: $12.2 million

• 3rd Quarter: Advertisers Have Until May 1st to Firm-Up

7% of Optional Dollars Were Firmed Up Early

ITN Networks

2009:Leverage ITN – Client & Agency Relationships

Calculated Responses

Results: ITN Maintained and Slightly Grew 2009 Billing

Added New Scatter / Upfront Billing:

•ITN was Rewarded for “Goodwill” / Strategic Value / Pricing Initiatives75% of New Dollars Came from the Agencies Who Accepted Rollbacks

•Existing Clients Expanded Into New ITN Networks for ScatterReckitt placed $2.1 million in ITN Daytime: Never Purchased Upfront or Scatter

•Developed Dialogue with Agencies for New, First Time ClientsSprint: $1.7 million “Small Business Owners” News Network, with Vignettes & Digital Extension

•Existing Clients Expanded Into New Networks for Upfront CommitmentJohnson & Johnson Added $1.5 million Upfront in ITN Noon News: Not Purchased in Initial Upfront

1Q 2009 2Q 2009 3Q 2009Billed as of March 10:$9.8 million $9.1 million

4Q 2009$458 thousand$1.1 million

ITN Networks

2009:Leverage ITN – Client & Agency Relationships

• Rollbacks Reset CPM Bases for All Future Upfront Activity

• New Scatter Clients Expect Greater Discounts for Future Upfront Commitments

• Profitability Will Be Challenged When the Local Marketplace Turns Back Up: Key Reason to Develop “Strategic Value” over “Cheap”

• Enabling ITN to Maintain 2009 Billing in Weak Economy

Efforts Will Have Short & Long-Term Effects

Calculated Responses

Example:Gross Billing $$

Gross Selling CPM

Guaranteed Impressions (000)

ITN Gross Cost CPM

ITN Gross Cost $$

ITN Gross Profit $$

ITN Gross Profit Margin

$30 Million

$20.00

1,500,000

$15.00

$22.5 Million

$7.5 Million

25%

Effect of CPM Rollback$30 Million

$18.00

1,666,667

$15.00

$25.0 Million

$5.0 Million

17%

10% CPM Rollback

- 33.3%

10% More Imps

ITN Networks

2009:Leverage ITN – Client & Agency Relationships

Efforts Will Have Short & Long-Term Effects

Calculated Responses

ITN Must Create New Efficiencies

Yield in CPM Efficiency is Only 7% , Not 30%

ITN Networks

2009:Pro-Active: Emerging Local Market Efficiencies are Temporary

Demand:Economy

Supply:Ratings

Local Broadcast Television

Temporary Situation Ongoing Situation

Calculated Responses

Original Rating P25-49: 1.3 New Rating P25-49: 1.0-30% -23%

Original Unit Cost: $1,000 New Unit Cost: $700

TV Station’s Late News:

ITN Networks

2009: Re-Buy Stations: Narrow Rotations to Key Days & Times

Calculated Responses

TV Station’s Late News: Mon-Sun 10pm-11pm

10:00pm

10:15pm

10:30pm

10:45pm

1.3

1.2

1.0

1.1

1.4

1.3

1.2

1.1

1.6

1.5

1.3

1.2

1.8

1.6

1.4

1.3

1.2

1.0

0.9

0.9

1.0

0.9

0.8

0.8

1.2

1.0

0.9

1.0

Mon Tue Wed Thu Fri Sat Sun

Avg. Rating P25-49: 1.2

Avg. Rating P25-49: 1.5 +25%

Declines in Unit Cost Hit Bottoms – Real Efficiencies Are Created From Audience Targeting

1. New YorkWNBC

WABC

-100%

+ 55%

2. Los AngelesKDOC

KTTV

KNBC

KTLA

-70%-41%

+ 107%

+ 69%

3. ChicagoWWME

WBBM

WLS

WCIU

WMAQ

WGN

-94%-50%-41%-33%

+ 105%

+ 37%

4. PhiladelphiaWTXF

WCAU

-30%

+ 795%

5. Dallas KDAF

KFWD

KDFI

KDFW

-52%-49%

+ 166%

+ 58%

-15% Across Most Other Stations

6. San FranciscoKBWB

KICU

KBCW

KNTV

KOFY

KTVU

-99%-66%-36%

+ 100%

+ 100%

+ 98%

7. BostonWBZ

WFXT

-22%

+ 34%

8. AtlantaWGCL

WATL

WUPA

WPCH

WSB

WAGA

-98%-77%-54%-41%

+ 62%

+ 55%

9. WashingtonWTTG

WRC

WUSA

-26%

+ 118%

+ 67%

10. HoustonKNWS

KPRC

-71%

+ 24%

11. DetroitWKBD

WMYD

WWJ

-23%

+ 69%

+ 53%

12. PhoenixKNXV

KUTP

KTVK

KPNX

KPHO

KSAZ

-43%-40%--22%

+ 286%

+ 202%

+ 38%

% Change in Station’s Share of ITN Dollars within Each Market1Q/2Q 2008 to 1Q/2Q 2009

ITN Networks

2009:Calculated Responses

13. Tampa WWSB

WTTA

WMOR

WTOG

WFTS

WFLA

WTVT

-97%

-84%

-35%

-29%

-28%

+ 100%

+ 63%

14. Seattle KING

KIRO

KONG

KSTW

KCPQ

-47%

-26%

+ 95%

+ 94%

+ 37%

15. MinneapolisKMSP

KSTC

KSTP

WUCW

WCCO

-52%

-48%

+ 79%

+ 55%

+ 34%

16. Miami WSVN

WFOR

WPLG

-49%

+ 136%

+ 55%

18. DenverKDVR

KUSA

KTVD

-29%

+ 42%

+ 30%

19. OrlandoWKMG

WOFL

WRBW

WESH

WFTV

WKCF

-46%

-25%

+ 221%

+ 85%

+ 46%

+ 21%

20. SacramentoKQCA

KTXL

KOVR

KMAX

KXTV

-58%

-49%

-24%

+ 70%

+ 62%

17. ClevelandWUAB

WBNX

-33%

+ 44%

ITN Networks

2009:% Change in Station’s Share of ITN Dollars within Each Market

1Q/2Q 2008 to 1Q/2Q 2009

Calculated Responses

ITN Networks

2009:Leverage ITN – Television Station Relationships

Calculated Responses

Pro-Active – Not Re-Active to the Changing Market ConditionsSince 4Q’08, ITN has made Dramatic Buying Shifts Across Most Markets

• Executing Individual Station & Group Deals for New Efficiencies

• Hedge Individual Market Conditions & Timing

• Identify & Manipulate Buys According to Increasing Changes in Local-National Conversion Factors

• Hold Stations Accountable – Set Firm Examples & Rewards

• Increase Flow & Speed of Data to Improve Reaction Time, as ITN will Have Less Room for Error

ITN Networks

2009:

Demand:Economy

Supply:Ratings

Local Broadcast Television

Inevitable Situation 2010? / 2011?

Calculated Responses

Pro-Active: Emerging Local Market Efficiencies are Temporary

State of Constant Negotiation: Leveraging to Establish Efficient, Sustainable CPMs

ITN Networks