The Internet and newspapers
What future for the printed format?
AEDE
10th March 2006
Enders Analysis
 Leading UK independent research company*
 Authoritative and original research to support buy-side activity combining financial analysis with
regulatory insight, consumer research and informed by high-level contacts with leading industry
players
 Research agenda covers mobile and fixed telecommunications, media and technology
 UK focus with coverage of US, Japan and major European markets
* Financial News survey of independent research, February 2005
2006-11
2
Client base
Funds:
Aberdeen Asset Management
ABP (Netherlands state pension
fund)
Baillie Gifford
Brookside Fund Managers
Capital Research
Fidelity
Gartmore
Hunter Hall Investment Management
JP Morgan
Kensico Capital Management
Liverpool Victoria Asset
Management
Loch Capital Management
Marshall Wace
Moore Capital
Morgan Stanley Asset Management
Morley Fund Management
Och-Ziff Capital Management
Putnam Investments
ROBECO
Threadneedle Investments
USS
Walter Capital Management
Advertising/Marketing:
OMD International
Wieden & Kennedy
WPP
2006-11
Film/Television/Music:
Arqiva
BBC
BSkyB
Canal +
Channel 4
Digital UK
EMI
Five
HIT Entertainment
ITV plc
MIH Asia
MTV Networks Europe
Sony BMG
Sony Pictures
Entertainment
The Walt Disney Company
Time Warner
Top Up TV
Turner Broadcasting
Video Networks
Vivendi Universal
Warner Chappell
Mobile:
O2
Orange
SFR
Tesco Telecoms
T-Mobile
Virgin Mobile
Vodafone
Vodafone Japan
Fixed Line:
BT
Cable & Wireless
Cegetel
Kingston Communications
NTL
Onetel
Telewest
Thus
Government:
Conseil Supérieur de l'Audiovisuel
(France)
Department for Culture, Media & Sport
Department of Trade and Industry
European Commission
HM Treasury
Ofcom
Internet:
AOL Europe
Iliad
Tiscali
UK Broadband
Wanadoo
Yahoo!
Gcap
Johnston Press
Lagardere Media
UBC Media Group
Private Equity:
Apax Partners
Cinven
Ingenious Media
Permira Advisors
Professional Services:
Accenture
Booz Allen Hamilton
Capgemini
Deloitte Consulting
McKinsey & Co
Mediatique
planning-inc
PricewaterhouseCoopers
Servista
Retail:
HMV
William Hill
Press/Radio:
D C Thomson
DMGT
Emap
3
UK media consumption
Printed media, radio, TV and Internet penetration of demos
(% of cohort)
100%
90%
90%
90%
94%
91%
88%
81%
80%
68%
67%
58%
54%
60%
49%
40%
44% 46%
46%
44%
51%
43%
48%
32%
23%
20%
18%
15%
10%
0%
16 - 24
25 - 34
35 - 44
Printed media
45 - 54
Radio
TV
55 - 64
65+
Internet
Note: Proportion who watch TV, listen to the radio or read printed media in any given day (weekdays and weekend).
[Source: ONS Time Use Survey]
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Reading newspapers and using the Internet
“I read the newspapers less now that I use the Internet”
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.30
15-19
0.48
0.22
0.36
20-24
0.53
0.11
0.43
25-34
0.39
0.18
0.33
35-44
0.52
0.15
0.33
0.57
45-54
0.10
0.23
0.66
55+
0.11
Agree
Disagree
Neither agree or disagree
Base: UK adult Internet users.
[Source: BMRB Internet Monitor Wave 34 November 2005]
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Reading newspapers and using the Internet
Internet usage is not affecting all formats equally – Saturday and Sunday editions appear to
Be especially vulnerable in relation to newspapers delivered during the week
 If current trends continue, by 2010, when Internet penetration will have reached 65% of UK adults
(33 million), about 13 million will not read the weekend newspapers
UK Internet users and newspaper readership, 2002-2004
2002
2003
2004
2005
20.4
21.9
23.4
26.5
Do not read newspaper on weekdays
(%)
28
28
31
28
Do not read Saturday newspaper (%)
32
35
36
36
Do not read Sunday newspaper (%)
32
34
39
40
Internet users (m)
[Source: BMRB]
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Media consumption trends
Weekday media consumption will become more concentrated than today
80
70
73%
63%
60
61%
50
50%
56%
53%
44%
47%
40
31%
38%
31%
30
20
24%
15%
16%
15%
22%
12%
11%
10
6%
0
'When you wake up' (6am - 10am) 'During the day' (10am-5.30pm)
Watch TV
Read newspapers
'During the evening' (5.30pm9pm)
Read magazines
Listen to radio
'During the night' (9pm-6am)
Use the Internet
Base: All respondents in EU & Norway using each type of media.
[Source: EIAA Mediascope]
2006-11
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Media-meshing
Media-meshing is already present and could accelerate due to young demo
Q. When you’re mainly watching TV, reading a newspaper, reading a magazine,
listening to radio, using the Internet, which other media do you sometimes use?
When mainly watching television
When mainly using the Internet
24%
11%
6%
21%
3%
28%
29%
3%
[Source: EIAA Mediascope]
2006-11
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Media-meshing
Media-meshing is very significant in young demo
Q. When you’re mainly watching TV, reading a newspaper, reading a magazine,
listening to radio, using the Internet, which other media do you sometimes use?
When mainly using the Internet
32%
6%
40%

More pronounced amongst 16-24s

Very high levels of meshing between online
and TV and online and radio
4%
[Source: EIAA Mediascope]
2006-11
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Internet use and gathering info
Online info collection activities are supplanting those delivered by regional newspapers
To look for jobs
65%
70%
30%
25%
60%
50%
To view classified adverts
25%
52%
22%
22%
46%
40%
18%
20%
40%
40%
13%
15%
30%
20%
13%
10%
10%
5%
0%
0%
15-19
20-24
25-34
35-44
45-54
8%
15-19
55+
To check TV listings
40%
29%
30%
25-34
35-44
45-54
55+
To house-hunt
35%
25%
20-24
35%
35%
25%
21%
30%
20%
20%
14%
15%
26%
23%
25%
14%
18%
20%
15%
10%
10%
5%
5%
15%
10%
0%
0%
15-19
20-24
25-34
35-44
45-54
55+
15-19
20-24
25-34
35-44
45-54
55+
Base: UK adult Internet users.
[Source: BMRB Internet Monitor Wave 35 November 2005]
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Threat to newspaper readership
The level of threat to newspaper readership depends on whether newspaper readership habits
can be formed and/or preserved in later lifestages
 Evidence is that aging does not increase readership - to the contrary, between 1974 and 2004, daily
national newspaper readership declined in all cohorts, by 30 percentage points in 15-24 demo
 But this hypothesis needs further testing for regional newspapers and in focus groups
UK daily newspaper readership, 1994-2004
1974
1984
1994
2004
15-24
81
72
58
44
25-34
79
68
56
44
35-44
78
71
58
46
45-54
81
73
63
51
55-64
78
72
64
58
65+
69
62
62
58
Base: Share of UK adults who read at least one national daily newspaper in the day prior to the interview.
[Source: National Readership Survey]
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Threat to newspaper readership
The Internet is a core medium for news and will soon be a mainstream method of accessing
regional/local information
 More than 40% of all UK adults now access news websites every month
 Demand for online news and regional/local information is growing amongst Internet users:
 In October 2005, almost 70% of Internet users accessed news/weather websites, up 17%
in the previous 12 months
 Over the same period, the share of internet users accessing regional/local websites grew
70% to just under half of all internet users
 Online news consumption will continue to grow driven by increasing access to the Internet and
increasing time online
 Usage of regional/local websites is likely to grow even more rapidly, albeit from a lower base
Audience reach and unique users, October 2005
Category
% reach
Y-on-Y growth
Unique users
Y-on-Y growth
100.0
n/a
28,883,000
3%
News/weather websites
68.5
17%
19,792,000
21%
Regional/local websites
47.2
70%
13,642,000
75%
All sites
Base: UK Internet users.
[Source: Comscore, ONS]
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Online news consumption
‘National’ websites are the main source of news on the Internet
 Although direct comparison is difficult, available data suggests that Internet users rely primarily on
nationally-based services/websites, rather than local networks, for news and information
 Key reasons include
 The success of the publicly-funded BBC News website
 Development of news websites by leading ISPs and portals
 Relatively early entry into online by national newspapers such as The Guardian
 Usage of leading local newspaper networks is now increasing rapidly, but from a far smaller base
Top 5 national news websites vs. top 5 local newspaper networks – unique users, October 2005
National news websites
Rank
Local newspaper networks
Unique
users
Y-on-Y
growth
Trinity Mirror icnetwork
Unique
users
Y-on-Y
growth
1,193,000
63%
1
BBC News
6,279,000
n/a
2
Yahoo! News
3,499,000
71%
Johnston Press PLC
981,000
155%
3
AOL News
2,863,000
15%
Scotsman.com network*
834,000
69%
4
The Guardian
2,512,000
78%
Manchesteronline.co.uk
811,000
172%
5
MSN News & Weather
2,230,000
n/a
Northcliffe this is network
776,000
65%
* The Scotsman Publishing Group bought by Johnston Press in December 2005.
[Source: Comscore]
 Although ‘national’ websites dominate online news, consumption of local news and information is
growing fast
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Reading local newspapers
“Top reason for reading the local newspaper”
0%
5%
10%
15%
20%
Local news
25%
30%
35%
40%
45%
42%
Births, deaths and mariages
18%
Headlines
11%
9%
Local sports news
Property sales & rent
4%
Localhistory
2%
Local entertainment
2%
Cars & motoring
2%
Share
Base: Local newspaper readers.
[Source: Echo Box]
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Scenarios for readership
Newspaper readership trends under inclination scenarios, 2003-2028
14,000
Printed media readers (000)
12,000
10,000
8,000
6,000
4,000
2,000
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
0
Age dependent inclination
Increasing inclination
Note: Figures are indicative only.
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Online advertising
Growth in online advertising far outstripping growth in other advertising sectors
 All formats of online advertising are growing rapidly, but those that have been the mainstay of
regional newspapers are rising especially quickly, i.e. paid-for search listings (up 73% in first half of
2005), recruitment classifieds (up 75%), and other classified advertising (up 160%)
Year-on-year growth in ad spend in first half of 2005
70%
62.3%
60%
50%
40%
30%
20%
10%
8.3%
8.9%
Cinema
Outdoor
3.1%
0.7%
0%
-0.2%
-10%
-6.5%
Direct mail
Press - display
Press classified
-2.7%
TV
Radio
Internet
Total advertising market growth = 3.0%
[Source: PwC]
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Online advertising
Search is the critical piece in any online advertising based strategy
 Search is highly consolidated and the combination of keyword search and the pay-per-click
auction model is extremely efficient
 In Q2, search accounted for 40% of US internet ad revenues, but only 5% of time online
 Outside of search website owners face challenges in delivering a critical mass of targeted Internet
users
Time spent online, US Q2 2005
Search
5%
Internet ad revenues, US Q2 2005
Commerce
18%
Search
40%
Content
37%
Classifieds/
lead generation
24%
Email
2%
Communications
40%
Display/sponsorship
34%
[Source: OPA/Nielsen//NetRatings Internet Activity Index, IAB/PwC Internet Advertising Revenue Report]
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Conclusions for the Spanish market
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