EFTA01385429

January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite Newspapers: Newspapers: Core Revenue Performance & Guidance: 44•••••••• 1411. 1414 /OM 1414 1143, 1417 aar ban al lad lbws ISM FACI04,11: •••111.-. a a a la alb 114 la ft a is a 1 n Olt In IA IP 401• 144 4144•44.1 I •la I 44/ tag. 441 111 IOW •14441144 low ala44441144••••••I .word Mosiegnain 411144•4441•4 0444101•444114•1 1444 414014404.4.4 Wee aseet Get. el a NW. ogles % elet are ee Ca aeon.% nee Ole Mee ea ~A al settee% ea ear* ailede MAIMS DM MINCT 0/ACWIThipte CCOO aW Soata ease bra .0+ 1a'a nee re% a °Wrenn omit, /Crew, &44 Sint Ennis As shown in the chart above, once again newspaper advertising revenue trends remained in negative territory throughout 2017. In fact, we have the rate of decline actually increasing (to mid-teens) despite comping to declines last year, the year before that, and the year before that, etc. (The industry has posted advertising losses since 2006). The erosion in physical distribution and circulation, brought on by the digital transition, is being only partially mitigated by digital growth. Looking ahead to 2018, we don't see much changing here. Despite consolidation in the industry leaving many participants in the space with lower debt levels (appropriately so, in our view), we remain cautious on the outlook. We expect newspaper's share of media spend to continue to erode (from —26% in 2007 to -4.4% in 2018, as per Magna), pricing pressures to persist, advertising revenue declines in the mid-to-high-teens, and the digital ad environment to remain competitive. Thus we're underweight on the sector as a whole. Page 154 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086713 CONFIDENTIAL SDNY_GM_00232897 EFTA01385429