ITN Networks
Combined Company Synergies
June 19, 2008
Combined Company Vision
The Aggregation Model for a Media Company is Emerging as the Most
Important Development for Future Ad Revenue Growth and Profitability.
Key Developments:
•Aggregation across broadcast and cable television, plus emerging platforms,
is increasingly valued by ad agencies for its ease-of-use to re-assemble mass
audience reach in a rapidly fragmenting media landscape.
•Major television networks are expanding the distribution of their content
outside-of-home, to offer packages of nationally aggregated audience.
•The Nielsen Company is employing new technologies to expand the ability of
their National People Meter samples to measure and support aggregation
across all television and emerging media platforms.
The Industry is Ripening for Aggregation
To Succeed, Media Companies Must Evolve to Develop New Business
Models and Infrastructures that Best Support Expanded Aggregation.
Combined Company Vision
A New Multi-Platform Media Company
A New Model
Combines:
•The Cachet of a Media Company’s Unique Content
& Distribution Assets
with the
•Scale and Targeting Power of Aggregation Beyond
the Limitations of a Media Company’s Assets
ITN Background
• ITN is the leading provider of aggregated national networks in the television
industry, with a 97% share of the aggregated or “unwired” network category.
• ITN has established affiliations with over 600 U.S. broadcast television stations,
major satellite providers, and various regional & local cable channels, to access
local TV station inventory across any program or daypart target
• ITN offers national networks across most network dayparts, plus options that are
otherwise unavailable in the national television market, including local newscasts,
and custom consumer targets, such as “Moms”, Full-Time Working Women, and
“Enthusiasts” of beauty, fashion, fitness, pets, and many more.
• ITN has developed a strong infrastructure of proprietary software and networking
systems, exclusive research and historical data, mature station relationships for
dependable & efficient inventory bases, and a talented staff of senior management.
• ITN is uniquely established with the Nielsen Company to provide advertisers the
identical audience metrics, timing and reporting capabilities as all national media
choices, with a level of accountability that exceeds all industry standards.
• ITN is actively expanding its Online Division, assembling a significant distribution
network of local media websites and a full-service internal infrastructure.
Value Proposition
Upon Acquisition of ITN, The Combined Company Creates a
New Syndication Market Leader:
• #1 or #2 in Total Ad Revenue
• #1 in Total Viewers Reached
• #1 in Program and Daypart Diversity
• #1 in Consumer Targeting Ability
• #1 in Market-by-Market Flexibility
• The Only Syndicated Program Seller Offering:
News Network Dayparts Consumer Targets
• The Only Syndicated Program Distributor Providing
Stations Both Program Content and Ad Revenue
The Combined Company Creates Immediate Synergies, and is
Uniquely Positioned Today and for the Future to:
• Increase Revenue and Profitability
• Leverage Stronger Station Relationships
• Establish Clear Competitive Advantages
• Strengthen Client & Agency Partnerships
• Expand and Monetize Assets Across Platforms
• Create Greater Market Value
Immediate Synergies
Revenue Growth
In Television, Sony + ITN Creates Strong Synergies for
Revenue Growth, as Both Companies Will Generate
More Ad Sales Together versus Apart
ITN Provides Sony with Strong Upfront Sales in News and Network Dayparts, plus
More Inventory in “Top Tier” Programming: High-in-Demand at Premium Prices.
These Strong ITN Program Additions will be Immediately and Effectively Leveraged to
Drive Larger Packages Across Sony’s Syndicated Program Offerings.
Sony Provides ITN with the Valuable “Sony” Name, plus for the first time, ITN’s “Aggregated” National
Networks Could Be Sold in Combination with More Traditional Syndicated and Original Content.
The Addition of Sony to ITN Immediately Elevates The Status of ITN Throughout the Media Industry.
See Examples of Packaged Sales Synergies on the Following Pages
Immediate Synergies
Profitability
Sony + ITN Creates Strong Synergies for Increased Profitability, as Both
Companies Will Generate Higher Profit Margins Together versus Apart
ITN Has No Inventory Risk
ITN accepts national sales orders pre-determined to yield the highest possible profit margins, and purchases locally
only the commercial inventory required to fulfill those orders.
ITN Absorbs Sony’s National Inventory Risk
In periods of market softness, some national inventory in Sony’s Syndicated programs may go unsold, most likely
occurring in Sony’s lower rated program offerings. Such inventory can be incorporated into ITN’s aggregated
networks, already sold upfront, likely at higher national CPMs as part of broader program packages that include midand top-tier programming.
•ITN gains access to commercial inventory it would otherwise be required to purchase
locally, and ITN is able to cancel pre-bought local inventory from later flight weeks.
•Sony maintains CPM integrity in the market, as opposed to offering last-minute unsold
inventory at lower CPMs, or commoditizing such inventory in ad auctions.
•Sony turns inventory that otherwise would have gone unsold into highly profitable inventory.
Sony + ITN Creates Stronger, More Profitable CPM Leverage
•More “Top Tier” Program Offerings Leveraged to Generate Higher, More Profitable Sales CPMs
•Increased Stations’ Dependency Leveraged to Generate Lower, More Profitable Cost CPMs
Immediate Synergies
Broadcast Television Distribution
Sony + ITN Provides Greater Flexibility for Sony to Distribute Programs,
or Sell Hardware to Stations More Effectively
•Sony can make more attractive offers to stations by accepting Local Inventory banks across
news or other programs, as partial terms for purchasing Sony programming or hardware.
•ITN can monetize Local Inventory banks at full value across all 52 weeks each year, by
incorporating the inventory into ITN’s aggregated networks sold in the upfront market.
Cable & Digital TV Expansion
Expansion of ITN’s Reach, Relationships, and Aggregation Model
Beyond Broadcast, to Cable and Digital Television Platforms
•ITN currently provides ad revenue directly to participating national cable networks,
regional & local cable stations, major satellite providers, and to Google, aggregating
the inventory in national networks anchored by broadcast television stations.
•ITN is currently working with the Nielsen Company and Comcast to measure local
cable inventory from MSOs through Nielsen’s National People Meters.
•ITN is currently working with Comcast and “Project Canoe” to explore advanced
television features, such as interactivity, addressability, and dynamic ad insertion.
How ITN Assists Sony’s Expansion in Cable and Digital Television
•ITN can incorporate and monetize unsold national inventory from Sony’s cable/digital
programs & networks into aggregated national networks at higher broadcast CPMs.
•Sony may seek to expand carriage of current and new cable networks across MSOs,
by accepting MSO or regional head-end time banks across Sony’s cable networks,
or across multiple other cable networks, as partial terms for increased carriage. ITN
would then monetize these time banks at full value in larger aggregated networks*
*Dependent upon ITN’s success with the Nielsen Company to measure, as outlined above
Proposed New Ventures
Expanding the New Sony + ITN Model to Succeed in
the Network Television Market
Emerging Market Dynamics
Significant Ratings Erosion Across All Broadcast Television Networks
Failures of CW and My Network to Establish the “5 th Network”
CW’s Exit from Sunday Nights Next Season 4Q’08-3Q’09
Media Rights Capital (founded in 2004) purchased the rights to Sunday nights
across CW affiliates to distribute their producers’ content (Reality Shows, Sitcoms)
•Annual Deal is Estimated at $10-$15 million
Demand Outpaces Supply of Broadcast Ratings & Primetime Cachet
Networks Continue to Experience Successful Upfront & Scatter Market Increases
Beyond Next Season
Speculation that CW & MYN may cease to exist beyond 2009
New Opportunities will Emerge for Media Companies to Distribute
and Sell Programs in Broadcast Primetime
Proposed New Ventures
Expanding the New Sony + ITN Model to Succeed in
the Network Television Market
CW and My Network
and Potential Newcomers
Old Network Model Failures
New Network Model Success
Launching with 3-5 Nights of Original
Programs, Exclusively in Prime
Launching with 3-5 Nights of Original
Programs in Prime, Supported with
Aggregated & Syndication Offerings
High Risk of Original Content Production
No Supporting Dayparts to Leverage Larger,
Total Network Packages
Bring Too Few National GRPs to the Market
Lack Targeting Strength on Key Demographics
Little Importance to Ad Agencies
Stations are Minimally Tied to the Success of
The New Network Effort
Reduces the Risk of Original Content Production
Provides News and Network Dayarts to Leverage
Larger Network Packages at No Additional Risk
Creates Significantly More National GRPs
Custom Aggregated Additions Can Increase
Targeting Strength on Any Key Demographic
Establishes Greater Importance to Ad Agencies
Stations are Directly Tied to the Success of the
Network Effort for both Content and Ad Revenue
The Opportunity Exists for Sony + ITN to Create the New Model “5th Network”
Clear Competitive Advantages
At a time when the Aggregation Model is becoming most important,
ITN provides Sony with the full infrastructure to develop a new business
model that is best positioned for success today and in the future.
Sony + ITN creates a unique company in terms of leveraging advertising
sales and station relationships, expanding across platforms, and limiting
competitors’ abilities to react.
•Syndication competitors can always expand or acquire another Syndication
provider, but they can’t duplicate or acquire another ITN
•Advertisers can always go to another Syndication provider to purchase more
Syndicated shows, but they can’t go elsewhere to purchase another ITN
•At Stations, Sony + ITN becomes a significantly more important part of their
livelihood, as the combined company provides content and hardware, plus
sizeable and consistent advertising revenues across television and online
Summary of Synergies
Leverage $$
Expand
Use of
Inventory
Increase
Stations’
Dependency
Premium
Syndication
Clearances
&
Online
Inventory
Become A
Content Provider
On-Air
&
Online
Create & Deliver
A Unique
National
Video Model
Television
Stations
Move to the
Front of
The Line Create “5th Network”
With
Expand Distribution
Networks & Sales with Original
Prime Content
Agencies
& Clients
Expand Use of
Programs to News
& Network Dayparts
Integrate
On-Air
&
Online
Components
Leverage Upfront Deals
News & Network Dayparts
With
Syndicated Programs