1

ROUND TABLEROUND TABLE ««Mass media market in Russia and the USA: differences and common tendencies”Mass media market in Russia and the USA: differences and common tendencies”

2

17636

10511

20503

12609

24336

15286

25404

16160

25843

16544

26600

17200

27150

17700

2001 2002 2003 2004 2005 2006 2007(prognosis)

Number of the registered mass media outlets. newspapers

magazines

Russian press market development

Russian press market has one of the fastest growth rate in the world, which is twice as big as in other countries.

Source: FAPMK

3

Number of the registered mass media outlets

In 2006 8342 new mass media outlets have been registered. It is 10.7% growth comparing to the year 2005, including:

Newspapers - 12.4% growth and magazines – 11.5%The number of the Internet mass media outlets grew 10.2%

printed; 59184; 82%

on-line; 12770; 18%

10,7%

12,4%

11,5%

10,2%

printed massmedia outlets

newspapers

magazines

on-line massmedia outlets

Mass media market structure Dynamics of the number of the registered mass media outlets (2006 comparing to 2005)

Source: AKAR, expert reports from market participants

4

DAILY AND WEEKLY NEWSPAPERS

Local newspapers;

32,1%

Regionalnewspapers;

33,1%

Interregional

federal newspapers;

34,8%

Russian newspaper market structure (circulation, in %, for 2006)

There are 35500 newspaper titles registered in Russia.Combined circulation of all the Russian newspapers in 2006 reached 8.05 billion.

The circulation of interregional federal newspapers is 2.8 billion.

5

MAGAZINES

Russian magazine market structure (circulation, in %, for 2006)

Crossword/puzzle magazines; 333 mln; 18%

Women magazines;

351,5 mln; 19%

TV-guides; 296 mln; 16%

Business; 259 mln; 14%

Specialized magazines;

444 млн.экз.; 24%

General interest magazines;

166,5 mln; 9%

Annual growth rate of the Russian magazine market for the last 3 years exceeds 13% per year.

Combined magazine circulation in 2006 reached 1.85 billion, including 900 million of “glossy” magazines.

6

1 «PromSwyazCapital» GK 60 996,1

2 «Prof-Media» Holding 44 273,7

3 PG «Hachette Filipacchi Shkulev» and «InterMediaGroup» 33 442,6

4 PH «Moskovskiy Komsomolec» 30 864,1

5 PH «Bauer Russia» 28 045,5

6 PH «News Media» 25 942,7

7 PH «Rossiyskaya Gazeta» 22 837,1

8 «Gazprom-Media» Holding 15 658,9

9 PH «Burda» 15 254,2

10 PH «Pronto-Moscow» 14 180,4

11 PH «Centr Plus» 12 557,0

12 PH «Independent Media Sanoma Magazines» 10 658,3

13 PH «Sobesednik» 9 073,4

14 PH «Mir Novostey Media» 8 297,8

15 PH «Populyarnaya Pressa» 8 038,9

16 PH “ZOJ” Editors” 5 614,0

17 PH «Abak-Press» 4 195,8

18 PH «S-Info» 3 753,8

19 PH «Egmont Russia Ltd.» 2 391,3

20 PH  «Edipress-Conliga» 2 201,6

THE LEADING PUBLISHING HOUSES:

Combined average monthly circulation (thousand items), 2006

7

LEADING PUBLISHING HOUSES:

Combined average monthly circulation (thousand items)2006

№ Publishing HouseCirculation,

thousand items

1PG «Hachette Filipacchi Shkulev» and «InterMediaGroup»

33 442,60

2 PH «Bauer Russia» 28 045,50

3 PH «Burda» 15 254,20

4 PH «Independent Media Sanoma Magazines» 10 658,30

5 PH «Egmont Russia Ltd.» 2 391,30

6 PH «Gruner + Jahr Russia» 1 050,00

7 PH «Conde Nast» 1 022,00

8 PH «Axel Springer Russia» 975,7

9 PH «Bonnier Russia» 721,4

8

Russian advertisement market structure, 2006

0,92%

10,86%

5,30%

18,20%

1,54%

9,10%

5,39%

48,69%

Other

Magazines

Newspapers

Street advertising

Internet

Advertisment newspapers & magazines

Radio

TV

Russian advertisement market is on the 11th place in the world by its size, which reached $ 4 billion in 2006.

18%

2,1%

17,1%

87%

9

Dynamics of the printed mass media outlets advertisement revenue,

(in million US dollars)

250 290 345

470580

705

480520

590

2004 2005 2006

newspapers magazines advertisement editions

+16%

+23%

+8%+13,5%

+21,5%

+19%

10

Printed mass media: advertisement revenue, 2006

Growth rateShares of the advertising income

PC 2.7%

Women & fashion

16.5%

Advertisement11.8%

Daily11.0%

Business7.1%TV-guides

5.7%Car

5.0%

For men3.3%

Design 3.3%

Other 33.6%

22.0%

19.0%

18.0%

17.0%

13.0%

10.0%

9.0%

7.0%

1.0%

For men

Daily

Car

Women & fashion

PC

Design

Business

TV-guides

Advertisement

Source: TNS Gallup AdFact, 2006

11

Electronic version of the printed media

no; 68%

yes; 32%

Does the mass media outlet have an on-line version?

Only 32% of the mass media outlets sell an on-line version of their printed material – less than 1/3 of the titles. Some of the publishers used to sell an on-line version, but rejected

this idea due to the lack of demand.

Types of the electronic versions

CD; 15%

CD+e-mail; 29%

website+ e-mail; 26%

website; 18%

сайт+CD+e-mail; 3%

website+CD; 1%

e-mail subscription; 8%

Many publishers choose e-mail subscription to distribute their electronic

versions. Passworded access to the information on the publisher’s website is

also quite a popular way.

Source: ITCOR, July, 2006

12

¼ of Russians use Internet from time to time. As a source of the information Internet is used only by 14% of Russian population. In this field, the level of trust to the Internet

information can be compared to the local and regional radio (13% and 10%).

5%

14%

5%

76%

Nearly everyday

A few timesper month

At least tw ice ayear

Do not use

Internet users in Russia, 2006

Source: WCIOM

13

RUSSIAN PUBLISHING MARKET TENDENCIES

Increase in number of registered mass media outlets along with the decrease in circulation;

Increase of specialized titles for special audiences, the decrease of titles with undefined theme;

Rapid growth of the free issues as the most attractive for the advertisers and customers;

Increase of the advertisement revenue because of the growth of the Russian advertisement market;

Increase of the investments into the promotion of the mass media outlets; The growth of the customers’ interest towards the on-line versions of the

newspapers; Decrease of the number of the younger readers (25-35 y.o.);Decrease of the newspapers’ share in the mass media structure;Increase of the number of “glossy” and business magazines readers;Increase in demand for men’s magazines;Continuous consolidation of media assets and concentration of the capital

in publishing business, decrease in investments.

14

Printed mass media distribution. Wholesale.Rapid decrease in number of the wholesale distributors

Source: Companies’ data

2004 2005 2006 2008(prognosis)

100% 85%66%

37%

15

Printed mass media distribution. Retail.(2006)

Retail sales structure (Moscow)

Source: ARPP

other; 10%

street sellers; 19%

kiosks / street

counters; 53%

supermarkets / gas

stations; 16%

press minimarkets

; 2%

post offices; 6%

kiosks; 60%

other; 7%

supermarkets / gas stations;

5%

street sellers; 9%

street counters; 13%

Retail sales structure (Other regions)

16

Number of the supermarkets(up to 2000 square meters)

160 210

8001300

2500

300800

4000

9000

5800

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1998 2000 2004 2006 2008(prognosis)

Moscow

Russia

Source: REWE-GROUP

Retail sales development

17

Retail sales development

Market shares of the various retail chains

3% 4%13%

48% 43%37%

35% 42% 38%

1% 1% 3%9%10%13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004 2005 2006

cash&carry, malls

convenience stores /other

discounters

supermarkets

hypermarkets

Source: RBC

181994 1996 1998 2000 2002 2004 2006

Dynamics of the subscription via the Russian Post (mln. items)

Average annual decrease rate - 3%

Source: Russian Post

4.1% growth

19

Types of the subscribed mass media outlets (2006)

National newspapers

29%

Regional Newspapers

27%

Local newspapers

27%

TV-guides1,4%

Institutional newspapers

2%

Books0,4%

Regional magazines

1,5%National

magazines13%

Source: Russian Post

20

Russian subscription market tendencies

Stabilization on the subscription market;Preference of the local mass media, increase

of the subscribed regional titles; Active implementation of the new and

additional subscription services;New alternative subscription structures in all

the regions of Russia.

21

Printed mass media distribution market – main tendencies

Concentration of the capital in the distribution market up to the federal level; Withdrawal of the street sellers and small private businesses; Decline of the importance of the wholesale sellers, wholesale segment has moved to the circulation management and logistics; Decrease of the market share of the super- and hyper-markets in the retail sales; Decrease of the profitability and assortment in the press distribution in the supermarkets due to the retailers’ interference and their intention to gain as much profit as possible, including the advertisement revenue; Increase of the promotional spendings and advertising at the points of sale, aimed to increase the sales; Decrease of the periodicals’ assortment at the retail points of sale, along with increase of assortment of other group of products; Price increase in the market due to the changes in the Russian economy; The market size growth is expected to take place because of the advertisement revenue and price increase.

22

The future of the Russian printed mass mediaARPP conception for 2007-2015г.

- official governmental recognition of the press as socially important product to guarantee the freedom of speech and democracy and to create special conditions for the press distribution market;

- to introduce a transparent VAT rate for manufacture and distribution of printed mass media, promote usage of the commission contracts;

- establish as many press retail points of sale as possible (1 POS per 1000 people), in close proximity to the places of residence for standardized prices, defined by the publishers;

- establish advanced logistic areas, warehouses, automated sorting lines;

Suggestions on improvement of the press distribution market infrastructure:

23

- to support establishing and development of special press and multimedia products points of sale all over the country, with wide range of products and on-line terminals;

- to develop the subscription market, including governmental support and partial financing of the delivery;

- to create a unified national control system to supervise the movement of the products from the publishers in the distribution chains;

- to introduce the GPS system to adhere the press delivery timetable.

ARPP

The future of the Russian printed mass mediaARPP conception for 2007-2015г.

24