Deutsche Bank Conference June 2005
www.hearstargyle.com This presentation includes forward-looking statements. We based these forward-looking statements on our current expectations and projections about future events. These forward looking statements generally can be identified by the use of statements that include phrases such as anticipate, will, likely, plan, believe, expect, intend, project or other such similar words and/or phrases. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this news release, concerning, among other things, trends and projections involving revenue, income, earnings, cash flow, operating expenses, capital expenditures, dividends and capital structure, involve risks and uncertainties, and are subject to change based on various important factors. Those factors include the impact on our operations from: Changes in Federal regulation of broadcasting, including changes in Federal communications laws or regulations; Local regulatory actions and conditions in the areas in which our stations operate; Competition in the broadcast television markets we serve; Our ability to obtain quality programming for our television stations; Successful integration of television stations we acquire; Pricing fluctuations in local and national advertising; Changes in national and regional economies; Our ability to service and refinance our outstanding debt; and Volatility in programming costs, industry consolidation, technological developments, and major world events. These and other matters may cause actual results to differ from those we describe. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation also contains non-gaap information. In accordance with Regulation G, non-gaap financial measures cited in this presentation are reconciled to GAAP measures In the Corporate Information section of our Web site, www.hearstargyle.com. 22
HTV Yesterday, Today and Tomorrow: A Heritage of Leadership and Innovation 33
Broadcast Television Today is Fundamentally Strong: Compelling Content Plus Event Programming Delivers Substantial Audience in Key Demographics
High Quality Programming Is Key to Success Season Just Ended: Audience grew in key demos Event programming drew large audiences Baseball playoffs: 21mm HH viewers Super Bowl: 45mm HH viewers Packers: a 66 share 2/3 of all Milwaukee TV HHs on WISN Academy Awards: 28mm HH viewers Kentucky Derby: 10mm-plus HH viewers, far exceeding NFL on ESPN Highly successful Sweeps : Housewives finale: 31mm viewers CSI finale: 31mm viewers Idol finale: 30mm viewers Unit pricing improved year-over-year 55
America s Most Watched TV Shows Are on Broadcast TV 92 of the Top 100 Primetime TV Shows for Last Week* Were on Broadcast TV 100 of the Top 100 Shows for Last Month* Were on Broadcast TV 299 of the Top 300 Shows for the Entire 2004-2005 TV Season Were on Broadcast TV* * TVB, measurement of TV household (HH) viewing; most recent available data is for week ended May 22, 2005 and for full month of April 66
Popular TV Shows Continue to Draw Viewers and Advertisers Upfront Showcased Promising Shows for Fall Shows with buzz: My Name is Earl, Fathom (NBC); Invasion, Commander-in-Chief (ABC) Overall Increase in primetime commitments, led by ABC (+30%, to $2.7bn), even with slippage for NBC* Digital TV Penetration 1,446 DTV stations 100.3mm HHs (92% of all US TV HHs) reached by HD-capable signals 15mm DTV sets to be shipped in 2005 (CEA) Best Buy forecasts 60-80% y-o-y growth Overall Media Consumption Grows: Time spent viewing TV per day: 1970: 6 hrs; 1990: 7 hrs; 2003: 8 hrs ** Adults 18+: TV: 4.3 hrs/day; Radio: 2 hrs/day; Internet: 1.1 hrs/day PVR usage shown to increase overall TV viewing * WSJ, 6/6/05; B&C, 6/6 ** Nielsen; TVB 77
Television s Important Role in the Future Ability to Aggregate Mass Audience Consistently demonstrating that compelling content can draw a large audience The Most Effective Medium for Brand-Building 90% of adults are reached by TV each day * 7,000 advertisers use broadcast TV to sell more than 30,000 brands a tripling over 10 years * Commitment to Meaningful Community Service Defines the Best Local Stations Across the Country Critical to viewer loyalty and advertiser support Key Building Block for Successful Launch of New Technologies, Consumer Electronics and New Content * TVB, TNS/CMR 88
The Regulatory Climate Today: The FCC is in Transition Some Issues Have Been Politicized Notwithstanding a Win-Win Solution for Industry and Consumers is Achievable
The HTV View of Regulatory Priorities Ownership Rules Should Reflect Competitive Landscape Newspaper-TV cross-ownership Duopoly Digital Transition Issues Require Attention Set penetration: 20mm+ homes still rely on analog broadcast antenna; 70mm+ analog sets remain in service Regulators Should Encourage New Distribution Technologies Such as IPTV Good for consumers Welcome competition for cable Additional distribution for broadcast content 10
Technology Trends Today Conversion to Digital Growing Broadband Penetration Expanding Storage Consumer Electronics Innovations And Advances in Production Technology Create New Distribution Channels and Increase Productivity
Evolving Media Technology Creates Opportunities Digital Content: Production, Editing, Sharing Cost Barriers are Dropping Last mile Expanding and Changing Consumption Patterns Broadband penetration Wireless media access and reach Business-Model Implications Brand extension, new revenue opportunities At HTV We See Technology as Friend, Not Foe Content-sharing: HATSat, HATMOS Expanded distribution platforms: Internet, wireless, podcast, DTV multicast 12
HTV s Strategic Positioning in this Competitive Landscape Includes: Localism Quality News Product Substantial HH Coverage Significant Audience Embracing New Technologies. and Ample Capital Resources. All Contribute to a Very Strong Competitive Platform
Localism: A Critical Success Driver in Competitive Media Landscape HTV is Strategically Positioned: Local franchises dating back some 50+ years Established local brand identities / promotional platforms Established, award-winning journalistic leadership FCC-friendly business model Recognized for family/children s programming, election coverage Official Station role with numerous major sports teams, i.e. Patriots Long history of recognition for community service Multiple winner of NABEF Service to America Awards Successful extension of local TV news brand to local Web audience Strategically invested in DTV transition and latest weather technology 14
Leading Local Content And Enduring Brand Identity 15
Superior Journalism Reinforces Local Brand Identification 3 Consecutive Peabodys Back-to-Back dupont-columbia Awards HTV Has Been the Only Winner in the Station Group Category Since USC s Annenberg School Established the Walter Cronkite Awards for Excellence in TV Political Journalism in 2000 16
HTV A Local Television Leader with a Large National Footprint Local News Leadership #1 or #2 in news ratings in 21 of 25 news markets* Predominance of Market-leading Audience, Revenue Shares Presence in Top-50 Markets A Principal Local Distributor for Popular Network and Syndicated Programming Long history of over-indexing * 18+% of US TV HHs Reaching 20mm HHs* Essential Marketing Partner to More than 10,000 Advertisers** * Nielsen ** Advertiser count includes subsidiaries, various brands within same advertiser company, and recent advertisers 17
Substantial Online Audience Across IBS National Network of Local News Websites 10mm+ monthly Unique Viewers (Nielsen) 18
Successful Start for a Digital Weather Brand Extension: NBC Weather Plus 50/50 equity partnership between NBC & Affiliates Extends station s weather brand 24/7; Leverages existing weather technology, personnel Uses 3Mbps (of 19.4 Mbps) of DTV spectrum Modest incremental investment; immediate advertiser and viewer support Approx. 70% US TV HH Distribution 6 mos. after Launch 19
Field Trials Underway Today Are Testing Other Initiatives Additional Multicast Uses of DTV Spectrum Low-Cost Cable Alternative Using DTV Spectrum Local News, Weather Content on: PDAs 2G and 3G cell phones Podcasts Local Content for VOD 20
Significant Capital Resources Available to Support HTV Strategy Low Leverage / Investment Grade Capital Structure Strong FCF Substantial Cash on Hand Bank Credit Facility / Significant Flexibility Strategic Partnership with The Hearst Corporation, Home to Some of America s Most Exciting and Enduring Media Brands 21