Canadian Media
Industry Review, 2009
The Economy as a Catalyst for Change
Executive Summary
Over the past 12 months, we have come from a situation in which we felt that some
stocks in our space were overvalued to a state of affairs in which every stock we
cover is trading at or below historical lows. Much of this change is due to the
economic downturn that hit equity markets hard in the second half of 2008, but
there is also an important secular component, in our view. Underscoring the themes
outlined in our January 2008 industry report, we find many legacy media business
models challenged as we enter 2009 while others are relatively well positioned to
continue to grow in the years ahead.
We believe the economic downturn will catalyze the already rapid pace of change
affecting media, resulting in a permanent downward reset of valuation multiples in
this space. We expect this recalibration to be uneven among the major media types,
reflecting the degree of new competition faced by the incumbents. Despite this
potential for a negative impact on average future valuations, most stocks we cover
are already trading below the level where we think multiples will settle, resulting in
good investment opportunities in select names. This report outlines our view of the
trends, technological advances and most important considerations for investors in
this space in 2009 and beyond.

Table of Contents
Introduction ................................................................................................... 3
Our Coverage Universe and Our Top Picks ............................................... 4
Part 1: Where We Have Come From........................................................... 5
Last Year’s Themes and Predictions..................................................................... 6
Valuations ...................................................................................................... 7
The Regulatory Agenda ................................................................................. 9
Shifts in the Balance of Power ..................................................................... 10
Part 2: Where Are We Going? ................................................................... 12
Broadband Penetration ........................................................................................ 12
Time Spent Online .............................................................................................. 13
Intentions of Marketing Professionals................................................................. 14
Part 3: Major Trends by Media Category ................................................ 16
Television............................................................................................................ 16
Specialty Television ............................................................................................ 19
Pay Television..................................................................................................... 19
Daily Newspapers ............................................................................................... 19
Community Newspapers ..................................................................................... 21
Radio ................................................................................................................... 22
Out of Home/Outdoor (OOH) ............................................................................. 25
Main Take-Aways............................................................................................... 25
Part 4: Advertising Outlook ....................................................................... 26
Categories of Concern: Automotive and Retail .................................................. 26
Exposure of Major Media to Automotive and Retail Spend ............................... 29
Advertising Forecast ........................................................................................... 31
Part 5: The Outlook for Future Valuation Multiples............................... 32
How Canadian Media EBITDA Multiples May Change .................................... 32
Implications for Target Prices on Select Stocks.................................................. 33
Part 6: Ranking the Group ......................................................................... 34
EV/EBITDA........................................................................................................ 34
P/E....................................................................................................................... 35
P/FCF .................................................................................................................. 35
FCF Conversion .................................................................................................. 36
Part 7: Main Strategy Recommendations for 2009 .................................. 37
Appendix I. Summary of Our Top Picks................................................... 38
Appendix II. Justifications of and Key Risks to Target Prices................ 42
APPENDIX A. IMPORTANT DISCLOSURES....................................... 45