Remarks by Dean Singleton
Chairman/The Associated Press
AP Annual Meeting
Washington, D.C.
April 14, 2008

As everyone in this room well knows, it’s been a challenging year for our industry, for AP, for AP’s Board of Directors and for AP members. Before we talk more about that, however, I want to let you know about some changes in our board.

First, I want to introduce Doug McCorkindale, who will be retiring from the Board of Directors after this meeting. Doug is the former chairman, president and CEO of Gannett and has served five years on AP’s board. Doug has been a friend, business partner and very dedicated AP director. Doug, will you please stand so we can thank you for your service.

The election inspectors have certified that we had a quorum by the election deadline date, and through your votes and proxies you have re-elected four directors, myself included. The three other returning directors are, and I ask them to stand as their names are called:

Victor Ganzi, of Hearst Corporation
Michael Reed, of Gatehouse Media
and
Jon Rust, of Rust Communications

Joining the AP Board will be:

Donna Barrett, of Community Newspaper Holdings
Craig Dubow, of Gannett Company
and
Sam Zell, of the Tribune Company

Please join me in thanking them in advance for their service.

In addition, based on your votes and proxies, all 78 applications for membership were approved.

In addition to the elected members, the board has appointive seats. The board has approved, and I am pleased to announce today the appointment of News Corp.’s chairman, Rupert Murdoch, to the AP board. Rupert’s first meeting will be in July.

Copies of the AP annual report were available on your seats this morning. The report shows, and I think you’ll agree, that it was a busy and productive year for AP and for our board.
The directors took important action this year to help assure the financial stability of the cooperative and to re-affirm its core mission and its commitment to you, the members. In fact, we have a very simple message for you today: We hear you. We understand that these are both difficult and historic times for the industry.

For the past two years, as you know, the board determined that there would be no increase in basic service assessments. In 2009, the news gets better: there will be pricing reductions of up to $21 million, or 10 percent of newspaper members’ total AP service fees.

Previously, we announced price reductions of 5 percent on text services or about $7 million for newspaper members who agree to become members of the digital cooperative. Tom will provide a few extra details on the digital cooperative in a moment.

Additionally, we also announced a change in pricing where you get to select your service level. We call it member choice. The basic text service would be breaking news across all of AP’s state, national and international services.

Those who want more can select heavier coverage in five subject areas: news analysis, sports, finance, entertainment and lifestyle. Those who want only the basic assessment also would get to select articles from the five premium categories on an a la carte basis. This program was to return about $5 million to members. But I’m pleased to report that we’re more than doubling that return to $14 million. So that’s a total of $21 million in price reductions for the membership next year.

We also are simplifying and broadening access to AP content. Previously, AP sold access to its photo archives on an a la carte basis, charging you extra for pictures more than a couple weeks old. All PhotoStream subscribers will gain unlimited access to the archives for no additional fees in 2009.

AP also is ending the premium charges for its very popular print and on-line Money & Markets stock market data and market insight content. In 2009, all members will have access to Money & Markets content at no extra cost.

These changes result from the most ambitious overhaul in pricing and products in the history of the cooperative. These steps should help AP align its content more closely with your market needs. At the same time, the board also approved more flexible licensing arrangements, something many of you have also been asking for.

In short, you get access to nearly all AP content for any product in your market for less money, and you now have the ability to customize what content is most relevant for your market.
Your board has worked long and hard with management to make these innovations possible, and I ask you to join with me in saluting the directors for their many contributions, including the careful scrutiny of pricing and product options and hours of extra work.

We are able to deliver these adjustments only because AP successfully has controlled costs while growing revenue and modernizing its technical infrastructure. Just two years ago the size of this price reduction would have consumed most of AP’s cash-flow.

The impact on cash flow from the 2009 changes is expected to be less than 25 percent, so AP still will be able to continue its162-year legacy as an independent source of breaking news.

As AP’s chairman and on behalf of all the directors, we are very proud that AP has been able to maintain its journalist staffing, especially domestically. It has managed to be an important source of stability in news coverage in turbulent times because it has grown revenues significantly in non-member markets.

In fact, you may be surprised to know that AP now receives only 28 percent of its revenues from member newspapers. In 2009 it will receive less than 25 percent of its revenues from members. Broadcasters, Internet companies and international subscribers now provide the lion’s share of AP revenue.

Importantly, AP continues to enhance the content available to us. It now provides 40 video clips a day on average for our Websites and in less than two years has built a robust company news service that produces 500 stories a day.

In addition to the historic restructuring of AP’s pricing and packaging, the board also took innovative steps toward creating new revenue opportunities for AP and its members – ways that all of us can cooperate and contribute to make the sum of our parts even greater than the whole.

All of you will recall that some of us tried this once before, in 1995, with the New Century Network. That effort failed.

But this year the board put together a “swat” team to look at special revenue opportunities for the entire cooperative. The effort has proved extremely successful and effective. In the short space of just a few months, the team has come up with several exciting opportunities.

I and the rest of AP’s directors believe we have reached another important decision point – a rare second chance – where acting quickly and together can produce far better results for our industry than going our separate ways as we did after NCN.