ANNUAL REPORT 2018 / ANNUAL REPORT / NEW MEDIA INVESTMENT GROUP INC. 2018 NEW MEDIA OVERVIEW 5+ MILLION New Media A leading source of local SMALL & MEDIUM BUSINESSES IN OUR MARKETS news and premier SMB solutions provider for its small to mid-sized communities PAID PRINT 1.6M CIRCULATION OPERATE IN 580+ REACH OVER 22 MARKETS ACROSS MILLION PEOPLE 600+ 146 37 STATES ON A WEEKLY BASIS TOTAL COMMUNITY DAILY PUBLICATIONS NEWSPAPERS SMB SOLUTIONS PROVIDER SERVES 199K+ SMALL & MEDIUM 54M+ VISITORS BUSINESSES & PAGE 365M VIEWS 1,160+ IN-MARKET SALES PAID DIGITAL REPRESENTATIVES All figures are as of December 30, 2018 145K CIRCULATION COMMUNITY FOCUSED SOLUTIONS COMMUNITY FOCUSED SUCCESSFUL EXECUTION OF NEW MEDIA INVESTMENT GROUP // 01 OUR STRATEGY Diversify revenue Diversified away from Traditional Print revenue, which was base to create 56% of total revenue in FY 2013 to now only 41% of total organic revenue and revenue in FY 2018(1) cash flow growth UpCurve revenue was $95.8 million for FY 2018, a 72% Compound Annual Growth Rate (CAGR) since FY 2013 GateHouse Live and Promotions combined revenue of $45.7 million in FY 2018, in increase of 58% to the prior year 01. ORGANIC GROWTH 02. ACQUISITIONS Out of favor and Completed Purchase price Average unlevered fragmented industry $1.1 billion in has averaged 4.1x yield of 23%(4) and has created attrac- acquisitions the Seller’s LTM average levered tive pricing for assets since spin-out(2) As Adjusted yield of 28%(5) EBITDA(3) Return a meaningful portion of free cash flow to shareholders $6.46 $6.08 2018 dividends of $1.49 per common share $5.70 $0.38 $5.33 $0.38 $4.96 $0.37 $4.59 $0.37 $4.22 $0.37 $3.87 $0.37 $3.52 $0.35 $3.17 $0.35 $2.82 $0.35 $2.49 $0.35 $2.16 $0.33 $1.83 $0.33 $1.50 $0.33 $1.17 $0.33 $0.84 $0.33 $0.54 $0.33 $0.27 $0.30 $0.27 $0.27 Q2 Q3 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03. PAY DIVIDEND 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 (1) Traditional Print revenue is defined as Local, Classified, & Preprints. (2) Purchase price includes 32 local media acquisitions, ThriveHive and Rugged Event Holdings, Inc. and excludes working capital, except for The Columbus Dispatch (closed in 2015) and the Times Publishing Company (closed in 2016). (3) Represents purchase price to average LTM As Adjusted EBITDA for 32 closed local media acquisitions. (4) Unlevered yield is calculated by subtracting capex and cash taxes from LTM As Adjusted EBITDA, and dividing the total into the total purchase price of the 32 closed local media acquisitions of $1,073.2 million. The calculation assumes an acquisition LTM As Adjusted EBITDA of $261.0 million, capex of 1% of revenue (assuming a 15% EBITDA margin), and cash taxes of $0. (5) Levered yield is calculated using the unlevered yield calculation described in footnote 4, and also subtracting debt payments for funding acquisitions from LTM As Adjusted EBITDA, and dividing the total into the cash portion of the total purchase price. The calculation uses the same assumptions as footnote 4, debt payments for funding acquisitions of $23.2 million (assuming a 8.48% rate on $273.0 million of debt) and the cash portion of the total purchase price of $800.2 million. 8 Quarterly Dividend 7 Cumulative Dividend 6 5 4 3 2 1 0 Q2 2014Q3 2014Q3 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018 DEAR FELLOW SHAREHOLDERS New Media Investment Group Inc. (“New Media,” “we,” or the “Company”) had a solid 2018, with positive results across each of the three pillars of our strategy. We improved our organic revenue trends by 60 bps over our prior year trend and grew our free cash flow. We had a very busy year on the acquisition front, completing purchases totaling $191.4 million in purchase price, including our first investment in the events space.(1) And we returned $1.49 per share in dividends after raising the dividend for the fifth time since our spin-out. New Media continues to invest into our platform to create organic growth and diversify our revenue base away from traditional print advertising. The year was not without challenges, however, inclu- ORGANIC REVENUE AND CASH FLOW GROWTH sive of several natural disasters that impacted some The unique position New Media’s local media brands properties and continued pressure on the traditional play in their communities has allowed us to diversify advertising business. We remain optimistic about the our revenue and create fast-growing new businesses. future and the transformation our Company continues At the close of 2018, 59% of our revenue was gener- to go through. At the close of 2018, New Media owns ated by stable or growing revenue segments as com- 146 daily newspapers, making us the largest owner of pared to 48% at the end of 2014. The largest drivers for daily newspapers in the United States. The compre- this change are the investments we made in UpCurve, hensive, hyper-local content that we provide to our GateHouse Live, and Promotions. communities allows us to be experts on local audience and valuable partners to small and medium businesses UpCurve provides guidance-based products and solu- (“SMBs”). We offer a vast and unique reach, with our tions for the small business economy. We offer guided print and digital products reaching over 22 million con- marketing software and solutions through our sumers each week across small and medium-sized ThriveHive brand and cloud-based productivity and communities nationwide. efficiency tools through our UpCurve Cloud brand. In 2018, UpCurve generated $95.8 million in revenue, an increase of 34.4% over the prior year, or 42.9% exclud- ing the impact of ASC Topic 606. At the beginning of (1) Excludes approximately $11 million in other acquisitions including customer lists and small digital properties. 02 // ANNUAL REPORT 2018 60BPS 34.4% $1.49 IMPROVEMENT GROWTH IN UPCURVE IN 2018 FROM FY 2017 FROM 2017 TO 2018 DIVIDENDS NEW MEDIA INVESTMENT GROUP // 03 + 42.9% excluding the impact PAID of ASC Topic 606 2018 there was an accounting rule change, ASC Topic Mark Cuban to become one of the largest endurance 606, which went into effect. It impacted how we recog- event companies in the nation based on number of nize a portion of our revenue earned through UpCurve events. Initially focused on obstacle course racing, the Cloud. This accounting change has no impact on profit; company has since expanded into marathons and it simply nets some pass-through expenses against other traditional road races, more than quadrupling its revenue. We continue to be excited about future growth portfolio of events in the four years since Cuban’s potential for this business given the over 5 million investment. For New Media, owning both events and SMBs in our markets and their growing needs for tech- media outlets in local markets allows us to deeply con- nology solutions tailored for their needs. nect with communities while also providing a compre- hensive, one-of-a-kind platform for our partners to Our community events business, GateHouse Live, grew engage with consumers in a meaningful and impactful revenue over 65% in 2018 to $26.0 million. We hosted way. In 2019 and beyond, we expect to explore more 359 events and completed our first acquisition in this potential acquisitions in this space as well as to con- space, purchasing a majority interest in an endurance tinue our long-standing roll-up strategy of community event production company, Rugged Events. In addition newspapers. to the awards events and expos that we have histori- cally offered, we now offer road races, trail runs, cycling RETURN OF CAPITAL TO SHAREHOLDERS IN THE events, and obstacle races nationwide. The demand FORM OF A DIVIDEND within our communities remains strong for events like New Media declared a total of $1.49 in dividends for these and we are excited to expand these concepts to 2018, which included an increase in Q3 2018 to $0.38 our communities and beyond in 2019. per share per quarter. Since our spin-off, we have returned $6.45 in cumulative dividends and have grown Our third strong growth driver was our Promotions busi- the dividend 41%. ness, which grew revenue 49% in 2018 to $19.7 million. Promotions not only provide a strong branding opportu- 2019 AND BEYOND nity for advertisers, but also gives them important lead We are proud of what was accomplished in 2018 and generation data for potential customers in their local where we are headed in 2019 and beyond. Our growing area. We can tie Promotions into our community events businesses are becoming significant contributors to as well, providing an impactful branding opportunity for our overall performance and transformation as a com- local businesses. We expect to see continued growth pany. The pipeline for acquisitions both within and out- for this offering in the coming years. side of the newspaper space remains very strong and we remain committed to creating shareholder value. INORGANIC GROWTH THROUGH STRATEGIC AND We see continued opportunity to allocate capital ACCRETIVE ACQUISITIONS across these opportunities and return it to sharehold- 2018 was a busy year for acquisitions at New Media. ers in a manner that creates the best overall, long-term We completed ten acquisitions for $191.4 million in pur- shareholder returns.