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Nine analysts and top management from thirty-six sector firms examine the Media & Entertainment sector in this special 199-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info389.htm

TWST: How have the newspaper stocks fared in 2001 compared to other sectors of the media?

Mr. Westerfield: The newspaper sector has outperformed the market this year, rebounding from a weak performance last year. The stocks are up between 10% and 15% on average, well outperforming the S&P 500 so far in 2001.

TWST: To what do you attribute this? We hear so much about the decline in advertising spending and the impact that this is having on the newspapers.

Mr. Westerfield: Investors are forward-looking, and last year were already anticipating a 2001 slowdown in advertising spending and an increase in newsprint costs that are now pinching newspaper chain profits. What’s happening now in the operating environment with earnings shortfalls is old news to the investing marketplace. Far-sighted investors are now looking forward to a rebound of advertising growth next year, declining newsprint costs, as well as accelerating profitability.

TWST: What is the timing of the rebound in advertising spending?

Mr. Westerfield: The timing is tricky, but the anniversaries of the toughest comparisons are beginning to be behind us now. The fourth quarter and the first quarter are the most likely periods for a rebound.

TWST: How successful have newspapers such as The New York Times (NYSE:NYT) and others been in the area of digital media?

Mr. Westerfield: To date, they have been very successful. Number one, they’re still in existence, and that should not be taken lightly since the dot-com crash. Number two, some news journals, such as wsj.com, can command subscription fees from a readership who recognizes the value of that financial journal’s original content. wallstreetjournal.com attracts over 550,000 paying subscribers, and in a world of the free Web, that’s truly remarkable. The New York Times’ readership is by some measures larger online than it is for the print edition in the New York metro area and national editions, but that is not a subscription-based model. However, on average, newyorktimes.com has a very loyal readership that devotes a large amount of time each month to reading newyorktimes.com, specifically over 40 minutes a month. That is contrasted with the supposedly formidable yahoo.com, whose average usage time is a mere six minutes. So we should clearly recognize that a readership is forming online for these journals.

TWST: Moving on to your contrarian recommendation. First of all, why is Dow Jones a contrarian recommendation?

Mr. Westerfield: Because the prevailing sentiment about the stock is negative, and because the preponderance of advertising revenues in The Wall Street Journal come from technology and financial markets. And in our economy, neither of those sectors are strong at the moment. Understandably, the advertising revenue declines at The Wall Street Journal are greater than for most newspaper companies and do not have an immediate end in sight, which suggests to me that as investor sentiment coupled with an adverse climate hold the DJ stock back from reaching valuation parity with its peers, then I can be accumulating the DJ stock at price levels that are enticing to value-oriented investors. You can see that I’m deliberately buying the stock in the face of challenging fundamentals. And for that reason it is a contrarian investment.

This special issue includes:

1) Broadcasting - TV & Radio - In an in-depth (10,600 words) Analyst Roundtable, James Goss, Vice President at Barrington Research Associates, Inc. and Alissa Grahm, Media Analyst at William Blair & Company, examine the outlook for the sector including, general market radio, regulatory outlook and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at nineteen sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Media & Entertainment Stocks - In an in-depth (3,100 words) Analyst Interview, Edward Hatch, Head of Media & Entertainment Equity Research Group for SG Cowen Securities Corp., examines the outlook for the sector and shares specific stock recommendations.

4) Entertainment & Media Stocks - In an in-depth (6,500 words) Analyst Interview, David Miller, Media and Entertainment Analyst at Sutro & Co., Inc., examines the outlook for the sector and shares specific stock recommendations.

5) Newspaper Stocks - In an in-depth (3,300 words) Analyst Interview, Leland Westerfield, Director in the Communications Group of UBS Warburg Equity Research, examines the outlook for the sector and shares specific stock recommendations.

6) Internet Media Stocks - In an in-depth (3,600 words) Analyst Interview, Safa Rashtchy, Vice President of U.S. Bancorp Piper Jaffray, examines the outlook for the sector and shares specific stock recommendations.

7) Outlook for Media & Internet Media Stocks - In an in-depth (3,400 words) Analyst Interview, Jordan Rohan, Head of Media Research at Wit SoundView Corp., examines the outlook for the sector and shares specific stock recommendations.

8) Interactive Television & New Media Technologies - In an in-depth (5,100 words) Analyst Interview, Murray Arenson, Equity Research Analyst at Morgan Keegan & Company, examines the outlook for the sector and shares specific stock recommendations.

9) Interactive Technology - In an in-depth (4,100 words) Analyst Interview, David Lee Smith, Senior Analyst covering the media sector for Dain Rauscher Wessels, examines the outlook for the sector and shares specific stock recommendations.

10) CEO interviews (average 2,500 words). Top management of thirty-six sector firms examine the outlook for their firm and the sector.