Meredith Posts 2Q Revs: Print Up, Broadcast Feels Pinch

by Wayne Friedman, Erik Sass, Jul 26, 2007, 8:30 AM

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Meredith Corporation, the publisher of well-known women's lifestyle titles, including Better Homes and Gardens and Ladies' Home Journal, reported a 2% increase in ad revenue and a 8% increase in earnings per share during the second quarter of 2007, compared to the same period last year.

In the first half of 2007, publishing group revenues rose 6%, compared to the same period of 2006. Meredith's fiscal year ended with publishing revenues topping $1.3 billion--up from $1.2 billion, an 8.3% increase. For the full year, publishing ad revenues rose from $619 million to $639 million, a 3.2% increase.

Coming on the same day as negative earnings reports from The New York Times Company and Tribune Company, Meredith's quarterly results underscore the divergent fates of consumer magazines and newspapers, their print cousins.

Meredith pointed to its consumer magazine business as a main driver of growth, offsetting weakness in book publishing. Strong performers included More, Family Circle and Ladies' Home Journal, with this flagship publication enjoying overall ad revenue growth of 10% in the first half of 2007, compared to the same period last year.

While specific figures for Internet revenue were not available for the second quarter, for the full year, Meredith's online revenue grew a remarkable 50%, driven in part by a 15% increase in page views. Another key growth area was Meredith's integrated-marketing operations, which have been bolstered by a number of acquisitions over the last year.

Among the new additions are Genex, an interactive-marketing services firm, New Media Strategies, an interactive word-of-mouth marketing company, and Healia, a consumer-health search engine.

These acquisitions complement Meredith's already substantial database marketing operations. Meredith's customer database boasts 85 million individuals, classified into 33 marketing niches and further subdivided by demographic and "life stage" data.

Although still a small piece of Meredith's overall financial picture, its Internet station-related revenues more than doubled in fiscal 2007.

On the broadcast front, Meredith Corp. is starting to feel the pinch against previous financial comparisons that included record sales of political advertising in 2007. In its fiscal fourth quarter 2007, ending June 30, Meredith's broadcasting operating profit was $28 million on revenues of $84 million--all declines versus the previous period, due to nearly $3 million less in political advertising revenues during the period.

This was somewhat expected by analysts, considering last year's record political revenues. For the entire fiscal 2007 year, the broadcasting group witnessed its operating profit grow 20% to $107 million, with an 11% rise in revenues. Meredith pulled in a record $33 million in political advertising revenue in fiscal 2007.

The company noted improvement on many of its station's early-morning new shows--particularly with adult 25-54 viewers. In particular, ratings and share grew significantly at seven stations--Atlanta, Phoenix, Portland, Hartford, Greenville, Las Vegas and Nashville. Las Vegas' station's ratings are up nearly 70% in the morning.

For the company as a whole, its fiscal fourth-quarter net income rose $51.5 million from $48.6 million. For the entire year, Meredith witness revenues 3% higher to $1.6 billion, including 6% growth in advertising revenues.

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