Meredith Reports Ad Momentum In TV, Publishing

Publisher and TV station owner Meredith Corp.'s revenues rose 9 percent in the third quarter, even with a slow-to-recover magazine industry and millions less in political ads than last year.

Advertising revenues increased to $164.8 million, up 10.6 percent compared to the same three-month period in 2002. Publishing revenues, which include the December 2002 acquisition of the American Baby unit from Primedia, rose 11.2 percent to $206.6 million in the quarter. Excluding revenues from American Baby, revenues were up 4 percent.

Broadcast revenues were up 2.8 percent to $65.9 million in the quarter, which was notable because absent was $6.6 million the TV stations got from political ads during the last election cycle. Meredith executives warned Wednesday that the current quarter, Meredith's second three-month period of its fiscal year, would have even tougher comparisons. The TV station group received $14.1 million in political ad revenues in the fourth quarter; similar revenues weigh heavily on many media companies for the current quarter. Current pacings are down in the high single digits although without political, they are running up about 10 percent.

Top advertisers for the TV station in the quarter just past include automotive, professional services and restaurants, said Kevin P. O'Brien, president of the broadcasting group. Local advertising makes up about 60 percent of the TV group's revenues.

On the publishing side, Meredith's performance in the quarter tended to be better than the magazine industry average as reported by the Publishers Information Bureau (PIB). Meredith publishes a number of titles, including its two largest, Better Homes and Gardens and Ladies' Home Journal. Both titles grew ad pages by a combined 9 percent in the quarter and increased its market share in the women's service category to 44 percent for the year ended with the September issues. The group's overall ad pages rose 10 percent compared to an industry decline of 3 percent, noted chairman and chief executive officer William T. Kerr.

"Our magazines benefited from a flight to quality as consumers and advertisers continue to turn to leading titles such as our premier home and family publications," Kerr said.

Its mid-size titles - including Country Home, Traditional Home, MORE and Midwest Living - were up double digits in the quarter. Stephen M. Lacey, president of the Meredith Publishing Group, said Wednesday that the company was planning to expand their rate bases. The rate base of the four mid-size titles are 3.8 million collectively, which is comparable in number to Ladies' Home Journal. Lacey said he expected to raise the rate base of each to more than 1 million, which is where Country Home is already.

Magazine ad revenues in the current quarter are up in the high 20-percent range, in the high teens excluding American Baby. Meredith executives hesitated to comment on 2004.

"I am not aware of, customer by customer, of any particular major problems or major budget cutbacks," Lacey said. "But as we've said ... [advertisers'] decisions continue to be made later and later and it's hard for us to get real visibility" further into 2004.

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