Meredith Corp. Reports Record Earnings, Ad Sales Thanks Largely To TV, Not Print

In its first earnings report since announcing the acquisition of Gruner + Jahr, Meredith Corp., the Iowa-based media company known for its magazines, Wednesday reported records earnings for its fiscal year ending June 30, with total earnings growing 23 percent to $128.1 million and fourth quarter net earnings rose 12 percent to $42.2 million. Ironically, that growth came largely from increased profits within its broadcasting division.

The company, which publishes 24 consumer magazines, and owns or operates 14 television stations, cited a rise in its broadcasting profits, which increased 25 percent to $86.7 million. The company's publishing operating profit increased 10 percent to $174.3 million with its operating profit margin improved from 18.1 percent to 19.2 percent.

In terms of straight advertising revenue, Meredith saw total advertising revenues grow 4 percent. In the publishing realm, the company's advertising revenues rose 2 percent while in broadcasting the company saw $18.8 million in net political advertising revenues compared with $6.1 million in fiscal 2004.



In a related research note, the financial management and advisory company Merrill Lynch concluded that Meredith Corporation's shares, currently being traded at around $8.70, were changing hands at a "rational" level "given the margin expansion potential at both the newly-acquired Gruner+Jahr titles as well as the broadcasting division."

Meredith Corporation acquired Parents, Child, Fitness, Family Circle and Ser Padres magazines this year.

The note warned, however, that Merrill Lynch analysts were "also mindful of the difficult broadcast comparisons in the second half of calendar year 2005 and a generally weak environment for traditional media advertising" and predicted a modest upside for the shares.

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