Meredith Sees Cause For Celebration: 15% Revenue Jump

Riding Sun Belt population growth and particularly strong political spending, Meredith Corp. posted robust revenue growth for its 14 local stations in the most recent quarter.

Revenues jumped 14.3% to $82.1 million, a higher growth rate than many competitive station groups posted in the July-September quarter.

The growth in the broadcasting business fueled an overall 5.3% ad revenue gain at the company, whose larger publishing operations include Better Homes and Gardens and Family Circle. Publishing revenues were $313.7 million, with ad dollars up 1.3%

In the station business, "location, location, location" gave Meredith momentum, the company said.

Its portfolio includes CBS affiliates in Atlanta and Phoenix and the Fox station in Las Vegas, three booming communities that continue to add TV homes and potential ratings points. It also has stations in the Hartford, Kansas City and Nashville DMAs--focal points of contentious U.S. Senate races.



The company said viewership growth at its Phoenix station, acquired in 1952, is translating into $1.4 million more in revenues per rating point increase.

Meredith posted $8.6 million in political revenues--its most ever for the July-September quarter. The strong spending trend bodes well for the company's revenues next quarter, since political spending accelerates in the last six weeks before the election.

The company said it has beefed up news coverage, particularly at its four Fox stations, in order to try and capture more political ad dollars.

Also, changing population dynamics could help in 2007, as political spending ebbs. Nielsen figures show that TV homes in the Atlanta market grew by 5.2% over a year ago, Phoenix increased 3.9% and passed Seattle to become the 13th-largest DMA, and Las Vegas moved up five spots to 43rd.

Another promising sign: nonpolitical local advertising was up 7%. The industry has struggled to grow local ad dollars, as retailers such as Macy's became larger national advertisers and the Internet gains ad clout.

Meredith president-CEO Stephen Lacy also said on a conference call that the station group has made progress on growing two revenue streams: retransmission consent fees and ad dollars for its Web sites.

Although he declined to offer specifics, he said so-called "retrans fees" increased "significantly" for the quarter and exceeded the amount the company pays networks to offer their programming, known as "reverse compensation." So far, retrans fees--something local broadcasters traditionally haven't collected but are now pushing aggressively for--are coming mostly from satellite operators.

Lacy added: "We're encouraged that some cable companies have started to pay these fees as well. We expect phone companies to pay retrans fees as we look to the future."

Redesigned Web sites for the stations also helped drive revenues, he noted. With consumers moving online and newspapers largely holding the edge as the local online news source, stations have tried to catch up with greater investments. "We dedicated additional resources, redesigned every station Web site and are driving toward becoming the local portal of choice in key markets."

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