'Marketing Services' Fuel Meredith, Growth Surpasses Publishing, TV Sales

Meredith Corp., publisher of magazines like Better Homes and Gardens and Ladies' Home Journal, is in expansion mode and it seems to be expanding more onto Madison Avenue's traditional turf. Executives put the spotlight on its recent acquisition of two marketing firms during the company's second-quarter earnings conference call, led by President and CEO Stephen M. Lacy. While the purchases probably "won't have a material impact in 2007," they will "significantly expand the scope of our new media strategies," according to Lacy.

The first company, Genex, is an interactive marketing firm that "specializes in online customer relationship marketing" for clients including Honda, Toyota and Citigroup. The second, New Media Strategies, specializes in interactive, viral and word-of-mouth marketing for clients like Coca-Cola, AT&T, Ford, and Sony.

Both purchases were first announced Jan. 10.

Meredith already has a substantial integrated-marketing operation in place, Lacy noted, in part because of its acquisition of interactive-marketing firm O'Grady Meyers in April 2006. During the Tuesday conference call, Lacy pointed to Meredith's successful collaboration with Charming Shoppes to illustrate its capabilities. Meredith produced a bimonthly custom magazine, Figure, for the owner of Lane Bryant, Fashion Bug and Catherine's retail stores. The deal also helped Meredith "secure a major online assignment from Charming Shoppes, including the Figure Web site."

Indeed, the online integrated-marketing division showed the strongest growth of any Meredith segment, with revenue increasing 40% and operating profit more than doubling compared to a year ago.

Lacy gave no indication that Meredith is finished acquiring marketing companies. He merely noted that the company has already "added 200 highly skilled employees across the country" to help deliver the "highest quality custom-marketing solutions." Above all, Lacy said, the goal is "to grow existing client relationships."

Overall, the Meredith Corporation posted a strong performance in the fourth quarter of 2006--with a 20% rise in profits, largely driven by political ad sales at its television stations in the lead-up to this year's midterm elections. Broadcast revenues grew 25% to $106 million, compared to the same quarter last year. The broadcast revenue helped offset a slight decline in publishing ad revenue, which dipped from $149 million last year to $145 million this year.

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