But Publishers Report Improved Results From Increased Ad Revenue

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NEW YORK ( -- Magazine companies Meredith Corp. and Ziff Davis Holdings each posted net losses but improved results for the quarter, thanks to improved advertising revenues.

Meredith, parent of Better Homes & Gardens and Ladies' Home Journal -- posted a net loss of $69.3 million in the first quarter of fiscal year 2003, due to a change in the accounting of goodwill. Factoring out the change, the company would have posted net income of $16.5 million, up 47.3% from 2001. Revenue rose 5.7% to $250.1 million, with publishing revenue up 3.2% and revenue from Meredith's TV station group up 13.9%.

Meredith shows improvements
The improved performance was reflected across all of the company's properties, Chairman-CEO William Kerr said. Meredith's magazines showed a 3% increase in advertising revenue, said Stephen Lacy, president of the publishing group. But advertisers are still waiting until the last minute to commit to media buys, which keeps ad revenue fluctuating from month to month, he said.

TV station advertising revenues grew 13% in the quarter, excluding political advertising, said Kevin O'Brien, broadcast group president. The improvement comes across all stations and is expected to continue in this quarter, he said, adding that advertising sales are pacing up in the 20% range this quarter and, excluding political ads, are pacing up in mid-single-digit percentages.

Improved loss
Ziff Davis, meanwhile, parent of PC Magazine, Computer Gaming World and eWeek -- posted a net loss of $29.1 million for the quarter, an improvement over the $70.5 million loss in the year-ago period. Revenues dropped 33.3% to $41.8 million, reflecting the closures of publications including Smart Business and Family PC and continued weakness in technology advertising.

Revenues at the company's Established Business segment, which includes most of its publications, was down 8.4%, due to a 10.2% drop in ad pages at the technology publications, which offset a 35.7% increase in ad pages at the company's electronic game publications. Revenue at the Developing Business segment, which includes new titles and Internet operations, was up 206.7% to $4.2 million due to increased Internet advertising and ads brought in by the launch of Baseline.

Gaming titles to provide boost
While the company's numbers reflect the weakness in advertising in general and business-to-business publishing in particular, consumer ad pages are expected to rise in the fourth quarter, thanks to increased holiday spending on the company's gaming titles, said Chief Financial Officer Bart Catalane. The fourth quarter is traditionally the strongest time of the year for the game publications and for the technology sector in general, he said.

Ziff Davis is also expected to benefit from a debt restructuring, which reduced the debt and added an $80 million cash infusion from its owner, investment bank Willis Stein & Partners. But Ziff Davis Chairman-CEO Robert Callahan warned that the marketplace is expected to remain tough and the company is "looking at a very tough '03." Controller David Mullen said the company is "managing our business for slower growth on the revenue side."

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