MEREDITH REPORTS STRONG PERFORMANCE

Earnings Projections Raised in Report to Analyst Conference

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NEW YORK (AdAge.com) -- Bucking some of the media world's doldrums, Meredith Corp. reported solid performance in its publishing properties and improvements
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in its lagging broadcast group in its presentation to analysts at Monday's Credit Suisse First Boston Media Week Conference.

The company, based in Des Moines, Iowa, has holdings that include 12 TV stations, 16 magazines including Better Homes and Gardens and Ladies' Home Journal, and book publishing and interactive marketing divisions.

Meredith's performance led Chief Financial Officer Suku Radia to raise full-year earnings guidance by 10 cents per share. Previously, Meredith management's earnings-per-share guidance for full-year 2003 was $1.65. The new figure of $1.75, though, is in line with analyst estimates, according to Thomson's First Call.

Upbeat broadcast figures
Likely the most welcome news came from Broadcasting Group President Kevin O'Brien, who in a blunt-spoken presentation detailed the progress of Meredith's broadcast stations, which accounted for slightly more than 25% of annual revenues for fiscal year 2002.

He said its Atlanta station, CBS affiliate WGCL, was no longer a drag on profits, as it had long been. He also said that by June of 2003 -- when Meredith's fiscal year ends -- its yearly earnings before interest, taxes, depreciation and amortization, or Ebitda, will double that of its previous year, and that revenues were up 52% for the quarter ending Sept. 30.

Mr. O'Brien said that profit margins for the quarter ended Sept. 30 were 24%, compared to 18% for the same quarter last year.

In a brief interview after the presentation, he said his profit-margin goal for the group was between 39% and 45%. He did not say when he thought the group would hit these targets, but said they represented roughly doubling the margins of the group when he arrived last fall.

At Meredith's publishing division, the company stressed the strength of its Better Homes & Gardens franchise, which the company said maintained a 30% share of gross revenues for the women's service categories for the 12 months ended October 2002.

Little 'Rosie' impact
Following the presentation, though, Meredith Publishing Group President Steve Lacy said he did not expect either Better Homes or Ladies' Home Journal to see much in the way of potential gains in share from the demise of Gruner & Jahr USA Publishing's Rosie, which published its last issue with a December 2002 cover date.

Mr. Lacy expressed general satisfaction with Living Room, a younger-skewing home title that published another test issue this fall, but stopped short of saying the title would launch.

"For [Living Room] to be viable," he said, "it's critical for circulation dynamics to be strong." The company would know more about the results of the test issue within a few weeks, he said.

Mr. O'Brien also touted a boon to broadcast's bottom line through ad partnerships with Meredith's print titles and on-air advertisers. Key home information reprints are poly-bagged and delivered to subscribers in relevant market areas. There were about four such programs in 2002, Mr. Lacy said. Mr. O'Brien said these efforts netted the broadcast group around $4 million in incremental revenue in calendar year 2002 and he was looking to double that in 2003.

Journalist sells ads
In what may be considered a more controversial move, Mr. O'Brien told analysts that veteran Kansas City anchor Anne Peterson, who appears on Meredith's CBS affiliate KCTV-5, was used on a sales call with a key automotive marketer to help close an important deal. In an interview, he dismissed concerns over the appearance of a potential conflict of interest, saying, "There's absolutely no promise of additional coverage" included in that ad deal.

Meredith's stock closed Dec. 9 at $42.17, down $1.21

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