News Releases

DES MOINES, Iowa, April 27, 2011 /PRNewswire/ -- Meredith Corporation (NYSE: MDP), the leading media and marketing company serving American women, today reported fiscal 2011 third quarter earnings per share of $0.67 on revenues of $341 million.  This compares to fiscal 2010 third quarter earnings per share of $0.73 ($0.69 before prior-year special items) on revenues of $353 million.

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"The Local Media Group, Meredith Integrated Marketing and Brand Licensing all posted solid growth in the third quarter," said Meredith Chairman and Chief Executive Officer Stephen M. Lacy.  "As previously communicated, National Media Group advertising revenues were lower.  We believe this was primarily due to belt-tightening by certain advertising clients facing sharply higher commodity prices.  However, net revenues per advertising page increased for the third consecutive quarter, and we see National Media Group advertising revenue declines moderating as we move into our fiscal fourth quarter."

For the first nine months of fiscal 2011, earnings per share were $2.12, up 37 percent from the year-ago period (39 percent before prior-year special items).  Revenues were $1.1 billion, a 3 percent increase.  Advertising revenues increased 5 percent to $606 million.  

"We leveraged our strong earnings growth over the first nine months of fiscal 2011 to reduce debt 25 percent, to increase our dividend 11 percent, and to invest in new initiatives such as the launch of tablet and mobile platforms for our key brands," Lacy added.

Highlights of Meredith's fiscal 2011 third quarter included:

• A 5 percent gain in Local Media Group non-political advertising revenues, on top of a 16 percent gain in the year-ago quarter;
• An 8 percent increase in Meredith Integrated Marketing revenues, led by the expansion of digital and customer relationship management (CRM) services for national clients;
• A 15 percent increase in Brand Licensing revenues, driven by continued expansion of Better Homes and Gardens-branded products at Walmart stores; and
• A 3 percent reduction in total Company operating expenses.  

In the quarter, Meredith was named the Highest Rated Media Company according to the Advertising Intelligence Reports' semi-annual survey of more than 1,500 advertising and marketing professionals.  Meredith ranked number one among all media – including Google, Yahoo!, Time-Warner, Hearst and Disney – scoring high in categories such as advertising effectiveness, rates and customer service.

Meredith continued to expand its digital footprint in the quarter, launching iPad versions of Better Homes and Gardens, Parents and Fitness, as well as tablet editions of selected Special Interest Media titles, Successful Farming, Siempre Mujer, and WOOD.

OPERATING DETAIL

LOCAL MEDIA GROUP

Fiscal 2011 third quarter Local Media Group operating profit was $13 million and revenues were $71 million, both increases over the year-ago period.  Non-political advertising revenues increased 5 percent to $64 million.  Eight of Meredith's 10 largest advertising categories grew revenues, led by Automotive, Retail and Media.

For the first nine months of fiscal 2011, Local Media Group operating profit was $69 million, more than double the $32 million earned in the year-ago period.  Revenues were $244 million, up nearly 20 percent from the year-ago period.  

Meredith television stations delivered strong year-over-year ratings growth in the important adults ages 25 to 54 demographic during the most recent February measurement period:

• Late news viewership share increased sharply at Meredith stations in the Atlanta (+ 29 percent), Phoenix (+ 19 percent), Portland (+ 20 percent), and Las Vegas (+ 32 percent) markets.
• WFSB-TV in Hartford continued its market leadership, finishing first in every news time period, including a significant gain in the 3 p.m. slot for the daily Better Connecticut show.
• Morning news viewership share increased more than 25 percent in both Atlanta and Kansas City.

During the quarter, Better, the daily women's lifestyle show produced by Meredith Video Studios, launched in Boston, the nation's 7th-largest market.  Better now reaches eight of the Top 10 markets, and its carriage now stands at more than 90 markets reaching 70 percent of U.S. television households.  

On March 28, Meredith's CBS Atlanta (WGCL-TV) began managing the day-to-day operations of Turner Broadcasting System, Inc.'s Peachtree TV (WPCH-TV) in the fast-growing Atlanta market.  "This strategic partnership with Turner provides Meredith with access to a larger share of the growing Atlanta advertising marketplace because of Peachtree's younger viewership; a strong lineup of sports programming; and increased inventory in both access and prime-time dayparts," Lacy said.  "Additionally, it raises our overall profile in Atlanta, the No. 8 television market in the country."

NATIONAL MEDIA GROUP

Fiscal 2011 third quarter National Media Group operating profit was $48 million, compared to $51 million in the year-ago period.  Total revenues were $270 million, compared to $285 million.  Advertising revenues were $122 million, compared to $137 million.  Operating expenses declined 5 percent.

For the first nine months of fiscal 2011, National Media Group operating profit was $128 million, up 6 percent from the $121 million earned in the year-ago period (up slightly from $127 million before special items).  Revenues were $808 million, compared to $817 million in the year-ago period.

After posting growth in the first half of fiscal 2011, print and online advertising revenues declined in the third quarter.  This was driven by industrywide weakness in the Food & Beverage, DTC & Non-DTC Pharmaceuticals and Home categories, where Meredith significantly over-indexes the industry as a whole.  Combined, these categories accounted for more than 90 percent of total National Media Group third quarter advertising revenue declines.  Additionally, Meredith was cycling against its strongest quarter of National Media Group advertising performance in the prior year period.

Total circulation revenues declined 9 percent in the third quarter of fiscal 2011 due to previously announced magazine rate base changes and the repositioning of the Special Interest Media business.  Online subscription orders more than doubled in the quarter.  Digital orders are a strategic priority because they are more profitable and offer more opportunity to cross- and up-sell additional Meredith products.

Meredith's connection to consumers continued to grow strongly during the third quarter of fiscal 2011.  Readership of Meredith's measured magazines increased 2 percent from the year-ago period to 111 million, according to the most recent data from Mediamark Research and Intelligence.  Also, traffic on Meredith's National Media websites continued to grow.  It stood at 22 million monthly unique visitors and more than 250 million page views as of March 31, 2011.

Meredith Integrated Marketing's fiscal 2011 third quarter revenues increased 8 percent, reflecting ongoing successful execution of cross-platform programs incorporating content development, customer relationship management, digital, mobile and social marketing capabilities.  Additionally, during the quarter Meredith Integrated Marketing significantly expanded its relationship with home and garden retailer Lowe's, and renewed major contracts with Kraft and Chrysler.

Brand Licensing revenues grew 15 percent during the third quarter of fiscal 2011.  Meredith continues to expand the number of Better Homes and Gardens-branded home products sold at Walmart stores.  The program now includes approximately 3,000 SKUs.  During the quarter, a line of bathroom furniture and accessories launched at Walmart stores across the United States and Canada.

"We continue to do an outstanding job of extending the reach of our trusted national brands across new platforms, resulting in increased touch points with an expanded and more diverse group of consumers," said Lacy.  "Today we reach women on a daily basis on their smartphones, iPads, tablets and laptops; while watching television or shopping at retail; through targeted custom communication programs; and, of course, through the outstanding magazines we create.  And it's all driven by the powerful content creation engine we've built over time."

OTHER FINANCIAL INFORMATION

During the first nine months of fiscal 2011, Meredith generated $140 million in cash flow from operations and reduced its total debt by $75 million to $225 million.  The weighted average interest rate on Meredith's debt was 5.3 percent, and its debt-to-EBITDA ratio was less than 1 to 1 at March 31, 2011.  

Meredith repurchased approximately 110,000 shares in the quarter as part of its share repurchase program.  For the first nine months of fiscal 2011, Meredith repurchased approximately 300,000 shares, leaving 1 million shares remaining under the current authorization.

Unallocated corporate expenses grew by approximately $2 million in the third quarter of fiscal 2011, due in part to higher investment spending on Next Issue Media and related Tablet development.

All earnings per share figures in the text of this release are diluted.  Both basic and diluted earnings per share can be found in the attached condensed consolidated statements of earnings.  Information on the special items in the prior year periods is available in Tables 1 and 2 and in Meredith's earnings release dated April 28, 2010.

OUTLOOK

Looking to the remainder of fiscal 2011, Meredith expects fiscal 2011 full-year earnings per share to range from $2.72 to $2.78.  This would represent an increase of approximately 20 percent over fiscal 2010, and is at the high end of the original $2.40 to $2.75 range provided at the start of fiscal 2011.

For the fourth quarter of fiscal 2011:

• National Media Group advertising, with two of three magazine issues closed, is expected to be down in the mid-single digit range compared to the prior-year period.
• Local Media Group non-political advertising revenue, with nine weeks remaining, is currently pacing up in the mid-single digit range compared to the prior-year period.  Additionally, the Local Media Group will be cycling against $4 million in net political advertising revenues recorded in the fourth quarter of fiscal 2010.
• Meredith currently expects fiscal 2011 fourth quarter earnings per share to range from $0.60 to $0.66.

A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the fourth quarter and full year of fiscal 2011. These uncertainties are referenced below under "Safe Harbor" and in certain of its SEC filings.

CONFERENCE CALL WEBCAST

Meredith will host a conference call on April 27, 2011 at 11:00 a.m. EDT to discuss third quarter fiscal 2011 results.  A live webcast will be accessible to the public on the Company's website, www.meredith.com, and a replay will be available for one week.  A transcript will be available within 48 hours of the call at www.meredith.com.

RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES

Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the Company.  Non-GAAP measures should not be construed as alternatives to GAAP measures.  EBITDA is a common supplemental measure of performance used by investors and financial analysts.  Management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends.  Meredith does not use EBITDA as a measure of liquidity or funds available for management's discretionary use because it includes certain contractual and non-discretionary expenditures.

Results excluding the special items recorded in fiscal 2010 are also supplemental non-GAAP financial measures.  Management believes these items are not reflective of Meredith's ongoing business activities.  While results excluding the special items are not a substitute for reported results under GAAP, management believes this information is useful as an aid in better understanding Meredith's current performance, performance trends and financial condition.  Reconciliations of non-GAAP to GAAP measures are included in the attached tables.  The attached condensed consolidated financial statements and reconciliation tables will be made available at www.meredith.com.

SAFE HARBOR

This release contains forward-looking statements that are subject to risks and uncertainties.  These statements are based on management's current knowledge and estimates of factors affecting the Company and its operations.  Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding advertising revenues and investment spending, along with the Company's revenue and earnings per share outlook for the fourth fiscal quarter and full year fiscal 2011.

Actual results may differ materially from those currently anticipated.  Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; unexpected changes in interest rates; and the consequences of acquisitions and/or dispositions.  The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

ABOUT MEREDITH CORPORATION

Meredith Corporation (NYSE:MDP; www.meredith.com) is the leading media and marketing company serving American women.  Meredith features multiple well-known national brands – including Better Homes and Gardens, Parents, Family Circle, Ladies' Home Journal, Fitness, More and American Baby – along with local television brands in fast-growing markets.  Meredith is the industry leader in creating content in key consumer interest areas such as home, family, health and wellness and self-development.  Meredith uses multiple distribution platforms – including print, television, online, mobile and video – to give consumers content they desire and to deliver the messages of its marketing partners.  Additionally, Meredith uses its many assets to create powerful custom marketing solutions for many of the nation's top brands and companies.  Meredith has significantly added to its capabilities in this area through the acquisition of cutting-edge companies in areas such as digital, mobile, word-of-mouth, social and database marketing.

SOURCE Meredith Corporation