Meredith Corporation (



F1Q2011 Earnings Conference Call

October 26, 2010 11 AM ET


Steve Lacy – Chairman, President and CEO

Joe Ceryanec – VP and CFO

Paul Karpowicz – President, Local Media Group

Tom Harty – President, National Media Group


Richard Ingrassia – Roth Capital Partners

Jason Bazinet – Citigroup

Michael Meltz – JPMorgan

Edward Atorino – The Benchmark Company

Peter Stabler – Credit Suisse

Barry Lucas – Gabelli & Co

Fassi Habib (ph)

Harry Dermit (ph)

Michael Corty – Morningstar



Welcome to the Meredith Corporation reports fiscal 2011 first quarter results conference call.

(Operator Instructions)

As a reminder, today’s conference is being recorded.

I would now like to turn the conference over to our host Mr. Mike Lovell. Please go ahead.

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Mike Lovell: Hi, good morning everyone; thanks for joining us. We’ll begin the call this morning with comments from our Chairman and Chief Executive Officer Steve Lacy and our Chief Financial Officer Joe Ceryanec. Then we’ll turn the call over to questions. Also on the line with us this morning is Paul Karpowicz, President of our Local Media Group and Tom Harty, who is joining this call for the first time as President of our National Media Group. Tom was the primary architect of our very successful efforts to gain market share in his most recent role here at Meredith as President of Consumer Magazine.

An archive of today’s discussion will be available later this afternoon on our investor website and a transcript will follow.

Let me remind you that our remarks today will include forward-looking statements and that actual results may differ from our forecasts. Some of the reasons why are described at the end of our press release issued earlier this morning and in some of our SEC filings.

And with that, Steve will begin the presentation.



Thank you, Mike and good morning everyone. I am pleased to report a strong first quarter and start to our fiscal 2011. Some highlights detailed in today’s earnings release: we increased earnings per share by 40%, total company revenues by 4% and total advertising revenues by 7% in the quarter. We grew television spot advertising revenues 27% including a record $12 million in net political advertising along with an 8% increase in non-political advertising. We achieved higher rates for National Media Group Magazine advertising pages and advertising to our national website increased more than 20%.

We generated strong revenue growth from businesses not dependent on traditional advertising including Meredith integrated marketing, where revenue was up 7% and brand licensing, where revenue was up 17%. We reduced total company expenses 1%, while continuing to invest in emerging media platforms including mobiles and e-tablet. Over a two-year period, our operating expenses are down 9%.

Stepping back for a moment to look at the current media and marketing environment, we are encouraged by the strengthening revenue picture across our businesses. We anticipated a strong television political advertising season and it’s meeting our expectation. Non-political television advertising continues to be strong as well even with less available inventory. On the national scene, magazine advertising for the remainder of calendar 2010 is also strengthening and we are very encouraged by the growing market demands for our digital platforms including mobile.

Still on a month-to-month and client-by-client basis, we continue to experience an advertising marketplace characterized by volatility and very low visibility on both the national and the local levels. This makes forecasting demand be on the end of calendar 2010 very difficult and as a result, we don’t have any solid reject reach yet on early calendar 2011 advertising revenues.

Our strategy to concurrently develop revenue sources not dependent on traditional advertising continues to yield results particularly in custom marketing and in brand licensing. Demand for Meredith’s integrated marketing services is intensifying, no doubt as a result of the combination of content development, CRM, digital and social capabilities we can now deliver across the marketplace. And we continue to be very pleased with the enthusiastic consumer response to our branded products at retail.

Finally, in connection – our connection to the consumer, which is the bedrock of our advertising and marketing activities, continues to strengthen as we add new platforms. Enhancing consumer relevance for our brands in a fragmented media landscape continues to be a top priority.

Now let’s take a closer look at our two major business operations beginning with the Local Media Group. As I mentioned, fiscal 2011 first quarter operating profit increased significantly due primarily to 27% growth in television spot advertising revenues. Political advertising was strong across the board in part due to very competitive primary races in several of our markets, including Hartford and Kansas City, where there are open seats for Governor and in the US Senate; Las Vegas, where incumbents are facing strong challenges; and in Nashville, where there are open seats for Governor and in the US House.

In addition, we’ve made special efforts to educate campaign about our increased news presence, particularly our FOX affiliates and we’ve successfully increased our share of political advertising dollars as a result. Non-political advertising revenue increases were broad-based as eight of our Top 10 categories grew, including automotive, retail, media, and professional services. Automotive advertising was up nearly 40%. We continue to aggressively pursue innovative sales strategies to increase revenue in the local marketplace. This includes targeting advertisers that have been traditionally been newspaper clients only.

Additionally, we’ve developed special advertising opportunities aimed at large national companies that are headquartered in our market that have not advertised on local television. Another factor in our success is our continued strong connection to the local consumer. During the most recent July ratings book, our CBS affiliate in Hartford continued its Number 1 position in all new day parts as well as sign-on to sign-off. Our NBC affiliate in Nashville is Number 2 in both late news and sign-on to sign-off and also posted growth in the morning news.

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