Meredith Corp. (MDP)
F3Q10(Qtr End 06/30/08) Earnings Call
April 28, 2010 11:00 am ET
Mike Lovell - Director, IR
Steve Lacy - Chairman, President and CEO
Joe Ceryanec - VP and CFO
Jack Griffin - President, National Media Group
Paul Karpowicz - President, Local Media Group
Brian Shipman - Jefferies
Richard Ingrassia - Roth Capital Partners
Peter Stabler - Credit Suisse
Michael Meltz - JPMorgan
Barry Lucas - Gabelli & Company
Edward Atorino - The Benchmark Company
Previous Statements by MDP
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Ladies and gentlemen, thank you for standing by and welcome to the Meredith Corporation reports fiscal 2010 third quarter earnings call. (Operator Instructions). As a reminder this conference is being recorded. I would now like to turn the conference over to your host Mr. Mike Lovell, please go ahead.
Hi, good morning everyone. Before our Chairman and Chief Executive Steve Lacy begins our discussions, I'll take care of few housekeeping items. In our remarks today we will include statements that are considered forward-looking within the meaning of Federal Securities Laws.
The forward-looking statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. A description of certain of those risks and uncertainties can be found in our earnings release issued today and in certain of our SEC filings.
The company undertakes no obligation to update any forward-looking statement. We will refer to non-GAAP measures, which in combination with GAAP results provide additional analytic tools to understand our operations. Tables that reconcile non-GAAP measures to GAAP results are posted on our website as well.
And with that, Steve will begin the presentation.
Thank you, Mike and good morning everyone. I’ll begin with an overview of the current environment, discuss how execution against our strategic initiative is strengthening our market position while delivering revenue and profit growth. Joe Ceryanec our Chief Financial Officer will go into greater detail on our financial and provide our earnings outlook.
Following our prepared comments this morning we’ll be joined by Jack Griffin, Paul Karpowicz, our Local Media Group President. Questions you might have at that time. I’m pleased to report; we grew third quarter earnings per share more than 30% to $0.73 a share including a $0.04 per share tax benefit. Total revenues grew 5% to $353 million. The improvement was broad based across the company from an advertising perspective; we deliver growth in both our National and Local media groups. Beyond advertising, we deliver double digit revenue growth in Meredith’s integrated marketing, brand licensing, retransmission fees and at Meredith's video studio. While our advertising performance is encouraging we are still well below historic levels established prior to the recession in both our national and our local businesses.
The place remains very volatile on both a month to month and a client by client basis. Before I go into detail about our business unit results, I’d like to briefly review the actions that Meredith has taken to drive performance in what has been a difficult economic time particularly for those of us in the media and marketing industries. We recognized early on with the country was entering an extended economic downturn took a series of decisive action. In the last two years we have executed against clearly defined strategic initiative specifically designed whether the challenges and emerge in a stronger competitive position. These include first of all gaining market share.
Our national magazine business currently has an advertising revenue market share of 12.4% third of fiscal, (Audio Gap) second increasing our connection to the American consumer, leadership of our magazines and viewerships at our local television stations, news programming remains quite strong. Over the same period Unique visitors to our website had grown 30% and paged use have grown over 50%. In addition our better daily television program now airs in nearly half of all U.S. households.
Third, growing new revenue streams not dependant on traditional advertising. Revenues in operating profit at Meredith integrated marketing are not more than 10% over two years ago. Our brand licensing business had grown revenue nearly 50% and today we have 2000 SKUs at Wal-Mart stores across the U.S. and in Canada. Fees from retransmission agreements had nearly tripled, recreated Meredith video studios would take advantage of our video content creation capabilities.
Our fourth initiative that’s reduced expenses and aggressively paid down debt. Over the two year period companywide operating expenses are down approximately 8% and 10% lower before acquisitions. We also eliminated a third of our debt while increasing dividends to our shareholders by 7% and finally we continue to invest in our businesses. We have enhanced the quality of magazine editorial, increased news programming in our local television market and added a variety of features and functionality to our interactive property.
At the same time we increased our digital marketing capabilities through the acquisition of big communication and an investment in mobile marketing leader the Hyperfactory. Most recently, we joined other major media companies to help create next issue media to develop a new digital store front and related technology that will allow consumers to enjoy content on portable digital devices including the iPad.
In short we took advantage of the economic weakness to strengthen our competitive position. While the market place remains challenging and particularly encouraged by the progress being made across the company. Now turning to fiscal 2010 third quarter operating performance. Our national media group operating profit rose 6% on a 2% increase in revenue. Total ad revenues grew 4% including an increase of more than 20% at our online property. From an advertising category standpoint we saw growth in toiletries and cosmetics direct response and retail related advertising.