Meredith Corp. (



F2Q2012 Earnings Call

January 24, 2012 11:00 am ET


Mike Lovell - Director, IR

Steve Lacy - Chairman & CEO

Joe Ceryanec - CFO

Paul Karpowicz - President, Local Media Group

Tom Harty - President, National Media Group


Mark Zgutowicz - Piper Jaffray

Koji Ikeda - Roth Capital Partners

Michael Meltz - JPMorgan

Matt Chesler - Deutsche Bank

Shagun Singh – CRT Capital Group

Jason Bazinet - Citi

Michael Corty - Morningstar

Nadia Lovell - JPMorgan



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Ladies and gentlemen, thank you for standing by, and welcome to the Meredith Corporation Reports Fiscal 2012 Second Quarter. At this time, all phone lines are in a listen-only mode. Later on, we will have a question-and-answer session with instructions given at that time. (Operator instructions.) As a reminder, today’s conference is being recorded. And I will now turn the conference over to Director of Investor Relations, Mike Lovell. Please go ahead.

Mike Lovell

Hi, good morning everyone, and thanks for joining us. We’ll start today with comments from Chairman and Chief Executive Officer, Steve Lacy; and Chief Financial Officer, Joe Ceryanec; and then we’ll turn the call over to questions. Also on the line this morning are Paul Karpowicz, President of our Local Media Group; and Tom Harty, President of our National Media Group. An archive of today’s discussion will be available later this afternoon on our investor website and a transcript will follow that.

Let me remind you that our remarks today include forward-looking statements and that actual results may differ from forecasts. Some of the reasons why are described at the end of our news release issued a couple hours ago and in some of our SEC filings. With that Steve will begin.

Steve Lacy

Good morning everyone and thank you for joining. First of all, let me say how excited we are to add to our Meredith portfolio of national media brands. This acquisition of the world's number one digital food site doubles size of the Meredith Women’s network to 40 million monthly unique visitors. In addition, it positions us as the number one premium-owned and operated network in the women's lifestyle category according to the most recent comScore data. That’s obviously a key selling point to our advertisers.

Importantly, Allrecipes nearly doubled the digital advertising revenues generated by our Meredith Women’s Network. It matches perfectly with our stated acquisition goal adding meaningful digital scale and a brand that brings new audiences and great advertiser relationship.

And finally, the Allrecipes transaction is a great stick with our total shareholder return financial strategy. It’s expected to add to growth in revenue, profit, and free cash flow over time.

The Allrecipes demographic matches very nicely with our core audience of female adults, its editorial positioning is right in our wheelhouse. We are already the leading food magazine company and now we are adding the number one digital position as well. We can now offer advertisers access to 100 million unduplicated American women across the platform they use every day. It’s clearly a great combination.

We also believe that will help us in other ways, including providing Meredith access to a large and vibrant audience to market other products to, including our magazine subscriptions and other e-commerce opportunities. It also enables Meredith to apply the Allrecipes proprietary SEO expertise across our digital platforms, which is expected to improve performance and reduce Search Engine Marketing spending over time. It introduces Meredith brands to new audiences as has 17 sites in 22 countries across the globe.

Now, let’s turn to our quarterly results. Earlier this morning, we reported earnings per share of $0.70 for the second quarter of our fiscal 2012. That compares to $0.88 in the year ago period, which was a record high for the Meredith Corporation and included $0.29 in political related earnings from last year’s very strong political cycle.

Looking at the quarter just completed from an advertising standpoint, the national advertising market remained challenging for our magazine and digital brands, consistent with what we experienced throughout calendar 2011.

Meanwhile, our Local Media Group delivered 9% growth in non-political advertising revenue. That’s the ninth straight quarter we have delivered non-political ad growth.

As we now look to early calendar 2012 advertising, we’re seeing an improving trend in the National Media Group, with monthly results strengthening as the current quarter progresses. In our Local Media Group, non-political advertising revenues continue to show strength pacing up in the mid-single digits with nine weeks left in our third quarter.

So, stepping back for a moment, so for in fiscal 2012, we have aggressively pursued a series of initiatives that position Meredith for long-term growth in revenue, profit, and free cash flow. In addition, we continue to take meaningful steps to increase total shareholder return and return more cash to our shareholders.

Examples of our fiscal 2012 accomplishments include our new three part financial strategy that’s being well received by the investment community. It includes, first, 50% dividend increase to $1.53 a share, a new $100 million share repurchase program, and strategic investments in our businesses as opportunities arrive.

Our share price has increase 30% since the late October announcement, and our dividend yield was a healthy 5% to 6% during our second quarter.

We also enhanced our position in food, and the boarder parenthood media space through the acquisitions of Every Day with Rachael Ray and the FamilyFun brands. These acquisitions, along with, make Meredith the leading food media company, in addition to our leadership positions in both parenthood and the home categories. In our business, scale means greater reach to consumers and higher margins over time.

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