Meredith's CEO Hosts Analyst Meeting (Transcript)

Meredith Corporation (

MDP

)

Analyst Meeting Call

February 14, 2012 09:00 ET

Executives

Steve Lacy – Chairman and Chief Executive Officer

Tom Harty – President, National Media Group

Liz Schimel – Chief Digital Officer, National Media Group

Martin Reidy – President

Paul Karpowicz – President, Meredith Local Media Group

Joe Ceryanec – Chief Financial Officer

Presentation

Steve Lacy – Chairman and Chief Executive Officer

Compare to:
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Well, good morning everyone. I guess the light's dim and it gets very quiet like church, so we appreciate all of you being here with us this morning. We are very, very flattered that you would join us. For any of you that I didn’t have the opportunity to say hello to, I am Steve Lacy, the Chairman and CEO of Meredith and we are very, very pleased to have the opportunity to share our growth strategies with you this morning and have the opportunity to interact a bit. And I certainly want to thank our friends at Bank of America for making this venue available to us today.

We are going to have of course conversations that include some forward-looking statements. Then this next slide is simply a reminder of the various factors that could impact our business as we go forward.

I think one of the great advantages of a meeting like this is really the opportunity that you have to hear from a deeper set of executives than in the normal investor conferences and various calls that we make on you across the country. It also of course gives us the opportunity to provide more context around the growth strategies and the initiative that we had in play to not only continue to grow our very, very strong connection with the individual consumer, but of course, monetize that connection by growing revenue profit and cash flow as we look to the future.

So, by way of an agenda, I am going to start with an overview or really look to the future of the company over kind of a three-year planning horizon between now and the end of our fiscal 20015 and then turn the discussion over to Tom Hardy, who a number of you know, Tom runs our National Media business. He will be followed by Liz Schimel, who is the Chief Digital Officer for our National Media activity and of course the number of the initiatives that were about and various investments that we have made recently are about growing our digital platforms. Liz will be followed by Martin Reidy, who is the President of Meredith Xcelerated Marketing and then Paul Karpowicz who a lot of you know who runs our local media business and then Joe Ceryanec, our CFO will provide a financial update and really talk in more detail about our total shareholder return strategy that we launched right at the end of October.

We are planning to take a break after Liz speaks and is anybody along the way would like to help yourself to coffee or some of the continental breakfast on each side of the room, also right outside the door, right across the hall is the women's restroom and for any of the men you have to go through a little bit of security, but our friend from Bank of America have a young man right out in the hallway who will help direct you around, so please feel free as we work our way through the morning to make yourselves comfortable.

For those of you, who might not be as familiar with our business, let me start with a very brief overview of the company. On the left hand side of the slide, you see our National Media brands depicted and they generated about $900 million in revenue in our fiscal year 2011 and that's the period that ended June 30 of last year.

With the addition of Allrecipes.com and we anticipate closing right about the 1 of March on that transaction that you will hear more about this morning. We will reach $100 million unduplicated women each and every month through our National Media business across platform. We are clearly the leading media and marketing company serving U.S. women today and the portfolio of brands that we have strategically assembled over time is unmatched in the media industry.

Our Local Media business, which is in the center of the slide, generated about $320 million in our fiscal 2011 and reaches about 10% of the U.S. household. We are leading the broadcast industry and gains in nonpolitical advertising revenue and we have done so now for a number of quarters.

Our Marketing Services business generated about $180 million in fiscal 2011 and we are a leading business-to-business marketer offering clients such as Kraft, Nestlè, Chrysler, Lowe’s expertise that really bridges a number of digital platforms including social, mobile, database marketing here in the United States and abroad.

Our connection to the end-consumer is very strong and continues to grow. Our National Media Brand attracts 115 million readers each in every month lead by our flagship brand Better Homes and Gardens. Over time we have developed a leadership position in food, in parenthood and of course in the home categories and we have leveraged our powerhouse Better Homes and Gardens brand to develop a very profitable licensing business at retail and that includes a major program with over 3,000 SKUs at every Wal-Mart store in the United States and in Canada.

Online our brands attract more than 40 million unique visitors each and every month and we are accelerating our digital presence with the recently announced acquisition of Allrecipes.com and aggressively extending into tablet and mobile as well and you will hear a lot more about that this morning as we progress through our conservation. We own a really great mix of network-affiliated television stations in fast growing markets and we are expanding the amount of local programming we create and aggressively growing our daily Better syndicated television show that Paul will tell you about in just a few minutes.

Today the better show has coverage about 80% of the country. Meredith Xcelerated Marketing is now a full service digital agency with all the acquisitions that we have made in recent years and with the investment in Iris, it gives us global capabilities as well. So, we really successfully extended our brands across a host of media platforms giving our consumer the important flexibility to access our content, where and when she wants to reach it and a much stronger consumer engagement across those platforms. In addition, we have built meaningful scale cross these media platforms giving our advertising and marketing partners the opportunity to reach the broad audiences and generate for Meredith of course more revenue and stronger cash flow.

Many of you who have followed us over a period of time, know that we have pursued a serious of strategies over the last decade that has added not only scale to the company, but significant operating efficiency, leading of course to higher revenue profit and free cash flow, while also helping diversify our revenue stream.

In National Media, we have expanded our content and diversified advertising away from the home and direct response categories to faster growing categories such as food and beauty, and Tom will provide more color around that this morning. We have also over this period of time doubled our share of magazine advertising revenue through the acquisition of a serious of properties from American Baby to Parents to Fitness and Family Circle, while also expanding our digital and again are very high margin brand licensing activity.

Our television station business under the leadership of Paul Karpowicz, will speak just a little bit later this morning as very successfully turned around to be a leader in the industry. Paul has focused the stations on growing the amount of programming our local news that we create and establishing a much stronger local brand presence.

In Meredith Xcelerated Marketing, we more from a what primarily a custom publishing activity to more of a strategic partner providing growing digital and CRM services to a whole host of corporate client. As we look ahead again over kind of a three-year planning horizon into our fiscal 2015. We see continued growth and market leadership.

Our National Media Group will build on its lead at creating and also distributing branded content for women across media platforms. We'll also continue to aggressively execute our digital strategy that you will hear about this morning in significant detail including our goal of generating over half of our consumer marketing transactions in a digital or online environment. We will also have expanded our brand licensing beyond Better Homes and Gardens during this time period.

Our Local Media Group will continue to be a news leader rated as the number one or number two station in each market where we operate possessing not only online, but also mobile platforms of scale and growing non-traditional sources of revenue from not only retransmission fees, but also from our Meredith Video Studios activity.

And in our marketing services business, we'll be more of a recognized leader in providing digital marketing solutions and we'll leverage our recently announced international capabilities and reach through the Meredith-Iris Worldwide Network adding those capabilities to our fast growing discipline.

I think so far in our fiscal 2012 and we are just a little past the halfway mark, we have had very strong execution against these growth initiatives. We have successfully grown our leadership in creating branded multi-platform content, particularly in the food and the parenthood space, through the acquisitions of the popular Every Day with Rachael Ray, EatingWell, and the Family Fun brands. Several people asked me this morning if Rachael Ray was going to be with us, we were really afraid to have her here, because we thought she steal the whole show, but she is a lot of fun to work with and we are having a good time with that new business.

We're also growing the number of subscriptions that we sell online and Liz will tell you more about that and extending and expanding our very successful program with Wal-Mart, which Tom recently extended out for a five-year period through 2016. In the Local Media business, the November ratings book was probably the strongest we've had in a decade and our station websites are better serving our viewers and our advertisers and we've nearly now doubled the number of markets, where the better show is available to the consumer.

As many of you know, we've recently rebranded Meredith Xcelerated Marketing and also announced the Meredith-Iris Global Network and we did at the ANA Conference earlier last call. To help us generate more revenues abroad and also bring some of Iris's clients abroad to the United States. We will also hear from Martin this morning about opportunities we see in health and in search engine optimization. And finally, we launched in late October, our new total shareholder return strategy and that has been very well received in the financial marketplace.

The key elements include a 50% increase in our annual dividend to a $1.53 a share and net yield is about a 5% yield at this point in time in the market; a new $100 million share repurchase authorization, and a series of ongoing strategic investments to drive incremental growth in revenue profit, and of course, free cash flow.

So, I thought I end this morning with kind of a quick snapshot of the current business environment as we enter early calendar 2012, because most of our conversation this morning will be around major growth initiatives that we'll be executing as we look to the future. The good news is we are seeing modest improvement in our National Media Group advertising aided we believe by our recently announced Meredith Engagement Dividend.

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