Meredith beats expectations, forecasts improvement


“Looking broadly across our businesses, we’re continuing to see improving trends in advertising. However, advertising revenues are still weak compared to historic levels and our visibility is increasingly limited,” was the good news/bad news analysis from Meredith Corporation CEO Steve Lacy (pictured) in his conference call with Wall Street analysts. But it seems the good news at least outweighed the bad.

For starters, earning per share, excluding special charges, came in at 49 cents for fiscal Q2 (October-December), beating the Wall Street consensus by four cents. More importantly, fiscal Q3, the current quarter, is looking even better.

At this point, Meredith officials say the current quarter is pacing up in the mid-teens percentages, excluding political, for its television stations. The previous quarter was up only 6%, excluding political. Including political, TV revenues fell $8 million to $76 million for the quarter, which was calendar Q4. Operating profits for the TV group, which Meredith now calls its Local Media Group, dropped $5 million to $17 million, primarily due to the $14 million fall-off in political advertising.

The automotive sector is demonstrating a bounce back. After being down 6% from a year ago in fiscal Q2, it is up 50% at this point in the current quarter, although that is from severely depressed levels a year ago.

Meredith noted that retransmission consent revenues nearly doubled for the quarter and it is expecting retrans to total more than $20 million for the year. It is also growing non-traditional revenues from its syndicated “Better” TV show, now in 55 markets.

On the magazine side, or National Media Group, the current quarter is pacing only flat to up slightly. However, Meredith’s female-focused magazine group held up better than its peers in calendar 2009 and the industry as a whole was not nearly as impacted by some others, like newspapers, by the advertising downturn. Fiscal Q2 revenues fell $16 million to $261 million, with ad revenues down only 2% to $117 million. “Better Homes & Gardens” actually grew revenues by 7% in the quarter. So, with some cost savings figured in, fiscal Q2 operating profits for the magazine operation, excluding special charges, jumped 27% to $37 million.