Meredith Q3 net earnings per share up 5%


Meredith Corporation reported fiscal Q3 net earnings per share of 0.97, compared to 0.92 per share in the prior-year quarter. Earnings per share from continuing operations were 0.98. Total revenues were 401 million, just about even with the prior-year quarter. Earnings per share were also 0.98, an increase of 10% compared to the prior-year quarter. Core earnings per share exclude discontinued operations for fiscal 2008 and fiscal 2007, and a one-time tax benefit in Q3 of fiscal 2007.

For the first nine months of fiscal 2008, net earnings per share increased 6% to 2.40. Core earnings per share increased 7% to 2.39. Total revenues increased to 1.2 billion, while ad revenues were 724 million.

However, Meredith also slashed its fiscal 2008 earnings forecast Tuesday, citing economic conditions and softer ad sales. The company now anticipates FY profit between 3.15 and 3.20 per share. In January Meredith reaffirmed an outlook in a range of 3.50 to 3.55 per share.

Fiscal Q3 Broadcasting operating profit was 19 million, compared to 21 million in the prior-year quarter. Revenues were 78 million, down slightly from the prior-year quarter. During the quarter, growth in online, video, retransmission and political revenues offset weakness in spot television advertising, particularly in the automotive, retail and telecommunications categories.

Meredith’s television stations continued to enhance their competitive position among adults 25-54 in the February ratings book. Nashville (+59%), Flint/Saginaw (+28%), Las Vegas (+23%) and Greenville (+14%) all posted strong share growth in morning news. In addition, five stations — led by Greenville (+33%) and Las Vegas (+24%) — increased overall sign-on to sign-off ratings.

Broadcasting online revenues increased nearly 50% during the quarter. Average unique visitors rose four-fold to 8 million per month, reflecting enhanced technology, content, promotions and sales-related activities. More than 1.3 million videos were streamed on Broadcasting’s sites each month during the quarter.

For the first nine months of fiscal 2008, Broadcasting operating profit was 60 million vs. 79 million in the prior-year period. Revenues were 240 million compared to 264 million, reflecting the cyclical decline in political advertising. Net political revenues for the first nine months of fiscal 2008 were 29 million less than the prior-year period.

Said Meredith CEO Steve Lacy in the conference call: “The current economic slowdown has impacted calendar 2008 advertising across our businesses. It’s reflected in our third quarter results. I think it is important to note that we strongly believe these trends are cyclical in nature and not structural as they relate to our industries and Meredith in particular…In addition, it is important to remember that while advertising is extremely important in our revenue mix, some 40% of Meredith’s revenues come from non-advertising activities. Chief sources include magazine circulation revenues, along with our rapidly growing business-to-business operations. These include our expanded integrated marketing business and brand licensing initiatives. Our strategy is to capitalize on these strengths; carefully manage expenses; and work aggressively to increase market share over time. We have successfully employed this strategy during past times of economic weakness, enabling Meredith to emerge in a stronger and more competitive position.”

After an exceptionally strong first half of fiscal 2008 — when Publishing ad revenues grew more than 10%– in Q3 Publishing experienced weakness in the home, pharmaceuticals and direct response advertising categories, partially offset by significant growth in food, Meredith’s largest advertising category. Publishing ad revenues were 155 million, compared to 161 million in the prior-year quarter. A strong increase in net advertising revenue per page partially offset lower page volume.

Meredith Integrated Marketing continued its strong performance, with revenues up nearly 50% and operating profit climbing more than 150%. As a result, Meredith maintained their publishing operating profit margin of 20%.