Earnings: Meredith Posts Modest Profit Gains Of 1.5 Percent In Q1, As Revs Remained Flat


Magazine publisher and broadcast owner Meredith Corp. posted flat Q1 revenues of $401 million while earnings from continuing operations were up a slight 1.5 percent to $73.2 million from $72.1 million the year before. Interactive revenues were not broken out for its publishing unit, unlike past quarters. Either way, publishing operating profit was $65 million and revenues were $323 million, both flat compared to Q107. The company did claim that under the broadcast division, online revs grew nearly 50 percent during the period. Meredith (NYSE: MDP) also said that average unique visitors rose “four-fold” to 8 million per month.

Outlook lowered: Publishing ad revenues and broadcast pacings are currently down in the low double digits, compared to the prior-year quarter, as Meredith expects paper costs and postage to rise next month. For the full fiscal year ending June 30, 2008, Meredith now expects to report earnings per share of $3.15 to $3.20, compared to $3.31 reported for FY07.

Earnings release | Webcast (11:00 AM EDT) | Transcript (via SeekingAlpha)

Conference call: Q1 revenues across Meredith’s consumer websites, a combination of sites in the publishing and broadcasting divisions, rose 12 percent, said Meredith President and CEO Stephen Lacy. He attributed the growth to Meredith Video Solutions and the company’s TV station sites. Monthly unique visitors to the company’s sites was up 15 percent to 19 million; pageviews gained 25 percent to 170 million, Lacy claimed. Visitors to Meredith’s sites watched an average of 2.4 million videos a month during the quarter. As a boost for the publishing side, Meredith netted more than 3.3 million online subscriptions during the first nine months of FY 2008, compared to 2.9 million during the prior year period.

Online revenue goals: Lacy also claimed that the company was making “strong progress” towards hitting its previously stated goal of generating 10 percent of Meredith’s revenues via online and videos sources by FY 2010. For the first nine months of FY 2008, about 6 percent of Meredith’s revenues were derived from online. Lacy: “And that’s up from 1.7 percent for all of our fiscal 2006.”

Online pub revenue growth slows: For Meredith, the publishing sites’ revenues have always mirrored the print side, given that they have the same clients, Lacy said. So unlike a lot of media companies, as print advertisers go, so does online. Jack) Griffin, Jr., president, Publishing Group: “Our revenue performance in publishing on the Internet in the quarter was weaker than we had hoped… As you all see every day, lots written about the advertising networks, and particularly advertising networks that are social media and consumer-generated content. The amount of inventory that has now been rolled up and put in front of major advertising buyers from these non-branded sites is really remarkable versus a year ago. So it has put downward pressure on CPMs. If you look at some of the social media roll-ups today they are doing CPMs in the $2 to $3 range. However, we’re in the branded businesses… we’re heavily in the branded business, and we’ve been very steadfast in holding our CPMs and maximizing our salable inventory and riding through this period that I think is really quite a time in the online space.”

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