Meredith profits jump on ad sales growth
Meredith Corp., which publishes Better Homes and Gardens and owns 11 television stations, said its fiscal third-quarter profits jumped 43 percent as new marketing strategies to boost advertising began to pay off.
Net income for the period ended March 31 increased to $25.5 million, or 50 cents per share, from $17.9 million, or 35 cents, a year ago. Revenues rose 8.58 percent to $278.2 million from $256.2 million.
Meredith’s publishing group, which includes such nationally known magazine titles as More and Ladies’ Home Journal, has been building new partnerships with companies such as supermarket chain Wegman’s Food Markets Inc. and drugstore operator Eckerd Corp. The company’s television stations have also been using the Better Homes and Gardens brand name to attract local advertisers.
The year-ago results included amortization that is no longer required under U.S. accounting rules. Excluding the amortization, the company’s profits in the third quarter of 2002 would have been $21.8 million, or 43 cents per share.
The increases in profits and revenues came despite factors such as higher postage costs and the war with Iraq, which Meredith chairman and chief executive William Kerr estimated cost the company’s TV stations $1.5 million in lost revenue.
In the publishing division, operating profits rose 13 percent to $46.3 million, boosted largely by the company’s second-largest magazine title, Ladies’ Home Journal, whose advertising pages jumped 33 percent during the quarter. In October, Meredith named Lynn Lehmkuhl, a former vice president of the children’s magazine division at The Walt Disney Co., as publisher of Ladies’ Home Journal.
“Changes implemented by our new editorial and publishing management team were instrumental in its third-quarter performance,” Kerr said.
The publishing division’s profits were also boosted by the release of the first of three planned books based on the popular “Trading Spaces” home improvement television program. That book, “Trading Spaces: Behind the Scenes,” has been highly ranked on several best-seller lists in recent weeks.
Revenues at the division rose 11.9 percent to $220.8 million.
Operating profits, excluding the effects of amortization, at Meredith’s broadcasting division rose 9.5 percent to $7.31 million from $6.68 million during the same quarter last year.
Viewership at most of Meredith’s stations improved in the quarter. Revenues dipped slightly to $57.4 million from $58.8 million because of the war. Revenues in the year-earlier period were boosted by about $2.5 million because of advertising associated with the Super Bowl and the Winter Olympic Games.
For the full fiscal year, Wall Street analysts expect the company to have per-share profits of $1.75. In a statement, Meredith called that estimate “achievable,” and said fourth-quarter advertising revenues for its publishing division, excluding the media properties that Meredith recently acquired from the American Baby Group, are up between 13 percent to 17 percent. Revenues at its TV stations are up by a smaller percentage, the company said.