Meredith holding steady in Q3

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Meredith Corporation, publisher of Parents, Better Homes and Gardens and Family Circle, among other titles, has reported third quarter total revenues of $401 million — flat compared to Q3 2007.

Revenue from the company's publishing arm was similarly flat, coming in at $323 million for the quarter. Circulation and advertising revenues for this quarter fell 4.7% and 3.5%, respectively. Circulation contribution and margin, however, increased, as did readership. Executives pinned the circulation revenue decline, from $91.4 million to $87 million, to the ongoing transition of magazine titles to a direct-to-publisher model.

“Meredith put the stated goal out there in 2005 that we were going to move to a direct-to-publisher circulation model, and we're having great success doing that,” said Art Slusark, VP of corporate communications for Meredith. “It's a more costly model impacting revenue, but it's tying up customers for longer periods of time with two-for-one and three-for-one offers. The magazines become less of an impulse buy and more a part of their life, so we don't have to be in the mail all the time. We actually made more money on circulation in the quarter, so while revenue was less, we're getting more profitable sources of circulation.”

Advertising's fall, from $161 million in 2007 Q3 to $155 million, has been attributed to softness in the home, pharmaceuticals and direct response categories. Ad revenue actually grew by 10% in the first half of this fiscal year, and losses in the Q3 were partially offset by an uptick in food ads, which remain Meredith's largest category.

In the months ahead, publishing revenues are expected to fall further, as increases in paper prices and postage rates, along with a weaker economy, take their toll. Paper prices, which are reset every three months, are expected to be 15% higher at the end of the Q4 than they were a year earlier. Ad revenues for May magazines look similar to this quarter, but preliminary numbers for June and July appear lower.

“We have put some measures in place for the coming quarter,” Slusark said. “From a corporate point of view, we're looking to manage expenses and drive efficiencies through aggressively negotiating open contracts with vendors, further expansion of the use of digital technology and growing our in-house pre-press operations.

“On the publishing side, we're looking at some proactive sales initiatives,” Slusark continued. “We're looking at special sales incentives, focusing more on diversifying ad categories and reducing exposure in some of these categories that have proved difficult. We have a very strong group sales operation called Meredith 360, and we're going to continue to build that.”


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