Meredith Corporation Reports Fiscal 2016 Second Quarter Results

Meredith Corporation Reports Fiscal 2016 Second Quarter Results

Advertising Performance Strengthens Across Company; Digital Businesses Deliver Record Results

DES MOINES, Iowa, Jan. 27, 2016 /PRNewswire/ -- Meredith Corporation (NYSE:MDP) (www.meredith.com) - the leading media and marketing company with local television brands in large, fast-growing markets and national brands serving 100 million American women - today reported fiscal 2016 second quarter results:


-- Earnings per share were $0.72, compared to $0.87 in the prior-year
period.
-- Excluding special items, comprised primarily of transaction expenses
related to Meredith's agreement to merge with Media General, Inc.,
earnings per share were $0.80. This compares to earnings per share
excluding special items of $1.00 in the prior-year period. (See Tables
1-4 for supplemental disclosures regarding non-GAAP financial measures.)
-- As expected in an off-election year, Meredith recorded $29 million, or
$0.39 per share, less of high-margin, incremental political advertising
revenues in the second quarter of fiscal 2016 than in the prior-year
period.
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"We're pleased to report strong advertising performance - including growth on an organic basis - in our National Media Group during the second quarter of fiscal 2016," said Meredith Chairman and CEO Stephen M. Lacy. "Additionally, our Local Media Group delivered excellent growth in non-political advertising revenues from both our existing stations and our recent strategic acquisitions."

Looking closer at Meredith's performance in the second quarter of fiscal 2016 compared to the prior year:


-- National Media Group operating profit grew nearly 30 percent on 10
percent revenue growth. Performance was driven by 18 percent advertising
growth - including the additions of the Martha Stewart and Shape media
properties - and increased brand licensing revenues.
-- Local Media Group non-political advertising revenues grew nearly 10
percent to a record $104 million. Growth was driven by the addition of
television stations WALA in Mobile-Pensacola and WGGB in Springfield,
Mass., and strong performance from existing stations WGCL in Atlanta,
WFSB in Hartford, and KCTV in Kansas City. Additionally, retransmission
consent fees were higher than in the prior-year quarter.
-- Total Company digital advertising revenues grew more than 15 percent to
a record high, driven by both recent acquisitions and organic growth.
Digital advertising revenues accounted for a third of National Media
Group total advertising revenues.
Fiscal 2016 first half earnings per share were $0.96, or $1.32 excluding special items. In comparison, prior-year earnings per share were $1.52, or $1.65 excluding special items. As expected in an off-election year, Meredith recorded $39 million, or $0.53 per share, less of high-margin, incremental political advertising revenues in the first half of fiscal 2016 than in the prior-year period. Total revenues grew 3 percent to $791 million.

OPERATING GROUP DETAIL

LOCAL MEDIA GROUP

Meredith's Local Media Group includes 17 owned or operated television stations reaching 11 percent of U.S. households. Meredith's portfolio is concentrated in large, fast-growing markets, including seven stations in the nation's Top 25 and 13 in Top 50 markets. Meredith's stations produce approximately 650 hours of local news and entertainment content each week. Meredith expects to continue to grow its Local Media Group organically and through strategic acquisitions.

Fiscal 2016 second-quarter Local Media Group operating profit was $40 million, compared to $55 million in the prior-year period. As expected in an off-election year, Meredith recorded $29 million less of high-margin, incremental political advertising revenues in the second quarter of fiscal 2016 than in the prior-year period. Total Local Media Group revenues were $140 million, compared to $157 million.

Looking more closely at fiscal 2016 second quarter performance compared to the prior year:


-- Non-political advertising revenues grew 9 percent to $104 million.
Results were led by growth in the automotive, professional services and
retail categories.
-- Digital advertising revenues grew 20 percent as growth strategies,
including Meredith bringing its programmatic sales efforts in-house,
began to be realized. Handling its own programmatic sales allows greater
customization and Meredith retains all the revenue.
-- Other revenues and operating expenses increased, due primarily to growth
in retransmission revenues from cable and satellite television operators
and higher programming fees paid to affiliated networks, along with
increases from recent acquisitions.
Meredith continued to increase its deep connection with local viewers through expansions of local programming. In St. Louis, KMOV recently added expanded morning and evening newscasts. KMOV also received an Alfred I. duPont-Columbia University Award as part of a community-wide campaign,