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Meredith: Economic Trend is Cyclical, not Structural

The 12 television stations owned by Meredith Corp. earned a profit of $18 million in the quarter ending June 30 (the fourth quarter in the company’s fiscal year 2008), down from $28 million in the same quarter a year ago.

For the full fiscal year 2008, broadcasting made the company $78 million on revenues of $319 million, a sharp drop from $107 million profit on $348 million in revenue in fiscal 2007. A decline in automotive advertising led the revenue plunge in the second half of the fiscal year. Political advertising was just $1.5 million in the quarter and $5.4 million for the fiscal year.

Overall, the company, which specializes in publishing aimed at women, earned 41 cents per share on revenues of $385 million, down from $1.05 per share on $428 million in the year-ago quarter. Total revenues were $1.6 billion in both fiscal 2007 and 2008

“We believe current economic trends are cyclical in nature and not structural as they pertain to our industry or Meredith in particular,” President and CEO Stephen M. Lacy said in a statement. “We possess great brands, sound growth strategies, strong management and a committed and talented workforce. I’m confident we will emerge from this cycle in an even stronger and more competitive position.”

He said that in fiscal 2008 the company has increased development of nontraditional revenue sources including unique sales initiatives, station Web sites, retransmission fees and video creation (including Parents TV, available on Comcast VOD, and “The Better” show). Average unique visitors to the company’s Web sites increased more than 300 percent and page views doubled, with more than 1.3 million videos streamed monthly.

The company also unleashed a new demographic label: The “gamma woman,” is purported to use multiple platforms to share her opinions on brands and products with her network of friends and relatives. “This is in sharp contrast to the ‘Alpha’ style of communication—a top down model of selectively passing along information,” the company said. “While a Gamma’s sense of self is guided by her internal beliefs, passions, and priorities, an Alpha is driven by external social hierarchies or other indicators of status or popularity.”

For fiscal 2009, the company expects broadcasting ad revenue to drop in the mid-teen-percentage range, despite $20 million to $25 million in political revenues, most in the second fiscal quarter (Oct.-Dec. 2008). Earnings are projected at 40 to 45 cents per share in the current quarter and $2.50 to $3.00 for the full fiscal year.