EX-99 2 slides.htm EXHIBIT 99 - TEXT OF PRESENTATION Meredith Corporation

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Steve Lacy

Good afternoon, and thank you for the opportunity to share some insight on Meredith. I want to thank Richard Ingrassia, in particular, for our invitation today.

 

 

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Meredith has successfully built businesses of scale at the national and local levels, as well as in the digital world.

I'll begin today with an overview of our company, touching on our brands and properties.

Then I'll move into our multi-platform strategy. In brief, our goal is to take our industry leading consumer brands and expert content and make them available to consumers wherever and whenever they want it. I'll share a few case studies highlighting how we are doing this.

I'll close with a review of our financials.

 

 

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Meredith generates approximately $1.6 billion in annual revenues. Approximately 60 percent comes from advertising in our diverse national magazine portfolio; our local television stations; and on our 40+ web sites.

Fully 40 percent of our revenue comes from sources other than advertising. These include fast-growing segments of our business such as integrated marketing and brand licensing as well as consumer subscriptions and newsstand sales of our magazines.

This balance has given Meredith the ability to outperform our peers in times when the general economy is strong. It has also given us the strength to gain market share in past downturns, and again out-perform our competitors in times of recovery.

 

 

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Our publishing business, anchored by such strong national brands as Better Homes and Gardens, Parents, Family Circle and More, generates approximately $1 billion in annual revenues.

Through this business, we reach 75 million unduplicated women each month -- making Meredith the leading media company serving women. We deliver both editorial content aimed at improving their lives and messages on behalf of our advertisers.

Our reach to adult women easily surpasses that of competitors such as Time, Hearst, and Condé Nast.

 

 

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Turning to our broadcasting business, our 12 locally branded television stations are located mostly in fast-growing markets such as Atlanta, Phoenix and Portland.

Ten of our stations are in the country's top 50 markets.

This business generates approximately $300 million in revenues, and we reach about 10 percent of U.S. households.

 

 

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According to the latest rankings, our markets grew at an average rate of 2.2 percent, compared to the national average of 1.4 percent. Most of our markets continue to grow relative to their peers. Atlanta is on track to overtake Boston as the #7 market in the United States. Nashville and Las Vegas each grew in market size during the latest period of measurement.

Our Meredith Video Solutions group, which translates our publishing brands to broadcast television and broadband video, works primarily from three locations: New York, Des Moines and Portland.

 

 

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The final element to our media and marketing footprint is our online and diversified businesses.

Our 40+ consumer Web sites draw 20 million unique visitors each month, and produce some of the highest profit margins at our company.

Our fast-growing integrated marketing business has custom marketing relationships with many of America's largest companies. We've been aggressively adding new digital capabilities to this business.

The success of our brand licensing business is proving the strength and relevance of our brands beyond traditional media -- as demonstrated by recent announcements with partners such as Wal-Mart, Realogy and Universal Furniture.

Tying all of our businesses together is our enduring connection to the consumer. Our 85 million name database is one of the largest in the media industry. The database supports our circulation and marketing activities and helps us expand in a variety of new directions.

 

 

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Today, in our online activities, we serve 20 million unique visitors and deliver about 170 million page views monthly at our magazine and television station sites -- another business of significant scale.

Beyond offering an additional editorial platform for our consumers, the Internet is an important tool to help generate subscriptions to support our magazine circulation activity. Web-sourced subscriptions cost half traditional direct-mail sources. We generated 3.3 million online orders in fiscal 2008.

 

 

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Meredith Integrated Marketing is the business-to-business arm of the company. Its core mission is to work with corporate clients to create targeted marketing programs that increase loyalty and drive revenues for our clients' brands.

The benefit to Meredith, beyond strengthening our ties to some of America's largest companies, is that Integrated Marketing delivers a growing and profitable revenue source that is not dependent on advertising.

This is one of our fastest-growing businesses, and in fiscal 2008 generated revenues of more than $150 million, up nearly 50 percent from fiscal 2007.

 

 

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In recent years, we've made a series of acquisitions to expand our capabilities in this high-growth business. Here's how these acquisitions have contributed to creating the "new" Meredith Integrated Marketing.

Through acquiring OGM, we achieved immediate online publishing and marketing capabilities, with particular strength in e-crm strategy and branding for CPG clients like Nestle.

The addition of Genex gave us bench strength in Web site architecture and application development specially relevant to clients in the automotive and financial services sector.

New Media Strategies enhanced our capabilities in the rapidly developing category of word of mouth and viral marketing which applies across all our clients, and in fact, helps Meredith's own business.

Directive has given us skill at database and customer targeting.

BIG also brings us new competencies within the healthcare industry, and important contacts inside the marketing departments of the world's largest pharmaceutical companies.

These transactions have brought Meredith meaningful new client relationships. And we've been further rewarded by winning business from existing Meredith clients.

 

 

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Put it all together and you can see we've built businesses of meaningful scale.

Across our national magazine and local television business, we reach 85 million adults each year.

Online we are serving approximately 20 million unique visitors each month and generating approximately 2 billion page views annually.

Our database contains 85 million names. We have rich data on seven out of 10 home-owning households.

Our custom publishing business generates 185 million impressions per year.

The international editions of our various magazines reach 3 million people per year.

 

 

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With that overview of our business, I'll take you through some ways we're expanding our content expertise and extending our brands.

 

 

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We purchased American Baby in 2002. The acquisition has been a home run by every measure -- financial and otherwise. The American Baby brand is anchored by a consumer magazine that reaches fully half of all new parents every year.

Beyond the magazine, American Baby serves new moms through channels that include:

  1. Online
  2. Wireless
  3. Sampling and Direct Marketing
  4. Custom Communications
  5. Video on Demand
  6. Events and sponsorships
  7. Hispanic magazines
  8. And stage-based magazines

When you add up all of the brand's platforms, American Baby reaches more than 90 percent of all new moms each year. These names feed directly into our database, giving us a rich research to market other of our products and services -- and the messages of our advertisers.

 

 

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In Parents -- the next life stage in our portfolio following American Baby - we've strengthened an already powerful brand since acquiring it in 2005. We've hired aggressive sales leadership and applied Meredith's proven circulation strategies. Additionally, we've launched an exciting new online property and a broadband video channel, which I'll speak to in a moment.

Parents is the most trusted authority in the parenthood category. It's nearly 15 million monthly readers are found largely from American Baby's database. We do not need to use direct mail to maintain Parents' rate base.

Today, Parents is a vibrant brand with many extensions to many media platforms, including events, books, licensed products, international editions and a powerful Web site.

 

 

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Parents.com serves as the launching pad for all of our online parenting brands. Unlike competitive sites, it has the ability to serve a wide range and age-span of parents and children alike -- from pre-natal to school-aged.

It features a variety of web 2.0 functionality, including blogs, wikis, and original video. We're extending our video in as many places as we can. For example, Parents TV powers the parenthood channel for Comcast's video on demand platform.

 

 

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The Better Homes and Gardens brand -- now 87 years young -- continues to evolve and grow in significance to the 40 million-plus audience it aggregates.

In recent years, we have completed a major redesign of the magazine, a re-launch of its web site -- BHG.com, and developed significant new brand extensions including a new retail program at Wal-Mart launched last week.

Better Homes and Gardens is a true mega-brand. Several of its components are listed here. I'll spend a little time discussing each.

 

 

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Better Homes and Gardens - the monthly magazine itself - is the nation's No. 1 home authority.

BHG has maintained a circulation of 7.6 million for many many years. That's a notable accomplishment given what has happened to other large circulation magazines.

Today it has more than 40 million monthly readers, up 10 percent from a decade ago. It reaches one out of every 4 U.S. women, and has been providing inspiration and information for more than 85 years.

The overall success of the Better Homes brand led to its being named Magazine of the Year by Advertising Age last year -- the highest industry honor.

 

 

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Beyond the monthly edition of Better Homes, we produce more than 120 specialty titles that also use the Better Homes and Gardens brand.

Offered primarily at retail, we sell about 20 million of these magazines each year. They are vertically focused on very specific content, reaching consumers who are passionate about that content. As a result, they command high cover prices.

These special interest publications provide fertile ground for new magazine ideas. For example, Diabetic Living started as an SIP. We are now selling subscriptions to it, investigating brand licensing deals, and publishing it internationally.

 

 

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Another key component of our strategy to grow new revenue streams is through video. Through our video production group, Meredith Video Solutions, we are producing broadcast quality video under our Better Homes and Gardens and Parents brands and airing that video online, on air and on demand.

We have four ways to generate revenue:

Advertising

Sponsorships

Product placement

Syndication to other groups

Advertisers to date include P&G, Kraft, General Electric, Kohler and KitchenAid.

 

 

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Turning to our licensing initiatives, we have several agreements of note:

Last week, more than 500 Better Homes and Gardens-branded products went on sale at Wal-Mart stores across the country.

This summer, Realogy -- the owner of such well-known real estate franchises as Century 21 and Coldwell Banker -- launched a Better Homes and Gardens-branded international real estate franchise.

And last year, Universal Furniture launched several lines of Better Homes and Gardens-branded home furniture. Today that furniture is available at more than 300 retail locations across the country.

Internationally, Better Homes and Gardens is growing as well. It is the largest consumer magazine in Australia. It also has local editions in China and India.

Revenues from these programs are growing rapidly - at high margins.

 

 

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In summary, today the Better Homes and Gardens brand aggregates meaningful audiences and generates significant revenue and profit across a variety of platforms, including print, the Internet, video and television and brand licensing.

Our goal is to continue evolving the Better Homes and Gardens brand -- ensuring its relevance to current and future generations of consumers.

 

 

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Now I'll turn to our financials.

 

 

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We have a strong historical track record of delivering growth in earnings per share. After several years of sustained growth, earnings per share declined 4 percent in fiscal 2008, reflecting a weaker advertising market and significant increases in paper costs.

 

 

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Given our growth in earnings, we have a strong track record of generating cash. We believe we've used that cash well to grow our business and reward our shareholders.

Over the past decade, we have generated more than $1.2 billion of free cash flow, which is defined as net earnings plus depreciation and amortization, less capex and excluding any special items. In a typical year, our free cash flow runs at 110 percent to 115 percent of net earnings.

We have completed approximately $1 billion in net acquisitions. We want to continue executing accretive acquisitions, similar to American Baby and Gruner + Jahr, every few years.

We have a consistent track record of returning capital to our shareholders through share repurchases and dividends.

 

 

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We support the stock through an ongoing share repurchase activity. Here we show our cumulative investment in Meredith stock. We repurchased approximately 3.2 million shares in fiscal 2008.

 

 

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We have also increased our dividends meaningfully in recent years, including a 16 percent increase in January of this year.

We have paid dividends for 61 consecutive years. Over the last 10 years, we have increased the dividend at a 12 percent compounded annual growth rate.

 

 

Slide 30

In summary, we have assembled a powerful portfolio of media brands and assets that are well-positioned to deliver meaningful growth and cash flow over time.

We are looking a variety of factors to drive revenue growth, including:

  • An advertising rebound at some point in the future.
  • Continued strong performance from Meredith Integrated Marketing.
  • Growth in our online properties.
  • Fees for retransmission of our local television broadcasts.
  • Expansion of our brand licensing activities.

 

We have a very conservative balance sheet with plenty of flexibility to execute strategic acquisitions. We continue to manage our expenses with extreme care. We have a talented employee base and management team.

With that, I'll turn it over to Richard for any questions. Thank you for your time today.