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Executives

Mike Lovell - Director, IR

Steve Lacy - Chairman, President and CEO

Joe Ceryanec - VP and CFO

Jack Griffin - President, National Media Group

Paul Karpowicz - President, Local Media Group

Analysts

Brian Shipman - Jefferies

Richard Ingrassia - Roth Capital Partners

Peter Stabler - Credit Suisse

Michael Meltz - JPMorgan

Barry Lucas - Gabelli & Company

Edward Atorino - The Benchmark Company

Meredith Corp. (MDP) F3Q10(Qtr End 06/30/08) Earnings Call April 28, 2010 11:00 AM ET

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Meredith Corporation reports fiscal 2010 third quarter earnings call. (Operator Instructions). As a reminder this conference is being recorded. I would now like to turn the conference over to your host Mr. Mike Lovell, please go ahead.

Mike Lovell

Hi, good morning everyone. Before our Chairman and Chief Executive Steve Lacy begins our discussions, I'll take care of few housekeeping items. In our remarks today we will include statements that are considered forward-looking within the meaning of Federal Securities Laws.

The forward-looking statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. A description of certain of those risks and uncertainties can be found in our earnings release issued today and in certain of our SEC filings.

The company undertakes no obligation to update any forward-looking statement. We will refer to non-GAAP measures, which in combination with GAAP results provide additional analytic tools to understand our operations. Tables that reconcile non-GAAP measures to GAAP results are posted on our website as well.

And with that, Steve will begin the presentation.

Steve Lacy

Thank you, Mike and good morning everyone. I’ll begin with an overview of the current environment, discuss how execution against our strategic initiative is strengthening our market position while delivering revenue and profit growth. Joe Ceryanec our Chief Financial Officer will go into greater detail on our financial and provide our earnings outlook.

Following our prepared comments this morning we’ll be joined by Jack Griffin, Paul Karpowicz, our Local Media Group President. Questions you might have at that time. I’m pleased to report; we grew third quarter earnings per share more than 30% to $0.73 a share including a $0.04 per share tax benefit. Total revenues grew 5% to $353 million. The improvement was broad based across the company from an advertising perspective; we deliver growth in both our National and Local media groups. Beyond advertising, we deliver double digit revenue growth in Meredith’s integrated marketing, brand licensing, retransmission fees and at Meredith's video studio. While our advertising performance is encouraging we are still well below historic levels established prior to the recession in both our national and our local businesses.

The place remains very volatile on both a month to month and a client by client basis. Before I go into detail about our business unit results, I’d like to briefly review the actions that Meredith has taken to drive performance in what has been a difficult economic time particularly for those of us in the media and marketing industries. We recognized early on with the country was entering an extended economic downturn took a series of decisive action. In the last two years we have executed against clearly defined strategic initiative specifically designed whether the challenges and emerge in a stronger competitive position. These include first of all gaining market share.

Our national magazine business currently has an advertising revenue market share of 12.4% third of fiscal, (Audio Gap) second increasing our connection to the American consumer, leadership of our magazines and viewerships at our local television stations, news programming remains quite strong. Over the same period Unique visitors to our website had grown 30% and paged use have grown over 50%. In addition our better daily television program now airs in nearly half of all U.S. households.

Third, growing new revenue streams not dependant on traditional advertising. Revenues in operating profit at Meredith integrated marketing are not more than 10% over two years ago. Our brand licensing business had grown revenue nearly 50% and today we have 2000 SKUs at Wal-Mart stores across the U.S. and in Canada. Fees from retransmission agreements had nearly tripled, recreated Meredith video studios would take advantage of our video content creation capabilities.

Our fourth initiative that’s reduced expenses and aggressively paid down debt. Over the two year period companywide operating expenses are down approximately 8% and 10% lower before acquisitions. We also eliminated a third of our debt while increasing dividends to our shareholders by 7% and finally we continue to invest in our businesses. We have enhanced the quality of magazine editorial, increased news programming in our local television market and added a variety of features and functionality to our interactive property.

At the same time we increased our digital marketing capabilities through the acquisition of big communication and an investment in mobile marketing leader the Hyperfactory. Most recently, we joined other major media companies to help create next issue media to develop a new digital store front and related technology that will allow consumers to enjoy content on portable digital devices including the iPad.

In short we took advantage of the economic weakness to strengthen our competitive position. While the market place remains challenging and particularly encouraged by the progress being made across the company. Now turning to fiscal 2010 third quarter operating performance. Our national media group operating profit rose 6% on a 2% increase in revenue. Total ad revenues grew 4% including an increase of more than 20% at our online property. From an advertising category standpoint we saw growth in toiletries and cosmetics direct response and retail related advertising.

Additional the home category which has suffered during the housing driven down turn stabilized during the third quarter. Our share of overall magazine industry advertising revenues increased to 12.4% during the quarter up from 11.2% in the prior year according to the latest data available from Publisher’s Information Bureau.

Additionally our market share grew to 40.6% as measured against our 28 title competitive set. Our advertising gains continue to be driven by three main factors, our branded editorial content focuses on subjects that matter most to women. The reach and the efficiency of our magazine portfolio is unparalleled in the industry and is appealing to advertisers speaking the most value for their investments.

And our sales organization is adept at delivering multi platform marketing campaign that helps our customers sell more products at retail. These programs now represent about 20% of our advertising revenue and the capabilities we have built give us a competitive advantage in the market place.

Recent examples of these multi platform programs include just last weekend when we hosted the sold-out More Fitness Women's Half-Marathon in New York City. More than 10,000 women participated in the three day event and sponsors included Lady Speedstick, Oakley, and Silk soy.

Our corporate sales group recently created and integrated programs for Johnson and Johnson’s allergy brand Zyrtec, targeted to pet owners, gardeners and those who love do-it-yourself projects. It launched with a series of flip books on the back cover of six Meredith titles. The program also included a custom designed website, custom videos and a retail element that will reach a thousand Petco stores on a nationwide basis.

Next month we’ll launch a program during women’s health week for general electric health imagination campaign that will inspire women to live healthier lives. The program includes ads in 9 Meredith titles and custom video segments that will appear on the daily Better Show. It also includes a custom website that allows participants to post their progress on Facebook and on Twitter. Our success in the market place was recently recognized by ad week when it named family circle and more to its list of the nation’s top ten magazines.

Readymade one of our newer brands was named to its up and comer list. Additionally the sales group that executes our multi-platform program with honored with when Meredith 360 head Jeannine Shao Collins was named Adweek's publishing executive of the year.

We continued to strengthen our connection to the consumer during the third quarter. For example an increase in news stand sales contributed to 2% growth in overall circulation revenue. Also traffic to our nationally branded website increased including a 30% jump in unique visitors to a fiscal third quarter record of 20 million.

Additionally consumers continue to embrace our brands at retail. Brand licensing revenues grew nearly 50% in the quarter primarily as a result of growth in the Wal-Mart program. The number of Better Homes and Gardens branded SKUs are Wal-Mart doubled to approximately 2000 over the prior year. We added a variety of new products including vast furniture, clocks and flatware as well as the new seasonal outdoor program.

Also during the quarter we announced a new relationship with FTD for a line of Better Homes and Gardens branded floral arrangement. They will be available across the FTD network in time from other states. Integrated marketing revenues grew 10% in the third quarter of fiscal 10 over the year ago period led by growth in digital program particularly in the pharmaceutical space.

As an example Big communications was recently named agency of record for several brands at the Novo, Nordisk and Takeda entity. Finally we are encouraged with the progress that’s being made by next issue media our joint venture with several other major media companies. Next month, next issue media will unveil a digital consumer store front for existing and soon to be developed digital contents and apps. Now turning to our local media group, where we delivered 16% growth in non-political advertising revenue in the fiscal third quarter.

Our growth was broad based at stations and all 10 of our markets posted gain. Nine of our top 10 ad categories also grew from the year ago period. Our stronger than industry performance reflects the aggressive sales and marketing initiatives we developed and launched during the economic downturn, along with overall improving market condition. This includes the series of new programs called one service aimed at converting traditional newspaper clients to television advertisers.

Going forward we believe our advertising gains will continue to aided by stronger rating achieved by many of our television stations during the February sweeps period. For example, in morning news our CBS affiliate in Atlanta doubled its ratings while Hartford and Greenville each posted double-digit growth.

In evening news our stations in Hartford, Kansas City, Greenville, and Atlanta all grew ratings. Stations in Nashville and Phoenix each grew ratings sign-on to sign-off. Additionally our daily better television show produced by Meredith Video Solutions, will be seen this fall in more than 60 markets reaching nearly half of the nations television household.

The success of the Better show, along with growth in custom video projects for corporate clients lead Meredith Video Studios to double its revenue in the quarter. Retransmission fees also rose nearly 15% in the third quarter from a year ago. We expect retransmission fees will finish over $20 million in revenue by the end of fiscal 10. Rounding out our discussion of our Local Media Group we recently join Pearl Mobile DTV. A joint venture with 11 other leading television broadcast groups to develop a new national mobile content service. Using the existing broadcast spectrum, the service will allow member companies to provide content to mobile devices including live and on-demand video, local and national programming and sports and entertainment.

Now, our CFO, Joe Ceryanec will discuss our financial performance and give our earnings outlook.

Joe Ceryanec

Thanks, Steve and good morning. As Steve noted, we posted earnings per share growth of 30% over the prior year and revenue growth of 5%. And we delivered revenue growth across all of our major businesses. At the same time, we held expenses essentially flat across the organization. As a result, fiscal third quarter 2010 operating margin was 16% an improvement of more than 300 basis points from the prior year and our highest margin percentage in a year and a half.

And as we’ve discussed on our recent calls, we’ve taken action across all our businesses to streamline operations. For example, our operating costs for the first nine months of fiscal year are down over 5%. Further, if you look at our efficiency initiatives over two year period, operating expenses are down 8% compared to the first nine months of fiscal ’08. If you exclude acquisitions, operating expenses are actually down 10% over that same time period and since March of 2008, our headcount is down by more than 10%.

The first nine months of fiscal 10 cash flow from operations was $140 million. We reduced our debt by $65 million so far in fiscal 10, our total debt was $315 million at the end of the third quarter. Debt-to-EBITDA ratio 1.4 to 1 and our average cost of borrowing was 4.8%. We had $140 million of debt slip to long term, some long term to current from a prior year end due to a $75 million term payment, which is due July 1, 2010 and $65 million outstanding on our revolver, which expires in October of 2010 and we currently working at with our bank groups to renew the revolver.

Now as return to our outlook for the fourth quarter and fiscal 10 we expect total company advertising revenue to increase 7% to 8% over to prior year. This includes Local Media Group, non-political advertising revenue, which is currently pacing up in the high teens and national media group advertising revenue, which were two of the three magazine issues closed as expected to flat to up slightly. Currently expect fiscal 2010 fourth quarter earnings per share to range from $0.61 to $0.66 both fiscal 2010 earnings per share to range from $2.13 to $2.18 excluding all special items

A number of uncertainties remained that may effect our outlook for the fourth quarter and full fiscal 2010 these are referenced in the Safe Harbors section on today’s press release and a certain of our SEC filings.

With that, I will now turn it back to Steve for closing comments.

Steve Lacy

Thank you very much, Joe. Well the recent economic cycle has been difficult we are experiencing improving trends across the organization throughout today’s discussion we pointed out examples where Meredith is exceeding industry performance in our core businesses strengthening our consumer connection across multiple channels growing non-advertising related revenue sources and efficiently deploying capital.

We’ll now be happy to answer any questions that you might have.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Brian Shipman with Jefferies. Please go ahead.

Brian Shipman - Jefferies

Thanks, good morning. Wanted to just drill down a little bit into circulation revenue growth. You attributed it to newsstand sales. Was that a bump in newsstand prices, or was it an increase in number of copies sold? And would you characterize would you be ready to draw a line in the sand here and say that the circulation has bottomed?

Steve Lacy

Jack would you like a piece of that, Joe’s got the detail on the number, do you want to may be get sort of an overall view all of how things are going at newsstand?

Jack Griffin

Sure. I would characterize the newsstand environment as stable to encouraging and I think attracts with the reports that you're seeing recently about consumer spending. We’ve done a little bit with pricings, but I would categorize the list that you're seeing in our results and more related to volume. Our rate base magazine basically steady and as we talk to you about last time we’ve done major reengineering work inside of our special interests publishing business and those trends have been very favorable this entire calendar year.

Brian Shipman - Jefferies

Steve, do you have any comments, bigger picture, on your longer-term outlook for circulation?

Steve Lacy

If you look at it, the actual numbers on a year-to-date basis is basically flat year-over-year. For the full fiscal year and I think as Jack said that is really been aided by the strong performance at new stand, we’ve been through a period of time, as you recall, when we were transitioning the Gruner and Jahr titles from their method of circulation to Meredith plans. That’s pretty well clear at this point. So, absolute some of radical shift in consumer behavior driven by economic conditions I think it’s a pretty stable revenue stream as we look down the road.

Operator

Your next question comes from the line of Richard Ingrassia from Roth Capital Partners. Please go ahead.

Richard Ingrassia - Roth Capital Partners

Can someone break down the Integrated Marketing result just a bit it’s a little stronger that expected I mean how much was organic and how much due to large new project launches?

Joe Ceryanec

Are you talking about the integrated marketing Rich?

Richard Ingrassia - Roth Capital Partners

Right. Did I say something else?

Joe Ceryanec

No, you said internet, Integrated Marketing as we said was up about 10%, about $4 million most of that is from new initiatives that we’ve seen. Although we will tell you that out of these initiatives are historically we had more pass through revenue where these had more individuals performing. So, operating profit was up slightly even though revenues were up about 10%.

Richard Ingrassia - Roth Capital Partners

While I have you, Joe, what’s the paper price assumption or change there, change assumption there in the guidance? And are we at a steady state on SG&A?

Joe Ceryanec

You probably saw SG&A pick up a little bit. We had as we’ve talked about actually at the beginning of the year some pension. As our revenues have grown we’ve seen our incentives and sales commissions pick up the little bit and we actually had more mail direct mail in the third quarter this year than we had last year. So that was part of the pickup, but I would to answer the second part, yes we’ve about stabilized for the year. Your other question was paper I think our prices year-over-year are down about 19% and right now we’re seeing that kind of the stable and where there is a little bit of the noise in the market that may be going forward, we’re going to see if commodities are coming back we may expect little bit of increase as we move into next year.

Richard Ingrassia - Roth Capital Partners

Do you have enough information then to project the slight increase? I mean is that built into the guidance?

Joe Ceryanec

Fourth quarter we are projecting flat. I'm looking into next year.

Steve Lacy

In the fiscal ‘11 Rich.

Richard Ingrassia - Roth Capital Partners

Got it.

Steve Lacy

Not the balance of the fiscal ’10.

Richard Ingrassia - Roth Capital Partners

Steve, it seems like you have a great opportunity here to extend your editorial breadth, particularly in the health and wellness segment. Could you give us some idea any thinking there and extending the brand or extending your reach?

Steve Lacy

As we’ve talked a number of times before Rich there are a serious of properties that we would be very interested in should they come available on the market place although at the moment it's really pretty quite on the magazine front, but a number of sort of internal initiative to move into some of those new content areas are really underway within the brands that we already own and operate and Jack maybe you could add a little color to some of those whether they be online or offline which allow us to broaden our reach to the consumer and also go after some of the newer or growing ad categories that you are working on.

Jack Griffin

So if you look at our magazine based portfolio, I think the best example of what you are talking about is happening in fitness which is a property that we acquired from Gruner and Jahr and this year is up well over 25% in advertising and has a very strong help and wellness focus to it as you indicated.

And it is the younger demographic and it’s proven to be an extraordinary property online and is driving a lot of the interactive growth in unique and pay views that Steve talked about. Additionally, we are in the process now of launching three mobile websites around Better Homes and Gardens, Parents and Fitness. We’re developing and launching applications in the Apple iTunes Store. So we’re very aggressive across most of our properties and extending the reach and footprint not only of the brands but of the content and finding new ways to engage consumers. So I’d say fundamental to our strategy.

Richard Ingrassia - Roth Capital Partners

Jack, since you touched on Apple there and maybe it is too soon to tell, but do you expect e-magazines, like a better word to be cannibalistic or incremental to the publishing side?

Jack Griffin

So you know that we are engaged in the industry consortium called Next Issue Media along with Time Inc, Hearst, Conde Nast and News Corp. And the predicate for that is to have a commercial arrangement where by the electronic distribution of our brands and products on the tablet and smart phone platforms have economics that are acceptable and attractive to the o the content companies.

So we are deep in the formation of the business model and the technology underpinnings in that venture. And I guess that I can speak for every one in the venture, but I guess I would say that our view is that tablets and smart phones will become an increasing part of the audience over the next five years or so.

I think it would be not correct to say that there will be no cannibalization, but I also think it depends heavily on what your demographic is. And what your content focus is. And our belief is that with our stable of titles oriented to adult American women, those are not the early adopters. But we are part of the venture we are being very diligent and aggressive about managing our future as consumers adopt that as their behavior to consume these products.

Richard Ingrassia - Roth Capital Partners

Thanks, Jack. I appreciate that detail. Can I hit Joe with just one more here, and then I will get off. The $35 million debt reduction, that was an unscheduled payment. Am I right? And then maybe can you summarize scheduled payments for Q4 and FY 11?

Joe Ceryanec

Sure Rich, the $35 million was just a payment down on the line, so I think the year-to-date 65 is albeit having the line beat down. We had a $75 million term payment due July 1. We’ll probably make that payment actually June 30. So that’s on a net basis year-over-year we expect net debt to be down about $75 million. So we started the year I think 380; we expect to deal around 300 to 305 as we end the year is that clear?

Richard Ingrassia - Roth Capital Partners

Yes. And then for next year? For fiscal 2011?

Joe Ceryanec

And then next year we’ve got one term payment for $50 million due again at the end of fiscal ‘11 which we expect to make out cash next year.

Operator

And our next question comes from the line of Peter Stabler, Credit Suisse. Please go ahead.

Peter Stabler - Credit Suisse

Good morning. Thanks very much for taking the call. Question on the broadcast side, you mentioned some significant ratings improvements at a handful of stations. Is it possible for you to give some commentary on an aggregate basis? How are ratings performing across the entire portfolio, let's say on a total day basis?

Steve Lacy

We can certainly aggregate that information and give you a buzz back I don’t have that right at our finger tips but I think what we could say overall is that you know we have added a lot of hours of news over recent years and we really had an across the board improvement of ratings and that has really allowed us certainly in the recent past to out perform the industry from an advertising point of view but we can aggregate that information that you’re talking about and get back to you with some data.

Peter Stabler - Credit Suisse

Okay, great, Steve. I guess what I'm trying to get at is the really significant high-teen performance here no doubt as demand comes back, we're seeing pricing firm up. How much of that, how much of that outperformance versus industry is being driven by ratings improvement rather than just a snap back on price?

Steve Lacy

Paul do you want to answer that from your point of you I know there is an awful lot of moving parts, but just give sort of an overall view especially what you’ve been doing on the pricing side.

Paul Karpowicz

Yeah, I think it’s certainly a combination of both I don’t think there is any question that there is an overall bounce back in place. If you look at our portfolio we are primarily CBS and Fox stations. At the present time both of those networks are experiencing some very significant gains and are very solid in their primetime performance.

With what we’re doing in our newscast we’ve really helped supplement that. As Steve alluded to what we have been able to do in this up tick has been to really solidify the pricing structure at the station. So it is a combination of network performance, our local news and demand that have given us the ability to increase our pricing and that’s what’s led to the high teens results.

Peter Stabler - Credit Suisse

Great, thanks, Paul and just wondering if you could quickly comment on what you are seeing on the auto side?

Paul Karpowicz

Auto side is very encouraging. We are seeing significant spending not only from the majors and on the networks or on the national side but it is now filtered down into the local market places where we’re seeing dealers have a degree of confidence to comeback into the market and begin spending again. So the automotive has been probably the biggest impetus to the big growth number that we are seeing.

Joe Ceryanec

For our Q3 auto was 60% and for Q4 were actually pacing a little bit above that.

Operator

Thank you. Next question comes from the line of Michael Meltz of JPMorgan please go ahead.

Michael Meltz - JPMorgan

Thank you, hey guys. I think I have four questions for you. Within publishing actually, and maybe it's my model but the other line came in a little light and I just am wondering, you mentioned everything that was up year-over-year. Is the drag just from the books deal converting, and what is the expectation on publishing other revenues going forward, and then I have a couple of follow-ups.

Joe Ceryanec

I think I will walk you through the math on others since I know this always a question for most of you guys we were down from last year little over $2 million for the quarter. The $2 million was integrated marketing was up as I said earlier about 4 licensing was up about three, book was down a little over six and all of the other things that go in that line item which is the custom publishing and other things were down a couple of million. That’s how you get to the net down to.

Michael Meltz - JPMorgan

And as you go forward with the new Chrysler deal, do you expect that line to grow sequentially going forward?

Joe Ceryanec

I think next quarter we expect it to be continued down a little bit but as we move into 11 the book drag is really because of the change due to the Wiley licensing what were just recognizing a net profit versus gross revenue and expenses. So I don’t expect we’ll see growth in that number until we cross into fiscal 11.

Michael Meltz - JPMorgan

Growth sequentially or year-over-year?

Joe Ceryanec

I think you’ll see both.

Michael Meltz - JPMorgan

Okay. On the expense side, can you talk a little bit about your expectation on publishing and broadcasting expenses going forward, please?

Joe Ceryanec

I think what we expect for Q4 is similar, to what you saw in Q3 publishing was up a little bit call it 1% or so broadcast actually would have been a little bit down expect we had a charge we took due to a bad debt and so we would expect broadcast to be flat to down a little bit and corporate probably up about a percent so overall similar to what we saw this quarter flat up on percent.

Michael Meltz - JPMorgan

Okay. And then within on the advertising side, Steve, I think you said all the categories that were up, you didn't mention food. Can you talk about what you are seeing in food and is there any change in the June quarter versus March?

Steve Lacy

Let me get to the right page, Jack I have got the page open do you wan to speak to the category or do you want me to it’s up to you.

Jack Griffin

So the environment that we are in from an advertising standpoint is stabilizing but there continues to be lots of volatility by months and by category and foods a good example of that, so foods are our largest category as you all know and in that first half of our fiscal the food category was up in revenue about a 11% and so far in the calendar year its down about 5%. So I think that’s inductive of the volatility that I was talking about and there are lots of reason for it and the other categories of consequence would be direct to consumer pharmaceuticals which was in the first half of our fiscal up very strongly is in double digit is up more like 5%. So far this year and what I would say is encouraging is that we are seeing as Steve mentioned in this script, a bottoming out of the home category, which has been in steep descent for at least two years now, and we’re seeing an up tick in the direct response category which I think speaks to again that consumer willingness to take out the pocket book. So with respect to food, I gave you a specific answer, and that is a general comment about the environment and if you have more questions I would be happy to take them as well.

Michael Meltz - JPMorgan

Okay. And then my last question, just on cash, I guess its, I do not know if it is cash priorities or cash uses with Next Issue Media and this new mobile consortium, should be expecting big what is the capital requirement for these alliances and how should we think of CapEx going forward?

Joe Ceryanec

I will let Jack and Paul pile on, on the respective businesses. What we’re looking at as we get into during our fiscal ’11 budget. I think on the next issue media, it’s difficult to predict because there is a lot of different ways that business can go. Right now we are seeing an investment of about $1.25 million to a $1.5 per quarter. So I would say as we look in fiscal ‘11 on a run rate basis and the number could be as high as $5 million as far as our pro rata share of investment. But I would also say its way to early to tell where exactly that number is going to come in. I think on the total side it’s a much smaller number as we look into the next year in fact it’s relatively immaterial.

Michael Meltz - JPMorgan

Is that all capitalized, Joe, or is that run through the P&L?

Joe Ceryanec

Right now, what we are doing Michael is because we had a 20% investment we are picking up equity, which at this point is a loss. So, we had little under a million of negative equity pick up in Q3, we expect that number to be a little bit higher in Q4 and I think in July when we preview with you guys our fiscal ’11 expectations. Hopefully we have a little better field, where we are vis a vis the 20% investment and where their budget is capital versus expense.

Michael Meltz - JPMorgan

To my question, though, when you’re saying it’s I know this is minutia here but where is that on is that on your P&L, the equity loss, where is that running?

Joe Ceryanec

Its runs through the corporate.

Michael Meltz - JPMorgan

And on the $1 to $1.5 million of cash investment per quarter, is that on your cash flow statement? I mean that would be separate from the equity loss, right?

Joe Ceryanec

No, that would actually run through our expenses. On the cash flow it would just come through net loss.

Michael Meltz - JPMorgan

Okay. Understood. And is that just to get this business up and running, or do you expect an ongoing capital requirement for this over the next three-plus years?

Joe Ceryanec

I think, it’s early to tell right now it’s truly just to get the business up in running and that’s why basically the investment, is going to expense as they developed their business plan as Jack talked about both the technology and as well as what the storefront looks like. We do expect next year depending on the direction with company that some of that investment will go into capital.

Operator

Your next question comes from line of Barry Lucas of Gabelli & Company, please go ahead.

Barry Lucas - Gabelli & Company

Thanks and good morning. I'd like to stay with the uses of cash and what do you do with it? You mentioned the term loan payment that's due, but you are going to be under one-time leverage, Steve, and paying a fairly sizable dividend at a point in time when tax treatment of dividends is going to be more adverse than it is now, so how do you think about returning cash to shareholders going forward?

Steve Lacy

Well, I think Barry, first and foremost you have been with us for a long time. The last two times that we have come through an economic down turn we have had the ability to add meaningful growth assets to the portfolio and I think you aware that we got a very aggressive development function and we are all over those opportunities I mean a lot of ways were platform agnostic as it relates to that as long as we can get our branded content to the consumer and sell advertising against it.

So I continue to believe that when we look back over a ten year period it will look a lot like it did over the last ten years where we had the ability to take the free cash flow that we had of about $2 billion and reinvest about half of that in our businesses and we returned about half of that through dividend and through the share repurchase program and obviously should we get to a point that you know we find it very, very difficult to find those investments you know I am sure we might reconsider opening the share repurchase program, but we have been as you know very focused on paying our debt down as aggressively as we could because we believe that there going to be appropriate investment opportunities to broaden our footprint although we just haven’t made any of those transactions yet.

Operator

Edward Atorino of The Benchmark Company.

Edward Atorino - The Benchmark Company

Hi, good morning. Steve, what was the total amount of bankruptcy, the severance, and the investment that sort of got buried away in there somewhere, number one? Second, on TV the other, you mentioned the growth in national and local, what are you thinking about political in the current quarter? And thirdly if you look at the other in broadcasting, I think it's $6.9 million, is that a good run rate going forward, that includes re-trans, I presume and some other stuff. Same thing with corporate, that looked like it was down a lot, and is that going to stay relatively in this current level?

Steve Lacy

We will take these one at a time, Ed, Joe why don’t you speak to the charge that was in there for the bad debt?

Joe Ceryanec

That charge was about a million 750, the restructuring charge on a net basis you can see it add in the tables to the press release but the net charge was little under 400,000 is about 360,000 that was the net charge towards the restructuring.

Edward Atorino - The Benchmark Company

And the investment is in there too, I guess, right?

Joe Ceryanec

The investment in next issued media. I think as I told Mike it was up 150. but that ran through corporate.

Edward Atorino - The Benchmark Company

Got you.

Joe Ceryanec

Does that cover you Ed?

Edward Atorino - The Benchmark Company

Yes, it did. No, that's fine. And on the TV, I think you mentioned national, local, didn’t mention political, I believe, that was not was that in your number or not?

Steve Lacy

For we gave guidance on non-political and political always very, very difficult to gauge as we look out into the fourth quarter it could probably ranging were from $2 to $3 million would be our best guess at this point.

Joe Ceryanec

Just to be clear at that the 7% to 8% add growth for Q4 does include political. Total company go to the ad line and P&L.

Edward Atorino - The Benchmark Company

Got you. And on the corporate expense and interest lines, just run those out?

Joe Ceryanec

Corporate expense run it out interest should be down a little bit as we continued to paid on debt.

Operator

Okay thank you and there are no further questions in queue.

Steve Lacy

Alright, well thank you all for participating today as always we will be available for follow up calls and we appreciate your ongoing support of Meredith. Thank you

Operator

Okay, thank you ladies and gentlemen, this conference will be made available for reply after 1 o clock today until May 5 at mid night. You may access AT&T Executive playback service at anytime by dialing 1800-475-6701 answering the access code 152-029. International participants dial 1-320-365-3844 again that access code is 152-029.

And that does conclude our conference for today thank you for your participation and using AT&T Executive TeleConference Service. You may now disconnect.

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Source: Meredith Corp. F3Q10(Qtr End 06/30/08) Earnings Call Transcript
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