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Meredith (NYSE:MDP)

Q4 2014 Earnings Call

July 31, 2014 11:00 am ET

Executives

Michael Lovell - Director of Investor Relations

Stephen M. Lacy - Chairman, Chief Executive Officer and President

Joseph H. Ceryanec - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Thomas H. Harty - President of National Media Group

Analysts

John D. Crowther - Piper Jaffray Companies, Research Division

Craig A. Huber - Huber Research Partners, LLC

Jason B. Bazinet - Citigroup Inc, Research Division

Barry L. Lucas - G. Research, Inc.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Meredith Fiscal 2014 Fourth Quarter Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I'll now turn the conference over to your host, Mike Lovell. Please go ahead, sir.

Michael Lovell

Hi, good morning, everyone, and thanks for joining us. Our call this morning will start with comments from Chairman and Chief Executive, Steve Lacy; and Chief Financial Officer, Joe Ceryanec. And then, we'll turn the call over to questions. Also on the line this morning are National Media Group President, Tom Harty; and Local Media Group President, Paul Karpowicz. An archive of today's discussion will be available later today on our investor website, and a transcript will follow that.

Our remarks today will include forward-looking statements, and actual results may differ from forecasts. Some of the reasons why are described at the end of our news release that we issued earlier this morning and in some of our SEC filings. And with that, Steve will begin.

Stephen M. Lacy

Thank you, Mike, and good morning, everyone. I hope you had the opportunity to see our news release issued earlier today detailing our results. I'm pleased to report that in the fourth quarter of fiscal 2014 we delivered 20% growth in net earnings. Our Local Media Group achieved record revenue and profit performance for our fiscal fourth quarter. Growth was driven by strong performance from our stations in Phoenix, Las Vegas and Greenville, the addition of KMOV in St. Louis, record digital advertising revenue and by higher retransmission-related revenue and profit. Operating margins in our National Media business improved by 80 basis points, driven by higher magazine advertising rates, increased profit contribution from our circulation activities and continued strong expense discipline. Consumer engagement strengthened across all of our media platforms, with traffic to our websites growing to a record high of more than 60 million monthly unique visitors. Readership of our subscription title is an impressive 110 million, and our Local Media Group delivered a very strong May ratings book.

Stepping back for a few moments to look at our full fiscal year 2014, several key accomplishments stand out. First of all, we expanded our portfolio of media properties through both acquisitions and new launches. Second, we grew businesses not dependent on traditional advertising. Third, we continued to prove the effectiveness of advertising across our portfolio. Fourth, we executed a series of efficiency measures to lower costs and increase profit margins. And finally, we continued to successfully execute against our Total Shareholder Return strategy.

Now I'd like to provide more color on those key accomplishments for the year. First, we executed agreements to buy the broadcast assets of stations in 3 markets. First, KTVK, an independent station in Phoenix, the nation's 12th largest television market. KTVK produces more hours of local news than any other station in the market. The Phoenix market is now a duopoly for us as we also own the CBS affiliate there. Next was KMOV, the CBS affiliate in St. Louis, which is the nation's 21st largest television market. KMOV is a top performer. And with it, we now operate the 2 largest CBS affiliates in the state of Missouri. The other, of course, is KCTV in Kansas City. And finally, WGGB, the ABC affiliate in Springfield, Massachusetts. We expect to close on this acquisition in the first quarter of our new fiscal 2015. WGGB is also the FOX affiliate airing on the digital tier. This will give us another duopoly when combined with the CBS affiliate we already own in that market, enhancing our competitive positioning.

I think it's worth noting that with these purchases, we created 2 more duopolies, bringing the total number of duopolies across our group to 5. As a reminder, our portfolio now consists of 15 owned or operated stations, including 7 in top 25 markets and 13 in top 50. All told, we reached more than 10% of the U.S. households through our broadcasting activity.

In addition to television station acquisitions, we successfully launched Allrecipes Magazine, which Media Industry Newsletter called the "Hottest Launch of the Year." It started with a rate base of 500,000, and we expect to grow it to 900,000 by the end of calendar 2014. We strengthened our parenthood activities by integrating the Parenting and Baby Talk brands that we acquired in late fiscal 2013. Next spring, we expect to launch an English-language parenting magazine for U.S. Hispanic moms called Parents Latina, with an initial rate base of 700,000.

Second, beyond media portfolio additions, we grew revenue and operating profit from activities that are not dependent on traditional advertising during our fiscal 2014. As examples, we delivered significant growth in retransmission-related revenues and profits in our Local Media Group. These, of course, are contractual, with most of our agreements in place through 2017 or 2018. Within our National Media Group, brand licensing grew revenues 10%, driven by an expansion of the Better Homes and Gardens line of branded products at Wal-Mart Stores across the country. Additionally, the Better Homes and Gardens real estate program continues to expand, adding both franchisees and individual agents. The network now includes more than 250 real estate offices across both the United States and Canada and more than 8,300 individual agents. Our brand licensing activities were recently ranked #3 in the world by Global License!, along such other well-known names as Disney and Hasbro.

Finally, Meredith Xcelerated Marketing grew operating profit, excluding special items, in the fiscal year ended June 30 of 2014 by solidifying relationships with top 10 clients and expanding business with key clients including Chrysler, Mercer, Allergan and Kia.

Third, we again proved the effectiveness of advertising across both our broadcast and print platforms. Broadcast television continues to demonstrate its unique effectiveness to local advertisers as we delivered an 8% growth in Local Media Group nonpolitical ad revenue. Ratings are the key to producing sustainable ad growth. And during the most recent May ratings book, our stations continued strong audience engagement. As examples, 6 of our stations were either #1 or #2 in the very important late news period; 4 were #1 or #2 in the fastest-growing period, which is morning news; 4 were #1 or #2 in early evening; and 4 of our stations were either #1 or #2 in sign-on to sign-off.

Our National Media Group accomplished several initiatives to strengthen its competitive position in the marketplace, including ongoing execution of the Meredith Sales Guarantee, which demonstrates that advertising in Meredith magazines delivers a significant return on investment to our advertisers. We expanded that program to include digital advertising in fiscal 2014.

In addition, we were named "Advertisers' Favorite Media Company" for the second time in just 4 years by Advertiser Perceptions, which annually surveys thousands of leading ad agencies and marketers.

Fourth, we continued our diligent focus on cost control. Total company costs actually decreased, excluding new acquisitions and special items, and Joe will provide more color on that activity in the operating group discussions.

Finally, in fiscal 2014, we again successfully executed against our Total Shareholder Return strategy. We increased our dividend another 6%, that is our 21st consecutive year of increases, and we repurchased 1.6 million of our shares. We also invested more than $400 million in our media portfolio, growing the television side of our business.

Our TSR strategy has produced nearly 120% return since we launched it in October of 2011. Key to its ongoing success, of course, is our ability to generate strong cash flow, giving us the flexibility to both increase the amount of capital returned to our shareholders and finance additions to our media portfolio. We ended fiscal 2014 with a debt-to-EBITDA ratio of 2.7:1, leaving us with significant additional capacity. As we've detailed over time on these calls, at our investor presentations and in our one-on-one meetings, we focus on the long-term and sustainable growth for the Meredith Corporation. We have a proven track record of outperforming our industries over the long term.

With that, I'll turn the discussion over to our CFO, Joe Ceryanec, for operating group performance. And then, I'll be back at the end for the Q&A. And again, thank you so much for participating with us this morning. Go ahead, Joe.

Joseph H. Ceryanec

Thanks, Steven, and good morning, everybody. We'll first dive into some details, starting with our Local Media Group. For the fourth quarter, revenues increased 20% to $111 million, and operating profit grew 14% to $32 million, both excluding special items. However, both were records, both revenue and operating profit. For the full year, revenues grew 7% to $403 million, and that's on top of nearly 20% growth the year before. Operating profit was $122 million, excluding special items, a record for a nonpolitical year. Nonpolitical advertising grew 8% in fiscal 2014, helped in part by 4 months of KMOV operations; gains in automotive, telecommunications and the retail categories; as well as record digital performance.

Our digital ad revenues from the local media websites rose more than 15% in our fiscal 2014, driven in part by the addition of KMOV in St. Louis, along with our work to grow and better monetize our audience. We're seeing strong audience and advertiser demand for mobile, particularly when it comes to weather and top news stories. We finished the rollout of station-specific apps across our group during 2014, and we're shifting more of our selling focus to mobile from the digital desktop and selling that inventory at premium rates.

We strongly believe in the value of the local news and entertainment programming and continue to invest in our communities by adding local content. In fiscal '14, we added 22 hours of weekly local programming in 5 of our markets, and that's in addition to the nearly 100 hours we added with the acquisitions in Phoenix and St. Louis. In total, we're now producing more than 525 hours a week of local content.

Retransmission revenues grew significantly in fiscal 2014. As you know, we renewed our agreements with subscription television, so we realized the significant boost in our fiscal '14. We remain confident that these retransmission revenues will continue to rise because almost all of our current agreements are in place throughout fiscal 2017. As Steve mentioned earlier, we continue to be laser-focused on managing costs. And if you exclude the growth in the network compensation and acquisitions, our Local Media Group expenses were up less than 1% in fiscal 2014.

Now wrapping up the overview of the Local Media Group. We've completely integrated KMOV, and we're pleased that the station performed strongly throughout the process, growing its audience in 6 of the 8 shows that it produces daily. Meanwhile, our integration of KTVK in Phoenix is well underway, and we expect it to be complete by the end of this fiscal quarter.

Now turning over to our National Media Group. Fourth quarter fiscal 2014 operating profit matched last year's $43 million, and we grew our operating margins 80 basis points. For the full year, revenues were $1.1 billion and operating profit was $133 million, again excluding special items.

For our fiscal '14, ad performance was characterized by a high degree of volatility from month-to-month. However, in total, fiscal '14 looked a lot like 2013, with ad revenues down about 6%.

Looking at categories more closely. Nonprescription drug, direct response and the agriculture categories were stronger, while food, beauty and home were weaker categories. We continue to increase our rates per page with our weighted average net revenue per page rising 2% during the year. We grew our circulation revenues 2% in fiscal '14, and the gains were driven in large part by the launch of Allrecipes Magazine and steps that we've taken to grow the new titles rate base, along with continued solid performance in both our parenthood and Hispanic brands.

In addition, we continue to execute our successful migration of our magazine subscription sales from direct mail to online. We grew the number of digital orders for print magazine subscriptions in fiscal '14 by approximately 20% to nearly 7 million new orders. We're now receiving 40% of our new orders from digital sources. This is important because it lowers our subscription acquisition cost and increases our ability to up-sell and cross-sell other products at digital checkout, resulting in an estimated $5 in incremental operating profit per digital order over the average life of a subscription.

Digital traffic to our National Media Group sites averaged over 50 million comScore unique visitors. The Meredith Women's Network captured the top spot in comScore's lifestyle category for several months during fiscal '14, and the first -- that's the first time we've competed for the lead position. Allrecipes continues to lead the food category, averaging more than 30 million monthly unique visitors.

National Media Group operating expenses were down 2%, again excluding special items, driven by lower paper prices, distribution expenses, as well as other cost-saving initiatives.

Now before we turn to our outlook, let me provide some color on the special items that we've recorded in our fiscal fourth quarter. First, we had pretax charges of about $6 million in our Local Media Group, and about half of those related to transaction costs from the acquisition of KTVK, and the other half were restructuring charges taking to integrate our new stations and improve efficiencies. Going the other way, we had a favorable tax item in our National Media Group.

Now let's turn to our outlook for 2015. We expect our full year fiscal 2015 earnings per share to range from $3 to $3.25. We expect a total of $28 million to $33 million of political advertising revenues at our television stations in fiscal 2015, and that includes KMOV and KTVK. And the majority of that, we expect to be booked in our second fiscal quarter.

Now we realize that our expectations for -- or that expectations for political are quite a bit higher than what our guidance just was, but it's really hard to predict where we'll end up 4 months from now. We're clearly off to a slower start than we were last cycle. Now last cycle, we did about $39 million, but remember, about half of that came out of Hartford and Las Vegas, where we had really hot races with Linda McMahon and Harry Reid. So hopefully, we're just off to a slow start, and we all hope we'll come in higher, but this is our best estimate at this point for political revenues.

Now as we look more closely at the first quarter of fiscal 2015, compared to the prior year, we expect that our total company revenues will be up in the mid single digits. The Local Media Group revenues, we expect to be up 35% to 40%, with approximately 1/3 of our total fiscal 2015 political ad revenues recorded in our first fiscal quarter. Total National Media revenues are expected to be down middle -- mid single digits. We expect our first quarter 2015 earnings per share to range from $0.60 to $0.65, and this compares to $0.53 that we recorded in the prior year first quarter.

Now I'll turn it back to Steve for a few closing remarks and Q&A.

Stephen M. Lacy

Thank you very much, Joe. In conclusion of our formal remarks, as we begin fiscal 2015, we continue to aggressively pursue parallel paths. First, of course, working to grow our existing businesses organically. This includes our television, magazine, digital licensing and marketing services business portfolio. Second, pursuing opportunities to add to our portfolio in both our National and our Local Media Groups. Third, a continued aggressive expense management program. And finally, executing our Total Shareholder Return strategy, as highlighted by our established pattern of dividend increases and a correspondingly very attractive yield, share repurchases and our accretive acquisitions to both businesses.

So with that, we'd be happy to answer any questions that you might have this morning.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from John Crowther with Piper Jaffray.

John D. Crowther - Piper Jaffray Companies, Research Division

So obviously, a very strong expense management in the National Media Group in the quarter, which was very nice to see. Just wondering if you guys could talk a little bit about what maybe some of the drivers were there. How much of that expense reduction may have been associated with Ladies' Home Journal, which you obviously took some steps last quarter to reduce expenses there meaningfully? And just to think about, as we move into next year, is that sort of level of declines year-over-year something that we can expect through the first part of the year next year?

Stephen M. Lacy

So John, this is Steve. Just for starters, we continue to publish Ladies' Home Journal through the entire fiscal year, so there's really no impact of Ladies' Home Journal that you would see in the fourth quarter. But with that, I'm going to turn it over to Joe for some more detail as we look forward on expenses into the early part of fiscal 2015.

Joseph H. Ceryanec

Yes. So John, let me just speak to the fourth quarter. Expenses were down from the prior year fourth quarter about $15 million or 6%, really due to several things that we mentioned. Our paper prices continue to be soft. Our distribution continues. We continue to execute good contracts in that business. And then, lastly, you may remember, in the third quarter, we took a special charge, where we did some headcount realignment, really to try and shift the business more from a print-centric to more of a digital-centric business. So some of those savings were also reduction in headcount, T&E and the related expenses. As we look into next year, we'll continue to manage those costs. As you pointed out, LHJ, for fiscal '15, we will see a decline both on the revenue side and on the expense side. So we'll provide some more color on what that's going to look like when it comes out. But barring that, yes, we continue to expect to manage expenses. But as we look at our expectations for the year in our NMG Group, our operating profit, we expect to be pretty flat, with expenses being relatively flat as well.

Stephen M. Lacy

For the full year.

Joseph H. Ceryanec

For the full year.

John D. Crowther - Piper Jaffray Companies, Research Division

Great. Maybe -- you talked a little bit about headcount realignment to focus more on digital. Maybe could you talk a little bit about how digital advertising performed in the National Media Group this last quarter. I know it's -- we've seen a little bit of pressure here on the display side as we move more towards programmatic training. Just wondering if there -- if you've made any headways there to kind of offset that in the recent quarter here?

Stephen M. Lacy

So while we look up the numbers, Tom, why don't you talk about the realignment and the new ad opportunities that we're seeing and give them a sense of how you see this new quarter pacing. And we'll dig out the numbers for fourth quarter and the year.

Thomas H. Harty

Yes. To your point, I think the marketplace has changed quite a bit in the digital landscape, with a push towards many users on mobile. And a lot of our leading advertisers were kind of lagging on their shift of the advertising to the mobile marketplace. So for the beginning of this calendar year, the second half of the fiscal year, we did see some lagging performance in digital display. As we start to look out to the next quarter, it looks a little better for us. But we're making, as Steve pointed out, some significant investments in our data. So what we're finding is that our proprietary data has a lot of value to a lot of leading advertisers, and we'd be able to target that data to specific advertising campaigns and also in the mobile area. And then, as you mentioned, programmatic, there is a shift there. And we hired some experts in that area, and we are participating now in the programmatic marketplace also.

Stephen M. Lacy

So to get back to your numbers question. In the fourth quarter, total digital was down about 4%. Allrecipes had a really good quarter. And then the balance of the sites where there's more kind of run of network advertising had weaker performance. Okay?

John D. Crowther - Piper Jaffray Companies, Research Division

Great. I appreciate that. And then, maybe if I could just ask one more question. Steve, in your comments, you talked about the leverage ratio being at about 2.7x right now. It looks like it -- if you were to look at it on a go-forward basis, it might only be about -- a little over 2x. But your comment specifically was on additional capacity there, and I wonder if there's been a little bit of a change in terms of [indiscernible] thought on the long-term leverage ratio. And then maybe if you could talk just a little bit about the acquisition environment, specifically national media, if you're seeing any opportunities on the print side or the digital side there.

Stephen M. Lacy

So I'll start with the second part of your question on what we see going on in the M&A market. And then, I'll ask Joe to come back and speak to our thoughts on leverage. It is a very interesting time because we do see activity really on both sides of the operations. We're into some conversations with what I would call some individual players in the magazine space. And of course, that continues to be very difficult and very challenging when you can't go to the marketing community with a bundled portfolio that really hangs together and accomplishing advertiser needs. So we're working on several possibilities there in print. And also, as a build-out to our digital activities, we're looking at some opportunities, in one particular case, that would provide an augmented audience to our consumer audience base; and in the second case, that would provide some of the technical capabilities to help us execute against some of the areas in digital that Tom just spoke to. And of course, I think you're very aware of how hot the M&A activity has been on the broadcast side. I think you know that we take maybe a little different approach and generally don't aggressively participate in the auctions because of our, I think, very disciplined approach to providing shareholder value. We do better in individual kind of private and negotiated transactions very much like the opportunities that we've talked about this morning. But we continue to see opportunities really in both spaces. And what we love about these businesses is that they are very high cash flow-producing activities. The best thing about the magazine business, of course, is that there is no invested working capital in running a magazine. We always have a larger subscription liability on the balance sheet than we ever have invested working capital in either inventory and/or receivables. So we generate a lot of free cash flow from both of those activities. And Joe, why don't you speak a little bit to our thoughts on leverage, where we are, how quickly we believe that will pay down and sort of how we look at it going forward?

Joseph H. Ceryanec

Sure. And John, I would not say that our view has changed on our leverage. We have said now since we launched our TSR program that we're very comfortable running the business in the 2.5x to 3x. And for strategic acquisitions, we would move above 3x. So at 2.7x, we still have several hundred million of capacity, of headroom. That's number one. Number two, as you saw, our broadcast group did, I think, 38% EBITDA margins in a nonpolitical year. And entering a political cycle, that business will generate a lot of cash. So as we look out over the next 2 years, barring other M&A, we can significantly reduce that leverage ratio down to 2x pretty quickly. So I don't think our view has changed. I think we still have capacity, and we're going to be opportunistic, as Steve mentioned, when there's opportunities.

Stephen M. Lacy

Thank you, John.

Operator

Our next question will come from Craig Huber with Huber Research Partners.

Craig A. Huber - Huber Research Partners, LLC

I have similar questions on your digital ad revenue performance in magazines. I'm sorry, were you saying that was down 4% for magazines or for the whole company?

Stephen M. Lacy

No. 4% for the digital activities in the fourth fiscal quarter in the National Media Group.

Craig A. Huber - Huber Research Partners, LLC

Okay. And then, was there anything else you want to add there other than programmatic trading hurting that and also some of your leading advertisers kind of delayed movement over to mobile hurting you guys? Is there anything else that's going on there? And why -- or you think you're seeing something better here in the new quarter on that front?

Stephen M. Lacy

Tom, do you want to speak to that?

Thomas H. Harty

Yes. I think that what we -- what I mentioned about our data, we spent a lot of investment in the last 2 years getting our proprietary data ready to target. So we haven't had that in the past. So moving into the new fiscal year, we hired some people that are experts in that area, and we're ready to go to market. So we're excited about the new offering, being able to have the advertisers target individual consumers related to our proprietary data. And that being said, we're only 3 weeks into the new quarter from a digital perspective. But when we look at pacings, we are optimistic about our digital business being better in the next quarter. So we're -- as we move forward with the fiscal year, we're glad to have the last half of fiscal '14 behind us where we felt like we faced some macroeconomic issues with some of our advertisers and then we also are now going to have some new digital offerings to bring to the marketplace.

Stephen M. Lacy

The other thing, Craig, that I would mention that is really a hallmark of our particular national media digital operations is really the whole issue of viewability that I think you read about a great deal, and we've had really significant work done on our sites. And we are very, very pristine in the marketplace. And I think, as we're able to go forward with that and some of the newer offerings that Tom made reference to, it takes an audience that is a very, very targeted audience of very engaged female consumers really in the sweet spot and positions them, I think, more aggressively than we've been able to do in the past. So thank you for those questions.

Craig A. Huber - Huber Research Partners, LLC

I'm just -- is there anything else that you can hit on, on the weak performance in the digital ad revenue front for your magazines and Allrecipes just in total at least?

Stephen M. Lacy

Well, there was no peak performance for Allrecipes. Allrecipes continued to perform in a very strong way. And actually, a number of these initiatives that Tom is making reference to, Allrecipes has been executing in the marketplace consistently over time. Remember again, that, that is even a more targeted audience and an audience that is highly, highly engaged. It's the original social media site. So there's never been a blip in the Allrecipes audience. It's been more the broader run of network advertising that we've historically done across what we call the Meredith Women's Network. And that really aggregates all the digital traffic in the National Media Group, except for Allrecipes. That's where the weakness was, not in Allrecipes, ever.

Craig A. Huber - Huber Research Partners, LLC

Okay. And then also if you would, can just quantify -- I'm curious how your brand advertising revenue did in the quarter year-over-year and also MXM, please?

Stephen M. Lacy

Brand advertising revenue. What do you mean, Craig?

Craig A. Huber - Huber Research Partners, LLC

The brand licensing revenue.

Stephen M. Lacy

Oh, the brand licensing. Okay, it's not advertising revenue. That is [indiscernible]. I know it was up 10% for the year, I don't know what it was in the quarter. We'd have to dig that out. I don't have any quarterly numbers, but it had a really strong year, up 10%. It continues to perform really well. They're selling now a little over $2 billion in revenue, and that's a lot of sheets and towels at $8 a crack. And MXM was basically flat in revenue and up a little in profit in the quarter. Okay?

Craig A. Huber - Huber Research Partners, LLC

Okay, yes. I have a TV question, if I could throw in here. Excluding your TV station acquisition, how much is your retransmission revenue up roughly year-over-year?

Stephen M. Lacy

Hold on just a minute.

Joseph H. Ceryanec

Well, I don't have '13 number handy, although I may have it here shortly. We did about $85 million of retrans in '14, excluding acquisitions. And the prior year, I think that number was about $50 million. So call it $35 million up.

Stephen M. Lacy

Yes. Okay?

Craig A. Huber - Huber Research Partners, LLC

What is the timing, guys, of just any new contracts come up? Any significant contracts in the next 3 years?

Joseph H. Ceryanec

Really nonsignificant, Craig. You may remember, we renewed almost all of the MVPD contracts during '13, so we really don't see those coming up until fiscal '16 at the earliest, '16 and '17. So what we're going to see for '15, not to get too into the detail, but those contracts all have a certain amount of inflation built in, but it will not be the step function growth in the core business like we saw in '14.

Operator

And we will go next to Jason Bazinet with Citi.

Jason B. Bazinet - Citigroup Inc, Research Division

Just a question for Mr. Lacy. You mentioned sort of being active on both national and local side, potentially on the M&A front. And the most common question I get from investors is, what is it that gives you conviction on the magazine side, that there's terminal year value there? Because I think the buy side looks at that business, and it's increasingly looking at it in sort of newspaper-light. So what is it that you see that the buy side may not see?

Stephen M. Lacy

Well, I think there are certain aspects of the magazine business that do, in fact, look like the newspaper business. And those are particular properties that create time-sensitive content and whether that be newsweeklies or other such activities. But what continues to give me confidence is our tremendous renewal and response rates for our print editions of whatever magazine it might happen to be. And even in the case of Ladies' Home Journal, that was never a consumer challenge. And no matter how hard we have tried to get these consumers to give up the print version and accept the tablet version, that I think you know we spent millions and millions of dollars creating, they're willing to pay a little more to get the tablet, but they still want the print. So when you're in a media business, if you begin to lose your consumer audience, the party can be over with pretty quickly. But that has never been the circumstance here. Now we continue to do things and, as we go forward into fiscal '15, we have found through our digital efforts some additional ways to get even more direct-to-publisher subscriptions, and that kind of changes the composition of what the income statement looks like, but we continue to be very optimistic about increased profitability from those circulation activities going forward. So that's really the fundamental underpinning. If we look at an opportunity, we say 2 things, "Can we add value to the circulation by co-marketing an individual title with the other activities that we have going on?" And as you know, Jason, more and more of those activities are digital rather than direct mail. And from an advertising perspective, does it fit with the calls that we already make on our corporate clients. And if it passes through that lens, I think you're really well aware of how much cost we take out when we bring a magazine into our portfolio. But if we don't think we can add value to circle our advertising, we don't pursue it. So that's really our fundamental belief.

Operator

We now have a question from Barry Lucas with Gabelli & Company.

Barry L. Lucas - G. Research, Inc.

A couple of quickies. As you think about sort of the outlook and what's happening on the national media side. So with a couple of magazines booked, how do you -- how are you seeing page pacings or however you want to describe the tone of the business? And what is your sense of market share? And while your yield is up, are you losing some share to some other players?

Stephen M. Lacy

Well, while we dig out the numbers, Tom, why don't we talk about share because I know you have those numbers right off the top of your head?

Thomas H. Harty

Yes. We measure share in month-to-month, and we've had some volatility here and there quarter-to-quarter, but when you look at it overall, we really look at it year-to-year. And when we just closed this fiscal year, which ended with our July issues, our share of market versus our competitive set, with our 30 magazines that we compete against, was up. And we've kind of consistently grown our share when you look at it over the long term, and we look to continue to do that. So we've been taking share. As it declines, we feel like, as Steve mentioned, the portfolio hangs together, and we have a great corporate group that goes out there and takes share off the table.

Barry L. Lucas - G. Research, Inc.

Yes, that's against the competitive set, Tom. How would you feel about total advertising, magazine advertising share at all?

Thomas H. Harty

Yes. When you look at the full magazine share, it was down slightly for the year, mainly because we were down -- the whole magazine group -- the whole magazine industry was down in the food area. And we over-indexed in food. So we were hurt a little bit more when you compare looking at non-food titles. That's really the main explanation around total share versus industry.

Stephen M. Lacy

And so the pacings going forward and, obviously, we have 1 issue completely done, the second one almost done and the third one that we're guessing at, my belief is that we're going to be down in print advertising in kind of the high singles, up in digital in kind of the high singles and when it nets out, probably kind of mid single digit down in ad revenue for the National Media Group. But there are more guesses in that, Barry, than there used to be because we got a lot more digital than we used to have. So within a few points, one way or the other, but that's our best thinking as of this morning.

Barry L. Lucas - G. Research, Inc.

And that's with or without Ladies' Home Journal on a comp basis.

Stephen M. Lacy

That's without Ladies' Home Journal. So on a comp basis, those numbers would be a point or 2 better. That's total. That's -- I'm sorry, that is -- yes, that's total. So Ladies' Home Journal was in last year, not in this year. We'll give both numbers when it all finalizes and we report out.

Barry L. Lucas - G. Research, Inc.

Okay. And can we sort of do a somewhat similar thing with TV, Steve, so that -- I know you've got a fair amount of detail on political, but if we looked at the core advertising and television same-station, what's your sense of the business?

Stephen M. Lacy

Basically, right now, flat, same-store basis this quarter, pacings as of now. Nonpolitical, Nonpolitical.

Barry L. Lucas - G. Research, Inc.

Right. And any particular things coming out? I'm wondering, especially about auto, now that we've gotten pretty close to the past peak in terms of sales approaching $17 million.

Stephen M. Lacy

Right now, in the quarter, auto for us is down a little bit as of the last round of pacings. And of course, as you know, those change every week. But the last set I looked at.

Operator

[Operator Instructions] Okay, gentlemen, we have no one else in queue.

Stephen M. Lacy

Okay. Thank you, all, for participating today. And of course, as always, Joe and I are available. If there are follow-on questions, please don't hesitate to reach out. We sincerely appreciate your ongoing support for the Meredith Corporation. Have a nice day.

Operator

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.

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Source: Meredith's (MDP) CEO Stephen Lacy on Q4 2014 Results - Earnings Call Transcript

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