Meredith Corporation, one of the nation’s leading media and marketing companies, today announced strong second quarter fiscal 2007 results. Earnings per share grew 24 percent to $0.72, compared to earnings per share of $0.58 in the prior year quarter. Net earnings increased 20 percent to $35 million. Revenues increased to $406 million, up 5 percent, including advertising revenue growth of 8 percent fueled by strong performance at Meredith’s television stations.The Company’s results for the quarter reflect a pretax charge of $3 million, or $0.04 per share, to reserve for a doubtful account relating to the December 29, 2006 bankruptcy filing by book distributor Advanced Marketing Services.
This was slightly ahead of expectations, due in part to strong advertising trends. However, the guidance was ever so slightly below expectations. We are also concerned that circulation revenue fell (publishers get paid both for the subscriptions and the advertising). If circulation trends are down, it could lead to lower advertising rates in the future. Although the impetus for the decline was price reduction rather than lower numbers of subscribers, advertisers are usually willing to pay more to be in popular publications that can command higher subscription rates. So it could still be a concern, though it is less of one than had the actual number of subscribers declined.
On the positive side, cash from operating activities rose by a far greater amount than either revenues or net income.
We are new to Meredith and this should not be taken as a full-fledged research report by any means. If you can add to our understanding, please do so in the comment area.
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