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Meredith Publishing Unit Grows Despite Impact of AMS Bankruptcy

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MAIN NEWS HEADLINES
February 1 – February 8, 2007 Edition

Meredith Publishing Unit
Grows Despite Impact
of AMS Bankruptcy

DES MOINES, IA/1/24/07—Meredith Corporation (NYSE: MDP), one of the nation’s leading media and marketing companies, yesterday 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.
 
“Our Broadcasting Group had a great quarter, reflecting tremendous political advertising performance and continued growth in local business,” said Stephen M. Lacy, Meredith’s President and Chief Executive Officer. “Meanwhile, Publishing Group operating results were bolstered by strong growth in our interactive media and integrated marketing operations.”
 
For the first six months of fiscal 2007, Meredith’s earnings per share grew 22 percent to $1.34, compared to prior year earnings per share of $1.10. Net earnings increased 18 percent from a year ago to $66 million after the pretax charge of $3 million. Revenues increased 3 percent to $802 million, and advertising revenues increased 7 percent to $496 million.
 
OPERATING HIGHLIGHTS FOR PUBLISHING UNIT
 
Publishing operating profit was $33 million and revenues were $300 million in the second quarter. Results for Publishing were adversely impacted by a charge of $3 million related to the book distributor’s bankruptcy filing. Including this charge, operating expenses were relatively flat on a year-over-year basis.
 
For the first six months of fiscal 2007, Publishing operating profit was $82 million and revenues were $614 million. Advertising revenues were $310 million, down slightly compared to the prior year. Operating costs were $532 million, including the $3 million charge, a one percent decline compared to the prior year.
 
Operating profit for Meredith Books decreased in the quarter due to the $3 million charge related to the bankruptcy filing, and higher royalty payments associated with a larger number of licensed books. Meredith Integrated Marketing more than doubled its operating profit and increased revenues over 40 percent from a year ago. These results were driven in part by the Company’s efforts to grow existing client relationship opportunities across this business.
 
The Company has previously indicated its intent to expand its integrated marketing capabilities through additional online marketing acquisitions. On January 10, Meredith announced the acquisition of two more such businesses.
 
The first is Genex—an interactive marketing services firm that specializes in online customer relationship marketing. Los Angeles-based Genex serves a number of major clients—including Honda, Toyota, CitiGroup, and KB Home.
 
The second is New Media Strategies—an interactive word-of-mouth and viral marketing company based in suburban Washington D.C. New Media Strategies also has a number of high-profile clients—including ABC, Coca Cola, AT&T, Ford, Sony, and Unilever.
 
While these acquisitions will not have a material impact on Meredith’s financial results in fiscal 2007, they will significantly enhance the scope of the Company’s integrated marketing capabilities.
 
“In less than a year we have transformed Meredith Integrated Marketing into a comprehensive marketing services provider with cutting edge digital assets,” said Lacy. “We’ve also added more than 200 highly-skilled employees across the country, giving us the creative resources and expertise to offer clients the highest quality custom marketing solutions.”