Meredith Corporation (MDP)
F2Q13 (Qtr End 12/31/2012) Earnings Call
January 24, 2013 11:00 AM ET
Executives
Mike Lovell - Director, Investor Relation
Stephen Lacy - Chairman, President and Chief Executive Officer
Joseph Ceryanec - Vice President and Chief Financial Officer
Paul Karpowicz - President, Local Media Group
Tom Harty - President, Nation Media Group
Analysts
William Bird - Lazard
John Crowther - Piper Jaffray
Craig Huber - Huber Research Partners
Jason Bazinet - Citi
Rich Ingrassia - Roth Capital
Matt Chesler - Deutsche Bank
Edward Atorino - Benchmark
Barry Lucas - Gabelli & Company, Inc.
Michael Schechter - Mentor
Presentation
Operator
Welcome to the Meredith Corporation's fiscal 2013 second quarter earnings call. (Operator Instructions) I'd now like to turn the conference over to your host Mr. Mike Lovell.
Mike Lovell
Good morning and thanks everyone for joining us. We'll start the call this morning with comments from Chairman and Chief Executive Officer, Steve Lacy; and Chief Financial Officer, Joe Ceryanec. And then, we'll turn the call over to questions.
We've also got on the line this morning, Paul Karpowicz, who is President of our Local Media Group; and Tom Harty, President of our Nation Media Group. An archive of today's discussion will be available later this afternoon on our Investor website and the 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 issued earlier today and in some of our SEC filings. And with that, Steve will begin.
Stephen Lacy
Good morning, everyone. I hope you've had a chance to see our news release issued earlier today, detailing our results. I am pleased to report a strong second quarter and first half of our fiscal 2013.
We increased earnings per share by 22% in the first half of fiscal 2013 compared to the prior-year period, excluding a previously announced special charge of $0.10 per share. Total company revenues grew by 9% and total advertising revenues were up a strong 15%.
Our Local Media Group delivered record revenue, operating profit and margin performance. We also generated a record $38 million in political advertising revenue in our first half. National Media Group revenues increased 3%, including 9% growth in advertising revenue and 9% growth in circulation revenue in the first half.
We continue to successfully integrate Allrecipes.com, EveryDay with Rachael Ray and FamilyFun into our brand portfolio. We also faced some challenges including comparable magazine advertising and performance at Meredith's Xcelerated Marketing. I'll cover those in more detail during the operating group discussion.
I'm pleased to report that digital advertising revenues across the company nearly doubled also reaching a record high. Total company digital advertising revenues accounted for about 11% of our total advertising revenue during the first half, almost double, where they were two years ago.
Stepping back now for a moment to look at the current media and marketing environment. We see several encouraging trends. First of all, we anticipated a strong television political advertising season and it certainly exceeded our initial expectations. In addition to heavy Presidential Election spending in the battleground state of Nevada, we also benefited from hotly contested statewide races in Connecticut, Arizona and Nevada as well as record spending from special interest groups.
Second, non-political advertising revenue at our stations remains strong and was approximately flat for the first six months of fiscal 2013, despite record demand for political advertising. Interestingly enough for the period following the election, non-political advertising revenues were up 3% compared to the prior-year period. Local television continues to prove its unique ability to build brands and drive the consumer into retail establishments.
Third, our National Media Group continues to take market share from its magazine competitors. So far in fiscal 2013, we increased overall share of magazine advertising to 11% from 10.3% according to the most recent data available from Publishers Information Bureau. Within our 30 magazine competitive steps, we now capture 38% of the ad dollars and that's up from about 34% in the prior-year period.
Fourth, our recent acquisitions are performing ahead of our original financial expectations. We're very focused on maximizing the value of these businesses, particularly Allrecipes.com. And finally, our diverse multi-platform business model continues to generate strong and sustainable cash flow. We generated $80 million of operating cash flow during the first half of fiscal 2013, a strong increase over the prior-year amount.
We remain committed to our total shareholder return financial strategy. Key elements of which include a current annual dividend of $1.53 per share, a $100 million share repurchase program and ongoing strategic investments to scale the business and increase shareholder value over time, through multi-platform, consumer and marketing client engagement strategies, through initiatives that possess significant digital components and through activities that capitalize on our broad content creation and marketing capabilities.
So now let's review our progress in more detail, starting with our Local Media Group. As I mentioned a few moments ago, our Local Media Group reported record results for the second quarter and the first half of fiscal 2013. While all of our markets delivered revenue growth, performance was strongest at our stations in Las Vegas, Portland and Hartford.
And as I mentioned, political advertising was a record $38 million, exceeding our initial expectations. In addition to several hotly contested races, we benefited from our initiatives to educate media buyers and campaigned about our powerful local news presence. Automotive, our largest broadcast advertising category grew 10% and it has now increased in 11 of the last 12 quarters.
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