UBS 37th Annual Global Media
& Communications Conference
New York, Dec. 7-9, 2009
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Safe Harbor
This presentation and management’s public commentary contain certain forward-looking statements that
are subject to risks and uncertainties. These statements are based on management’s current knowledge
and estimates of factors affecting the Company’s operations. Statements in this presentation that are
forward-looking include, but are not limited to, the statements regarding broadcast pacings, publishing
advertising revenues, as well as any guidance related to the Company’s financial performance.
are subject to risks and uncertainties. These statements are based on management’s current knowledge
and estimates of factors affecting the Company’s operations. Statements in this presentation that are
forward-looking include, but are not limited to, the statements regarding broadcast pacings, publishing
advertising revenues, as well as any guidance related to the Company’s financial performance.
Actual results may differ materially from those currently anticipated. Factors that could adversely affect
future results include, but are not limited to, downturns in national and/or local economies; a softening of
the domestic advertising market; world, national, or local events that could disrupt broadcast television;
increased consolidation among major advertisers or other events depressing the level of advertising
spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired
businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in
paper, postage, printing, or syndicated programming costs; changes in television network affiliation
agreements; technological developments affecting products or the methods of distribution; changes in
government regulations affecting the Company’s industries; unexpected changes in interest rates; and the
consequences of any acquisitions and/or dispositions. The Company undertakes no obligation to update
any forward-looking statement, whether as a result of new information, future events, or otherwise.
future results include, but are not limited to, downturns in national and/or local economies; a softening of
the domestic advertising market; world, national, or local events that could disrupt broadcast television;
increased consolidation among major advertisers or other events depressing the level of advertising
spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired
businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in
paper, postage, printing, or syndicated programming costs; changes in television network affiliation
agreements; technological developments affecting products or the methods of distribution; changes in
government regulations affecting the Company’s industries; unexpected changes in interest rates; and the
consequences of any acquisitions and/or dispositions. The Company undertakes no obligation to update
any forward-looking statement, whether as a result of new information, future events, or otherwise.
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Agenda
§ Meredith Overview
§ Advertising Overview
§ Performance Improvement Plan
§ Financial Overview
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Broad Media and Marketing Footprint
National
Media Brands
Media Brands
Marketing
Solutions
Solutions
Local Media
Brands
Brands
Revenues:
$900 million
Revenues:
$240 million
Revenues:
$270 million
MEREDITH OVERVIEW
Integrated marketing
Brand licensing
Retransmission fees
Video studios
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Powerful National Brands Across Life Stages
Her Family
Her Home
Her Self
MEREDITH OVERVIEW
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National Media Brands Achievements
§ Delivered highest-ever market share in magazine advertising
§ Achieved all-time high profit contribution from circulation
§ Increased newsstand market share
§ Eliminated 10% in expenses
§ Named “Publishing Company of the Year”
MEREDITH OVERVIEW
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Diverse Local Media Portfolio Across Country
MEREDITH OVERVIEW
12 network affiliates
10MM+ households
25+ websites
5MM unique visitors
Mobile platforms
Syndicated television
Phoenix
Flint-Saginaw
Atlanta
Hartford
Las Vegas
Greenville
Springfield
New York
Des Moines
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Local Media Brands Achievements
§ Grew morning news ratings across the group
§ Expanded number of markets airing Better show
§ Developed new sales and marketing programs
§ Initiated cost-saving plan to create hubs
MEREDITH OVERVIEW
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Meredith
Integrated
Marketing
Integrated
Marketing
Retransmission
&
Video Studios
&
Video Studios
Brand
Licensing
Licensing
MEREDITH OVERVIEW
Growing Marketing Solutions and Diversified Businesses
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Online: Meredith
Women’s Network
Women’s Network
Magazines: Home, Family,
Health & Well-being
Health & Well-being
Consumer Events
Custom Marketing
Database Marketing
Consumer Research
Broad Capabilities Across Media Platforms
Video Studios
Brand Licensing
MEREDITH OVERVIEW
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Agenda
§ Meredith Overview
§ Advertising Overview
§ Performance Improvement Plan
§ Financial Overview
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Calendar 2009 | Meredith Internal | Industry PIB |
1st Qtr | (13)% | (22)% |
2nd Qtr | (11)% | (21)% |
3rd Qtr | (5)% | (18)% |
4th Qtr | Down mid single digits* | N/A |
National Media Performance vs. Industry
Improving National Media Advertising Environment
ADVERTISING OVERVIEW
*Forecast
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Calendar 2009 | Meredith Internal | Industry TVB |
1st Qtr | (30)% | (22)% |
2nd Qtr | (25)% | (25)% |
3rd Qtr | (13)% | (20)% |
4th Qtr | Up low single digits* | N/A |
Local Media Performance vs. Industry
Improving Local Media Advertising Environment
ADVERTISING OVERVIEW
*Forecast
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§ Delivered improving results throughout calendar 2009
§ However, still a volatile advertising environment
§ Limited visibility into calendar 2010 advertising budgets
Advertising environment
ADVERTISING OVERVIEW
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Agenda
§ Meredith Overview
§ Advertising Overview
§ Performance Improvement Plan
– Gain market share in core businesses
– Increase consumer connection
– Develop new revenue streams
– Exercise disciplined expense and cash management
§ Financial Overview
STRATEGIC OVERVIEW
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Growing National and Local Market Share
Source: National: TNS Media Intelligence, 2009, Local: TvB
GAIN MARKET SHARE
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Agenda
STRATEGIC OVERVIEW
§ Meredith Overview
§ Current Advertising Update
§ Performance Improvement Plan
– Gain market share in core businesses
– Increase consumer connection
– Develop new revenue streams
– Exercise disciplined expense and cash management
§ Financial Overview
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Powerful National Consumer Connection
Source: Fall 1999 & 2009 MRI Reports
* Traditional Home and Midwest Living
1999 | 2009 | |
Better Homes and Gardens | 33 | 39 |
Family Circle | 22 | 20 |
Parents | 12 | 15 |
Ladies’ Home Journal | 15 | 12 |
Fitness | 6 | 6 |
American Baby | 5 | 7 |
More | NA | 2 |
Other* | 4 | 8 |
TOTAL | 97 | 109 |
+12%
Readership in Millions
INCREASE CONSUMER CONNECTION
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Strong Subscription-Focused Circulation Model
Rate Base | % of circulation from subscriptions | |
Better Homes and Gardens | 7.6M | 97% |
Ladies’ Home Journal | 3.8M | 95% |
Family Circle | 3.8M | 81% |
Parents | 2.2M | 98% |
Fitness | 1.5M | 87% |
More | 1.3M | 87% |
Traditional Home | 950,000 | 89% |
• Direct Mail response rates strong
– Both for renewals and new offers
• Progress on direct-to-publisher
– Acquired titles now at 60%
• Growing online subscriptions
– 3.0 million annually
• Strong profit contribution
INCREASE CONSUMER CONNECTION
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§ November TV sweeps solid
§ Record traffic on Meredith Women’s Network
§ Wal-Mart licensing agreement expanded
§ New digital content/Storefront venture
Increase Consumer Connection
INCREASE CONSUMER CONNECTION
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Agenda
STRATEGIC OVERVIEW
§ Meredith Overview
§ Advertising Overview
§ Performance Improvement Plan
– Gain market share in core businesses
– Increase consumer connection
– Develop new revenue streams
– Exercise disciplined expense and cash management
§ Financial Overview
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§ Integrated Marketing
§ Brand Licensing
§ Retransmission
§ Video Studios
§ Mobile Marketing Opportunity
New Revenue Stream Development
NEW REVENUE STREAMS
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Meredith Integrated Marketing Update
§ Client base of nearly 200
§ Rich pipeline of requests for new business proposals
§ Clients focused on program expense and measurability
§ Great interest in new ways of taking brands to market
– Social media
– Mobile
NEW REVENUE STREAMS
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• Content strategy
• Quarterly magazines
• Multi-language e-mail campaigns
• Food photography & videos in multiple languages
• Database Marketing strategy
• Campaign management
• Business intelligence
• Shopper purchase analytics
• Digital magazine
• iFood assistant
• Digital design
• Digital strategy
• Mobile strategy
• Mobile execution
• Online word of mouth
• Digital public relations
• Online intelligence
• Food blogging
Kraft CRM & Meredith Integrated Marketing
Kraft CRM
&
Meredith
NEW REVENUE STREAMS
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Growing Presence in Brand Licensing
– Sales meeting expectations
– SKUs tripled to more than 1,500 in 2009
– Expanded to Canada earlier this month
– Ongoing national U.S. advertising campaign
Garden
Interior decor
Paint
Canada
NEW REVENUE STREAMS
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$ in millions
Increasing TV Retransmission Revenues
$4
$20+
$8
2006
(Actual)
2008
(Actual)
2010
(Estimate)
NEW REVENUE STREAMS
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§ The next big distribution platform
§ Opportunities in:
– Business to consumer
– Business to business
§ Clients increasingly asking for mobile marketing solutions
§ Relationship with The Hyperfactory
– Clients include Toyota, Coke, Blackberry, Nike, Vodafone, Disney
– Offices in New York, Los Angeles, New Zealand, India
Mobile Opportunity
NEW REVENUE STREAMS
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Agenda
§ Meredith Overview
§ Advertising Overview
§ Performance Improvement Plan
– Gain market share across businesses
– Increase consumer connection
– Develop new revenue streams
– Exercise disciplined expense and cash management
§ Financial Overview
STRATEGIC OVERVIEW
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Actions Taken
§ Departmental efficiencies
§ Reductions in workforce
§ Strategic vendor sourcing initiative
§ Reduced capital expenditures
§ Aggressive working capital management
§ Result:
- Cut total operating expenses 8% in Q110
- Reduced $125 million in debt over 15 months
DISCIPLINED EXPENSE MANAGEMENT
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Historical Cash Flow From Operations
12% CAGR
5% CAGR
$ in millions
FINANCIAL OVERVIEW
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Use of Cash: Fiscal 2000 through 2009
200
Stock Option Exercises
$2,000
Utilization of Cash
100
Net Debt
300
Capital Expenditures
600
Acquisitions, Net of Dispositions
$2,000
Available Cash
$1,800
Operating Cash Flow
300
Dividends
$ in millions
$700
Share Repurchases
$1,000
SUBTOTAL
FINANCIAL OVERVIEW
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Calendar Year Dividends Per Share
13% CAGR
FINANCIAL OVERVIEW
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Current | Capacity/Authorization | |
Debt Level | $360 million | Additional $470 million |
Debt-to-EBITDA Ratio | 1.7x | Less than 3.75x |
Interest Coverage Ratio | 10.8x | Greater than 2.75x |
Average Cost of Funds | 5.6% |
As of 9/30/09
Financial Metrics
FINANCIAL OVERVIEW
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$209 trailing 12 EBITDA
$209 trailing 12 EBITDA
$1.6B total cap
$1.2B market cap
§ Current dividend yield
§ EPS multiple:
§ EBITDA multiple
to market capitalization:
to market capitalization:
§ EBITDA multiple
to total capitalization:
to total capitalization:
$2.01 trailing 12 EPS
$27.19 share price
Current Valuation Metrics
• As of Sept. 30, 2009 using trailing 4 quarters actual results, excluding discontinued operations and special items.
• Dividend data uses current dividend of $0.225 per quarter.
• Share price data is market close on Dec. 3, 2009.
$0.90 dividend
$27.19 share price
3.3%
13.5x
6.1x
7.7x
FINANCIAL OVERVIEW
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Outlook: Second Quarter and Full Year 2010
E = Estimate
*Pacings at 10.29.09
**Expected ad revenue performance for Q210 as of Dec. 8, 2009
FINANCIAL OVERVIEW
Oct. 2009E | Dec. 2009E | |
National Media advertising revenue | Down mid single digits | Down mid single digits |
Local Media advertising revenue | (8)%* | Up low single digits** |
Q210 Earnings per share | $0.33 - $0.38 | $0.40 - $0.43 |
FY10 Earnings per share | $1.60 - $2.00 | $1.70 - $2.00 |
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Summary
§ Vibrant and profitable media assets and brands
§ Growing market share
§ Wide array of new revenue stream development
§ Strong financial foundation
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