Meredith's National Media Group Profits Down
Acquisitions prop up revenues, but profits drop in 3Q and year-to-date.
Meredith Corporation released its fiscal third quarter results today and the overall picture is a mixed one for its National Media Group. Revenues were flat at $268 million compared with the same period the previous year, but profits were down 23 percent to $37 million, which doesn't include a $13 million special charge related to the Allrecipes.com deal and further workforce and space consolidation during the year.
The third quarter financials come on the heels of a 2 percent staff reduction of 80 employees from a total of 3,400 that's occurring this week, as initially reported by AdAge's Nat Ives. A spokesman tells FOLIO: the cuts occurred across all brands and business units at all levels, noting that 350 positions were also added as a result of Meredith's recent buying spree over the last year (Allrecipes.com, EveryDay with Rachael Ray, Family Fun and EatingWell).
The 80 cuts, says the spokesperson, came from a combination of cost-cutting, redundancies and other realignments.
The acquisitions gave advertising a shot in the arm, which was up 2 percent for its third fiscal quarter, but would have been down 7 percent without them.
Digital advertising was up 70 percent, according to the financials, driven largely by the Women's Network properties, which accounted for half that growth, and the balance coming from Allrecipies.com.
Circulation was another bright spot, with revenues growing 15 percent and contribution growing 12 percent in the third quarter compared to same period last yearâagain, driven by the acquisitions. Without the new brands, circ revenue would have grown only 3 percent.
The company says it generated 2 million subscriptions from digital sources during the first nine months of fiscal 2012, which is up 150 percent versus the same period the prior year. Another 600,000 subs are expected during the rest of its fiscal year. Meredith says it receives $5 in incremental profit for each digitally sourced order.
Meredith's marketing agency group, Xcelerated Marketing, took a $12 million hit as some clients scaled back their spending. As a result, the company's "other" revenues category was down to $68 million for the quarter.
Nine-month revenues and profits were both down. Profits fell 27 percent, including the $35 million charge, to $95 million and revenues dropped 4 percent to $771 million.
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