Meredith Corporation (NYSE:MDP) Q1 2018 Earnings Conference Call Transcript

Oct 26, 2017 • 08:30 am ET

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Meredith Corporation (NYSE:MDP) Q1 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Matthew and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal 2018 Earnings Conference Call. (Operator Instructions) Thank you. Mike Lovell, you may begin your conference.

Executive
Mike Lovell

Hi, good morning. Thanks everyone for joining us. Our call today will begin with comments from Chairman and Chief Executive Officer, Steve Lacy; President and Chief Operating Officer, Tom Harty; and Chief Financial Officer, Joe Ceryanec. Then we'll turn the call over to your questions. Also on the line today are Local Media Group President, Paul Karpowicz and National Media Group President, Jon Werther. An archive of our call will be available later today on our investor website.

Our remarks this morning 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 this morning and in some of our SEC filings.

With that, Steve will begin.

Executive
Steve Lacy

Thank you, Mike and good morning everyone. I hope you have had the opportunity to see our earnings release that was issued earlier this morning. First quarter fiscal 2018 earnings per share were $0.73, including a $0.04 gain related to the sale of a majority stake in the Family Circle Cup Tennis Center. Excluding this special item, earnings per share were $0.69. This compares to earnings per share of $0.75 in the prior year period, which included $0.20 per share of political advertising revenues.

We are particularly pleased that we were able to make up most of the profit that does not recur due to the every other year political election cycle. The main drivers of our strong company-wide performance were continued growth in our profitable digital activities, favorable results from retransmission agreements, solid magazine execution in all aspects, including growth in subscription revenues, and of course, ongoing discipline control of our expenses.

As we look ahead to our second quarter of fiscal 2018, we are encouraged by strengthening demand for non-political advertising revenues in our Local Media Group, which is pacing up in the mid-to-high single digits. This performance is being led by our two largest ad categories, automotive and professional services, partially offset by weakness in retail. Our stations in Atlanta, Las Vegas and the Kansas City markets are performing particularly well. We also expect continued benefit from our recently renewed retransmission agreements. As you may recall, we renewed about 40% of these agreements in our fiscal 2017 and are now fully realizing the financial benefits of those negotiations. As a result, we expect non-political revenues in our Local Media Group to be up in the high teens.

We are experiencing some softness in National Media Group advertising, similar to what has been reported by the major ad agency holding companies and media peers. In print, this can be traced to cyclical prescription drug advertising and the retail category, partially offset by strength in beauty and household supplies. In digital, this can be