MerrillMerrill LynchLynch Advertising/Marketing,Advertising/Marketing, InformationInformation && EducationEducation ConferenceConference MarchMarch 2,2, 20042004 SafeSafe HarborHarbor
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. 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 of one or more major clients; changes in consumer reading, purchase, order, and/or television viewing patterns; unanticipated increases in paper, postage, printing, or syndicated programming costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in legislation and government regulations affecting the Company’s industries; unexpected changes in interest rates; and any acquisitions and/or dispositions. The Company undertakes no obligation to update any forward-looking statement. MeredithMeredith OverviewOverview EPSEPS PerformancePerformance
$2.09*
$2.00 $1.80
$1.38 $1.50
$1.00
$0.50
$- FY 02 FY 03 FY 04*
Before the cumulative effect of a change in accounting principle and adjusted for SFAS NO. 142 *First Call Consensus estimate BusinessBusiness MixMix FirstFirst SixSix MonthsMonths FYFY 20042004 Revenues Operating Profit*
25% 37%
63% 75%
Publishing Broadcasting
* Before unallocated corporate expenses MeredithMeredith CorporationCorporation FirstFirst SixSix MonthsMonths FYFY 20042004 PerformancePerformance
66 Mos.Mos. FYFY 66 Mos.Mos. FYFY 20042004 20032003 ChangeChange RevenuesRevenues $553.0$553.0 $501.8$501.8 10%10%
EarningsEarnings 40.040.0 35.8*35.8* 12%12%
EPSEPS $0.78$0.78 $0.70*$0.70* 11%11%
In millions except EPS *Before the cumulative effect of a change in accounting principle related to SFAS No. 142 PublishingPublishing PIBPIB AdvertisingAdvertising PagesPages MDP vs. Industry Average Percentage Point Variance 35 30 30
25 23 22 19 20 18
15 13 11 10 10 6 5 4 5 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 CY 01 CY 02 CY 03
CY 2003 excludes American Baby Group BroadcastingBroadcasting TVBTVB SpotSpot AdvertisingAdvertising MDP vs. Industry Average Percentage Point Variance 10 8.2
6.2 5.5 5.4 4.9 5 4.1 3.9 2.7 2.9
0.4 0
-1.3
-3.6 -5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
CY01 CY02 CY03 TVB Total Spot Revenue as of 1/28/04 MeredithMeredith StrategiesStrategies
LeverageLeverage strengthsstrengths
FocusFocus onon corecore businessesbusinesses
PursuePursue targetedtargeted acquisitionsacquisitions LongLong--termterm FinancialFinancial TargetsTargets
AnnualAnnual EPSEPS GrowthGrowth LowLow doubledouble digitsdigits inin nonnon--politicalpolitical yearsyears MidMid--toto--highhigh teensteens inin politicalpolitical yearsyears
SegmentSegment MarginsMargins 20%20% operatingoperating profitprofit inin PublishingPublishing 40%40% EBITDAEBITDA inin BroadcastingBroadcasting PublishingPublishing PublishingPublishing FirstFirst SixSix MonthsMonths FYFY 20042004 PerformancePerformance
66 Mos.Mos. FYFY 66 Mos.Mos. FYFY 20042004 20032003 ChangeChange RevenuesRevenues $413.5$413.5 $356.8$356.8 16%16%
OperatingOperating $55.8$55.8 $46.3$46.3 20%20% incomeincome MarginMargin 13.5%13.5% 13.0%13.0%
In millions FavorableFavorable DemographicsDemographics
BabyBaby boomboom generationgeneration –– 66%66% ofof MDPMDP customerscustomers areare ageage 3535--6464 –– 85%85% ofof MDPMDP customerscustomers areare homeownershomeowners HomeHome ownershipownership toto reachreach 70%*70%* WomenWomen ageage 2525--6464 toto growgrow toto 8686 million*million* HispanicHispanic marketmarket toto growgrow 37%*37%* SingleSingle personperson homeownershomeowners growing*growing*
*2003 Census Bureau housing survey PublishingPublishing GrowthGrowth StrategiesStrategies
GrowGrow andand expandexpand magazinemagazine portfolioportfolio ExtendExtend andand developdevelop brandsbrands EnhanceEnhance productproduct salessales ExpandExpand nonnon--magazinemagazine operationsoperations CaptureCapture potentialpotential inin HispanicHispanic marketmarket MagazineMagazine AdvertisingAdvertising FirstFirst SixSix MonthsMonths FYFY 20042004 PerformancePerformance
Ad Pages 6 Mos. FY 2004 FY 2003 Change BHG 994 902 10% LHJ 653 567 15% Country Home* 448 334 34% Traditional Home 475 349 36% MORE 284 236 20% Midwest Living 299 235 27%
*Country Home published one additional issue in Fiscal 2004. MagazineMagazine MarketMarket ShareShare
66 Mos.Mos. FYFY 66 Mos.Mos. FYFY 20042004 20032003 TotalTotal MeredithMeredith 6.7%6.7% 5.7%5.7%
BHGBHG 31.7%31.7% 31.3%31.3%
LHJLHJ 12.6%12.6% 11.6%11.6%
CountryCountry HomeHome 23.6%23.6% 16.6%16.6%
TraditionalTraditional HomeHome 19.4%19.4% 14.3%14.3%
Source: PIB revenues Meredith is compared to all publishers. BHG and LHJ are compared to women’s service field. Country Home is compared to Country Living, Home, House Beautiful, and Martha Stewart Living. Traditional Home is compared to Architectural Digest, House & Garden, House Beautiful, Metropolitan Home, and Elle Decor. MagazineMagazine CirculationCirculation 20042004 RateRate MagazineMagazine Base*Base* SubscriptionSubscription NewsstandNewsstand BHG 7,6007,600 96%96% 4%4% LHJ 4,1004,100 91%91% 9%9% Country Home 1,2501,250 87%87% 13%13% Traditional Home 950950 80%80% 20%20% MORE 950950 86%86% 14%14% Midwest Living 900900 92%92% 8%8%
* In thousands RateRate BaseBase GrowthGrowth MidMid--sizesize MagazinesMagazines
Magazine 2004 2003 2002 2001 Change Country Home 1,250 1,200 1,100 1,000 250
Traditional Home 950 925 825 800 150
MORE 950 850 700 600 350
Midwest Living 900 850 815 815 85
Total 4,050 3,825 3,440 3,215 835
In thousands PortfolioPortfolio ExpansionExpansion
ExpandExpand audienceaudience toto youngeryounger readersreaders EnhanceEnhance adad revenuerevenue FeedFeed corecore titlestitles AttractAttract talenttalent AreasAreas ofof interestinterest – Health – Parenting – Fitness BrandBrand ExtensionExtension
Add’l Brand Special Sub. Corner- Brand Internet Books Licensing Events Pubs. Titles stones BHG XX XX XX XX XX XX XX ABG XX XX XX XX XX XX LHJ XX XX MORE XX XX HispanicHispanic MarketMarket
HispanicHispanic householdshouseholds –– GrowGrow 37%37% fromfrom 20002000 toto 20102010 –– RepresentRepresent 40%40% ofof totaltotal U.S.U.S. householdhousehold growthgrowth –– RepresentRepresent 13%13% ofof totaltotal U.S.U.S. householdshouseholds inin 20102010 MeredithMeredith –– CoreCore competenciescompetencies areare relevantrelevant –– ABGABG andand bookbook publishingpublishing areare entryentry –– 30%30% ofof HomeHome Interiors’Interiors’ salessales forceforce isis HispanicHispanic –– HiredHired DirectorDirector ofof HispanicHispanic VenturesVentures IntegratedIntegrated MarketingMarketing
FY2002–9-11, weak economy FY2003–strongest year of new business development 2HFY 2004 and beyond – Retain existing relationships – Pursue new accounts BooksBooks
DevelopDevelop MeredithMeredith contentcontent LicenseLicense brandsbrands – The Home Depot – Trading Spaces – HGTV – The Food Network PublishPublish booksbooks basedbased onon – Personalities (Paige Davis) – New content (Spiderman) BroadcastingBroadcasting GroupGroup
Portland Springfield Flint-Saginaw
Bend Kansas City Hartford
Las Vegas Nashville Phoenix Atlanta Greenville, SC BroadcastingBroadcasting GroupGroup
Station Market Market Rank Market Rank 2004 1997 WGCL Atlanta 9 10 KPHO Phoenix 15 17 KPTV Portland 24 24 KPDX Portland 24 24 WFSB Hartford 27 27 WSMV Nashville 30 33 KCTV Kansas City 31 32 WHNS Greenville 35 35 KVVU Las Vegas 51 64 WNEM Saginaw 64 62 WSHM Springfield 106 103 KFXO Bend 199 203 BroadcastingBroadcasting FirstFirst SixSix MonthMonth FYFY 20042004 PerformancePerformance
66 Mos.Mos. FYFY 66 Mos.Mos. FYFY Fav./Fav./ 20042004 20032003 (Unfav.)(Unfav.) NonNon--politicalpolitical revenuesrevenues $135.4$135.4 $121.4$121.4 12%12% PoliticalPolitical revenuesrevenues 0.80.8 20.320.3 (96%)(96%) OperatingOperating expensesexpenses 106.6106.6 106.5106.5 —— EBITDAEBITDA $41.6$41.6 $46.6$46.6 (11%)(11%) BroadcastingBroadcasting EBITDAEBITDA MarginMargin
28.4% 27.6% 30%
21.4%
15%
0% CY 01 CY 02 CY 03 GrowthGrowth StrategiesStrategies
StrengthenStrengthen newsnews SellSell aggressivelyaggressively CreateCreate additionaladditional sourcessources ReduceReduce programmingprogramming costscosts FebruaryFebruary SweepsSweeps SignSign--onon toto signsign--offoff ShareShare
StationStation Feb.Feb. 20042004 Feb.Feb. 20022002
WCGLWCGL--AtlantaAtlanta 77 66
KPHOKPHO--PhoenixPhoenix 88 66
KPTVKPTV--PortlandPortland 88 66
WFSBWFSB--HartfordHartford 1414 1313
KCTVKCTV--K.C.K.C. 1212 1111
Households–Week 3 of Feb. 2004 vs. Final Feb. 2002 FebruaryFebruary SweepsSweeps LateLate NewsNews ShareShare StationStation Feb.Feb. 20042004 Feb.Feb. 20022002
WCGLWCGL--AtlantaAtlanta 88 66
KPHOKPHO--PhoenixPhoenix 1010 77
KPTVKPTV--PortlandPortland 1111 77
WFSBWFSB--HartfordHartford 1717 1313
KCTVKCTV--K.C.K.C. 1717 1111
KVVUKVVU--LasLas VegasVegas 88 77
Households–Week 3 of Feb. 2004 vs. Final Feb. 2002 RevenueRevenue GrowthGrowth SameSame--stationstation NonNon--politicalpolitical
$80 +10% +4% +7% +14% +13% +7% $60
$40
$20
$- FY02 FY03 FY02 FY03 FY02 FY03 FY02 FY03 FY03 FY04 FY03 FY04 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 CornerstonesCornerstones
RaisedRaised revenuesrevenues 60%+60%+ inin 1HFY1HFY 20042004 IncreasedIncreased pagespages andand frequencyfrequency ExpandedExpanded programsprograms ReduceReduce ProgrammingProgramming CostsCosts FilmFilm AmortizationAmortization
$50 $44.1 $40.1 $37.3 $40 $31.0 $30
$20
$10
$- FY 01 FY 02 FY 03 FY 04*
In millions *FY 2004 is an estimate. ContinueContinue thethe MomentumMomentum
RealizeRealize upsideupside inin largestlargest marketsmarkets LeverageLeverage midmid--sizesize marketsmarkets ExploreExplore duopoliesduopolies andand clustersclusters ImproveImprove networknetwork diversitydiversity ExpandExpand reachreach MaintainMaintain geographicgeographic diversitydiversity FinancialFinancial PrinciplesPrinciples
RigorousRigorous reportingreporting practicespractices ActiveActive shareshare repurchaserepurchase programprogram QuarterlyQuarterly dividenddividend paymentspayments ConservativeConservative debtdebt structurestructure StrongStrong CashCash FlowFlow
CalendarCalendar 20002000--20032003 ShareShare repurchasesrepurchases $160$160 CapitalCapital expendituresexpenditures 140140 PublishingPublishing acquisitionacquisition 120120 DividendsDividends 7070 DebtDebt reductionreduction 200200 TotalTotal $690$690
InIn millions millions TotalTotal DebtDebt
$585 $600
$500 $330 $400
$300
$200
$100
$- Mar. 31, 1999 Dec. 31, 2003
In millions DividendDividend PaymentsPayments
$0.60
$0.50 $0.48
$0.38 $0.40 $0.36 $0.34 $0.32 $0.30 $0.28 $0.30 $0.26 $0.22 $0.20 $0.18 $0.20 $0.16
$0.10
$- 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* Calendar Year
* Current rate Outlook
Q3Q3--0404 ––MagazineMagazine adad revenuesrevenues ++ lowlow--toto--midmid singlesingle digitsdigits ––BroadcastBroadcast pacingspacings ++ midmid--teensteens ––EPSEPS estimateestimate $0.62*$0.62* isis achievableachievable FYFY--0404——$2.09*$2.09* isis achievableachievable
* First Call consensus MeredithMeredith StrategiesStrategies
ExpandExpand Publishing’sPublishing’s powerfulpowerful basebase
ContinueContinue Broadcasting’sBroadcasting’s turnaroundturnaround
StrengthenStrengthen ourour excellentexcellent financialfinancial positionposition