UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
Commission file number 1-5128
Meredith Corporation
(Exact name of registrant as specified in its charter)
Iowa 42-0410230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1716 Locust Street, Des Moines, Iowa 50309-3023
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: 515 - 284-3000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $1 New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
Title of class - Class B Stock, par value $1
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The registrant estimates the aggregate market value of voting stock held by
non-affiliates of the registrant at July 31, 1996, was $712,644,000 based upon
the closing price on the New York Stock Exchange at that date.
Number of common shares outstanding at July 31, 1996: 20,278,501
Number of class B shares outstanding at July 31, 1996: 6,568,377
----------
Total common and class B shares outstanding 26,846,878
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DOCUMENT INCORPORATED BY REFERENCE
Description of document Part of the Form 10-K
------------------------------------ --------------------------------
Certain portions of the Registrant's
Proxy Statement for the Annual Part III to the extent described
Meeting of Stockholders to be therein.
held on November 11, 1996
The registrant hereby amends the following item of its 1996 Annual Report on
Form 10-K as set forth in the pages attached hereto:
Part I, Item 1. Business
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PART I
Item 1. Business
General
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Meredith Corporation (the Company) was founded in 1902 by Edwin Thomas
Meredith, and incorporated in Iowa in 1905. Since its start with Successful
Farming magazine, the Company has expanded its operations, primarily in
magazine publishing and television broadcasting, through internal growth and
acquisitions.
Today, Meredith Corporation has three operating segments for reporting
purposes: Publishing, Broadcasting, and Real Estate. Virtually all businesses
within each segment operate in the United States. The Publishing segment
includes magazine and book publishing and brand licensing operations. The
Broadcasting segment includes the operation of seven network-affiliated
television stations. The Real Estate segment includes franchise and marketing
operations. In previously reported fiscal years, the Company's segments
included a cable television segment. It was classified as discontinued in
fiscal 1996 due to the intended sale of all cable television operations, and
prior years' financial results have been restated accordingly.
The Company's largest source of revenues is magazine and television
advertising. Television advertising tends to be seasonal in nature with higher
revenues traditionally reported in the second and fourth fiscal quarters.
Certain other revenues are also somewhat seasonal, such as real estate
franchise fees which are generally highest during the spring and summer months.
Trademarks (e.g. Better Homes and Gardens, Ladies' Home Journal) are very
important to the Company's Publishing segment. Better Homes and Gardens and
its familiar "house and trees" logo is also crucial to the Real Estate segment.
Local recognition of television station call letters is important in
maintaining audience shares in the Broadcasting segment. Name recognition and
the public image of these trademarks are vital to both ongoing operations and
the introduction of new businesses. Accordingly, the Company aggressively
defends it trademarks.
The Company did not have any material expenses for research and development
during any of the past three fiscal years.
There is no material effect on capital expenditures, earnings and the
competitive position of the Company regarding compliance with federal, state
and local provisions relating to the discharge of materials into the
environment and to the protection of the environment.
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The Company had 2,310 employees at June 30, 1996 (including 153 part-time
employees and 252 employees in the discontinued cable operation).
Business Developments
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The Company formalized plans to sell all of its ownership interest in cable
television systems and therefore classified its Cable segment as a discontinued
operation effective September 30, 1995. In April 1996, the Meredith/New
Heritage Partnership, of which the Company indirectly owns 96 percent,
announced the signing of an agreement to sell its 73 percent ownership interest
in Meredith/New Heritage Strategic Partners, L.P. Pending approvals, the sale
is expected to close in the second quarter of fiscal 1997. This sale will
complete the Company's exit from the cable television business. Meredith
Corporation expects to record a net gain of approximately $15 to $20 million
after taxes from the sale.
In July 1995, the Company announced an alliance with The Reader's Digest
Association, Inc., granting Reader's Digest the rights for direct-response
marketing of certain Meredith-trademarked products. In December 1995, the
Company sold to Book-of-the-Month Club, Inc., the accounts receivable,
membership lists and product inventory of three book clubs: Better Homes and
Gardens Crafts Club, Better Homes and Gardens Cook Book Club and Country Homes
and Gardens Book Club. These actions resulted in a significantly smaller book
publishing operation for the Company, with a primary focus on the sale of books
through retail marketing channels.
In January 1996, the Company acquired the assets of WOGX, a FOX-affiliated
television station serving the Ocala/Gainesville, Florida market.
In fiscal 1996, all of the Company's New York City employees were relocated
into consolidated office space. The Company entered into a long-term lease
agreement for these offices at considerable cost savings. Also in June 1996,
ground was broken for the construction of a new office building in Des Moines,
adjacent to current corporate headquarters. When completed, this building will
increase operational efficiency by enabling all Des Moines employees to be
located on a corporate campus.
Overview of Fiscal 1996 Financial Results
- -----------------------------------------
Fiscal 1996 revenues for the Company were $867,137,000, an increase of 5
percent over fiscal 1995 revenues of $829,401,000. This increase was primarily
due to higher advertising revenues in both the Company's magazine and
broadcasting operations. Advertising revenues in the Broadcasting segment were
boosted by an additional six months of operations of WSMV-TV in Nashville,
acquired by the Company in January 1995.
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Company operating profit in fiscal 1996 increased to $97,505,000 from
$72,702,000 in fiscal 1995, an increase of 34 percent. All business groups
reported higher operating profits in fiscal 1996.
Fiscal 1996 net earnings were $53,940,000, or $1.91 per share. In fiscal 1995,
the Company experienced a net loss of $6,315,000, or 23 cents per share due to
the recognition of a non-cash charge for the cumulative effect of a change in
accounting principle. (See Note 3 to Consolidated Financial Statements on page
F-35 of this Form 10-K.) Fiscal 1996 earnings per share from continuing
operations before special items were $1.82, up 28 percent from comparable
fiscal 1995 results. Special items included the gain on sale of book clubs in
fiscal 1996 and IRS interest income in fiscal 1995.
See Financial Information about Industry Segments beginning on page F-4 of this
Form 10-K.
Description of Business
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PUBLISHING
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Publishing revenues $696,285 $683,331 $622,953
Publishing operating profit $ 64,107 $ 48,636 $ 45,678
Publishing revenues, representing 80 percent of the Company's consolidated
revenues in fiscal 1996, increased 2 percent as higher magazine advertising
revenues more than offset the decline in revenues resulting from the downsizing
of book operations. This downsizing had a favorable effect on book operating
results which combined with a strong performance in magazine publishing to
result in a 32 percent increase in Publishing operating profit.
Magazine
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Magazine operations account for more than 90 percent of the revenues and
operating profit of the Publishing segment. Meredith Corporation currently
publishes 19 subscription magazines that appeal primarily to consumers in the
home and family market. Key advertising and circulation information for major
subscription titles is as follows:
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Title Frequency Rate Base Ad Pages
----- --------- --------- --------
Better Homes and Gardens - Home service
Fiscal 1996 Monthly 7,600,000 1,753
Fiscal 1995 Monthly 7,600,000 1,592
Ladies' Home Journal - Women's service
Fiscal 1996 Monthly 4,500,000 1,445
Fiscal 1995 Monthly 5,000,000 1,482
Country Home - Home decorating
Fiscal 1996 Bi-monthly 1,000,000 558
Fiscal 1995 Bi-monthly 1,000,000 531
Country America - Country music and lifestyle
Fiscal 1996 10x/year 900,000 467
Fiscal 1995 10x/year 1,000,000 599
Midwest Living - Regional travel and lifestyle
Fiscal 1996 Bi-monthly 815,000 587
Fiscal 1995 Bi-monthly 815,000 561
Traditional Home - Home decorating
Fiscal 1996 Bi-monthly 775,000 515
Fiscal 1995 Bi-monthly 725,000 474
WOOD - Woodworking projects and techniques
Fiscal 1996 9x/year 600,000 332
Fiscal 1995 9x/year 650,000 328
Successful Farming - Farm information
Fiscal 1996 12x/year 485,000 590
Fiscal 1995 12x/year 485,000 641
Golf for Women - Golf instruction and information
Fiscal 1996 Bi-monthly 325,000 367
Fiscal 1995 Bi-monthly 325,000 322
Crayola Kids - Kids' reading, crafts and games
Fiscal 1996 Bi-monthly 350,000 107
Fiscal 1995 Bi-monthly 300,000 96
Rate base is the circulation guaranteed to advertisers.
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Ad pages are as reported to Publisher's Information Bureau, Agricom, or if
unreported, as calculated by the publisher using a similar methodology.
Better Homes and Gardens magazine, the Company's flagship, accounts for a
significant percentage of revenues and operating profits of the Publishing
segment and the Company.
Country America, published by Country America Corporation, is jointly owned by
Meredith Corporation (which owns 80 percent), TNN:The Nashville Network, and
Group W Satellite Communications. In fiscal 1997, Country America will begin
publishing on a bi-monthly schedule.
Crayola Kids is published by Meredith Custom Publishing under a license from
Binney & Smith Properties, Inc., makers of Crayola crayons.
Other subscription magazines published by the Company include Cross Stitch &
Needlework and three Better Homes and Gardens craft titles (Decorative
Woodcrafts, Floral & Nature Crafts and American Patchwork & Quilting). The
Company discontinued publication of home garden magazine and three small
woodworking/craft titles in fiscal 1996. All subscription titles, except
Successful Farming, are also sold on newsstands. Successful Farming is
available only by subscription to qualified farm families.
In addition, one of the larger contributors to revenues and operating profit of
magazine publishing is a group of magazines sold primarily on the newsstand,
the Better Homes and Gardens Special Interest Publications. These titles are
issued from one to four times annually. Approximately 40 different titles (75
issues) were published in fiscal 1996 in categories including decorating, do-
it-yourself, home plans, crafts, gardening, holidays and cooking. Total annual
advertising and circulation revenues of these publications exceed those of
other Company-owned titles, except Better Homes and Gardens and Ladies' Home
Journal.
Several subscription magazines also publish related specialty magazines sold
primarily on newsstands. Ladies' Home Journal published two special interest
issues in fiscal 1996. Country Home published four editions of Country Gardens
and one Holidays at Home edition in fiscal 1996. Traditional Home introduced
Renovation Style, publishing two issues in fiscal 1996. In addition, the
Company publishes numerous craft magazines sold primarily on newsstands.
Meredith Custom Publishing (MCP) provides custom publishing services to
advertisers and other external clients on both one-time and periodic bases.
Current clients for ongoing periodicals include Sears Roebuck & Company,
Northwest Airlines and The Home Depot. MCP operates California Tourism
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Publications, a wholly-owned subsidiary of Meredith Corporation, that produces
travel publications for the California Division of Tourism. MCP also publishes
travel guides for other states and cities. MCP published a series of brochures
for Metropolitan Life Insurance Company in fiscal 1996. MCP manages the
licensing agreement with Hallmark Cards, Inc., which involves the marketing of
Better Homes and Gardens Heart and Home Collection cards and specialty
products. The creation and sale of premiums and specialty products, typically
for one-time promotional purposes, are also significant sources of revenues for
the custom publishing operations.
Meredith Custom Marketing develops comprehensive integrated marketing programs
which may include magazine advertising, custom publishing and resources from
other operating segments.
American Park Network, a wholly owned subsidiary, publishes the country's
largest collection of visitor guide magazines for national, state and wildlife
parks. American Park Network published 20 guides, primarily furnished free to
park visitors, in fiscal 1996.
Magazine operations also realize revenues from the sale of ancillary products
and services.
The Company also has a 50 percent interest in a monthly Australian edition of
Better Homes and Gardens magazine.
Magazine Advertising
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Magazine advertising revenues $308,959 $276,312 $236,814
Advertising revenues are generated primarily from sales to clients engaged in
consumer advertising. Many of the Company's larger magazines offer advertisers
different regional and demographic editions which contain the same basic
editorial material but permit advertisers to concentrate their advertising in
specific markets or to target specific audiences. The Company sells three
primary types of magazine advertising: run of press, mail order and insert.
Most of the Company's advertising pages and revenues are derived from run of
press advertising. Meredith has a group sales staff specializing in
advertising sales across titles.
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Magazine Circulation
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Magazine circulation
revenues $272,406 $269,029 $257,453
Subscription revenues, the largest source of circulation revenues, are
generated through direct-mail solicitation, agencies, insert cards and other
means. Newsstand sales, including single-copy sales at supermarkets, drug-
stores and other retail outlets, also are important sources of circulation
revenues for most magazines. Magazine wholesalers have the right to receive
credit for magazines returned to them by retailers.
Books
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Consumer book revenues $ 56,481 $ 86,568 $ 86,040
The Company publishes and markets a line of 225 consumer home and family
service books, published primarily under the Better Homes and Gardens
trademark. They are sold through retail book and specialty stores, mass
merchandisers and other means. Approximately 40 new or revised titles were
published during fiscal 1996. Books are primarily sold on a fully returnable
basis. The Company has also retained the direct-marketing rights to selected
annual trademarked titles.
The decline in consumer book revenues in fiscal 1996 reflects the elimination
of most book direct-response marketing revenues due to the July 1995 Reader's
Digest alliance and the December 1995 sale of three book clubs. The Company
expects to receive royalties for the use of Meredith trademarks as a result of
these actions.
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Brand Licensing
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The Company has licensed Wal-Mart Stores, Inc., to operate Better Homes and
Gardens Garden Centers in its stores nationwide. In addition, Wal-Mart stores
began to offer Better Homes and Gardens Floral & Nature Crafts-labeled products
in January 1996. The Company receives royalties for sales of licensed products
offered exclusively in Wal-Mart stores.
Other Publishing
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The Company has licensed Multicom Publishing, Inc., in which it has a minority
ownership interest, to develop and publish CD-ROM titles based on Meredith's
home and family editorial products. The Company earns royalties on the sales
of these titles. In addition, several of the Company's magazines have
established web sites on the Internet. The most extensive of these web sites
is Successful Farming @griculture Online, which recently began offering
subscriptions to premium services in addition to its core material. Also, The
Better Homes Kitchen is available through CompuServe. None of these ventures
is currently a material source of revenues.
Production and Delivery
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The major raw materials essential to this segment are coated and uncoated
publication paper and book-grade papers. Strong demand and a relatively fixed
level of supply resulted in sharp increases in paper prices in fiscal 1995 and
early fiscal 1996. Since January 1996, market conditions have softened and
some reductions in the Company's paper prices have occurred. At June 30,
1996, the Company's paper prices were about 35 percent higher than two years
ago. Since then, major paper suppliers have announced further price
reductions. However, price increases may occur later in fiscal 1997. The
Company has contractual agreements with major paper manufacturers to ensure
adequate supplies of paper for planned publishing requirements. Efforts to
minimize the impact of price increases to-date have included changes in
magazine rate base levels and paper type and weight.
Postage is also a significant expense to this segment due to the large volume
of magazine and subscription promotion mailings. A postal rate increase in
January 1995 resulted in an annual increase of approximately 13 percent. The
Publishing operations continually seek the most economical and effective
methods for mail delivery. Accordingly, certain cost-saving measures, such as
pre-sorting and drop-shipping to central postal centers, are utilized. The
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Board of Governors of the U. S. Postal Service has approved increased
discounts, effective July 1, 1996, for carrier-route sorting. The Company
believes this will result in cost savings for the Publishing segment. Some
magazine subscription invoices include a separate charge for postage and
handling.
Paper and postage expenses together account for approximately one-third of the
Publishing segment's operating costs.
The Company has printing contracts for all of it's magazine titles. It's two
largest titles, Better Homes and Gardens and Ladies' Home Journal, are printed
under long-term contracts with a major United States printer. All of the
Company's published books are manufactured by outside printers with the Company
usually supplying the paper. Book manufacturing contracts are generally on a
title-by-title basis.
Most fulfillment services for the Company's Publishing segment are provided by
an unrelated third party under negotiated contract terms. National newsstand
distribution services are also provided by an unrelated third party under a
multi-year agreement.
Competition
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Publishing is a highly competitive business. The Company's magazines, books,
and related publishing products and services compete with other mass media and
many other types of leisure-time activities. Overall competitive factors in
this segment include price, editorial quality and customer service.
Competition for advertising dollars in magazine operations is primarily based
on advertising rates, reader response to advertisers' products and services and
effectiveness of sales teams. Better Homes and Gardens and Ladies' Home
Journal compete for readers and advertising dollars primarily in the women's
service magazine category. Both are part of a group known as the "Seven
Sisters," which also includes Family Circle, Good Housekeeping, McCall's,
Redbook and Woman's Day magazines, published by other companies. In fiscal
1996, the combined advertising revenue market share of Better Homes and Gardens
and Ladies' Home Journal magazines totaled 37 percent. This share exceeded all
other corporate publishers included in the Seven Sisters.
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BROADCASTING
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Broadcasting advertising
revenues $137,964 $116,460 $ 95,525
Broadcasting total revenues $145,932 $121,690 $100,012
Broadcasting operating profit $ 52,311 $ 41,883 $ 19,189
Broadcasting revenues, representing 17 percent of the Company's consolidated
revenues in fiscal 1996, increased 20 percent and operating profit increased 25
percent in fiscal 1996. These increases were primarily due to a full year's
ownership of WSMV-TV, an NBC affiliate in Nashville acquired in January 1995.
The following table lists selected information regarding the Company's
television stations:
Station, Channel, DMA Major
Market, Network National Expiration Average Commercial
Affiliation, TV Homes Market Date of Audience TV Stations
Frequency in DMA Rank FCC License Share in Market
- ----------------- --------- -------- ----------- -------- -----------
KPHO-TV, Ch. 5 1,170,000 17 10- 1-1998 10.5% 4 VHF
Phoenix, Ariz. 3 UHF
(CBS) VHF
WOFL-TV, Ch. 35 998,000 22 2- 1-1997 9.8% 3 VHF
Orlando, Fla. 3 UHF
(FOX) UHF
KCTV, Ch. 5 780,000 32 2- 1-1998 18.0% 3 VHF
Kansas City, Mo. 3 UHF
(CBS) VHF
WSMV-TV, Ch. 4 766,000 33 8- 1-1997 20.0% 3 VHF
Nashville, Tenn. 2 UHF
(NBC) VHF
WNEM-TV, Ch. 5 450,000 60 10- 1-1997 19.5% 2 VHF
Flint/Saginaw, Mich. 2 UHF
(CBS) VHF
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KVVU-TV, Ch. 5 400,000 66 10- 1-1998 10.5% 4 VHF
Las Vegas, Nev. 3 UHF
(FOX) VHF
WOGX-TV, Ch. 51 95,000 167 2- 1-1997 12.5% 2 UHF
Ocala/Gainesville, Fla.
(FOX) UHF
VHF (very high frequency) stations transmit on channels 2 through 13; UHF
(ultra high frequency) stations transmit on channels above 13. Technical
factors and area topography determine the market served by a television
station.
Designated Market Area (DMA), as defined by A. C. Nielsen Company (Nielsen), is
an exclusive geographic area consisting of all counties in which local stations
receive a preponderance of total viewing hours. The market rank is the Nielsen
1995-96 DMA rank based on estimated television households as reported by
Nielsen Media Research.
Average audience share represents the estimated percentage of households using
television tuned to the station. The percentages shown reflect the average
Nielsen ratings share for the July 1995, November 1995, February 1996 and May
1996 measurement periods from 9 a.m. to midnight daily.
The number of major commercial television stations reported is from "Investing
in Television, '96 Market Report" dated May 1996. The Company's station and
all other stations reporting revenues are included. Public television stations
are not included.
WOGX was acquired in January 1996. WSMV was acquired in January 1995.
WNEM became a CBS affiliate in January 1995. Previously, it was an NBC
affiliate. KPHO became a CBS affiliate in September 1994. It was previously
an independent station.
Operations
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Advertising is the principal source of revenues for the Broadcasting segment.
The stations sell commercial time to both local and national advertisers.
Rates for national and local spot advertising are influenced primarily by the
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market size and audience demographics for programming. Most national
advertising is sold by a national advertising representative firm. Local
advertising revenues are generated by sales staff at each station's location.
All of the Company's television stations are network affiliates and as such
receive programming and/or cash compensation from their national network. In
exchange, much of the advertising time during this programming is sold by the
network. Affiliation with a national network has an important influence on a
station's revenues. The audience share drawn by a network's programming
affects the rates at which advertising time is sold. New and extended network
affiliation contracts signed in the past two years have increased the Company's
network compensation.
Competition
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Meredith television stations compete directly for advertising dollars and
programming in each of their markets with other television stations and cable
television providers. Other mass media providers such as newspapers and radio
stations also provide competition for market advertising dollars and for
entertainment and news information. Ownership consolidation continues to occur
in the television broadcast industry. In addition, the Telecommunication Act
of 1996 is expected to increase competition in part due to the ability of new
video service providers (e.g. telephone companies) to enter the industry. The
Company cannot predict the effects of these actions on the future results of
the Company's broadcasting operations.
Regulation
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Television broadcasting operations are subject to regulation by the Federal
Communications Commission (FCC) under the Communications Act of 1934, as
amended (Communications Act). Under the Communications Act, the FCC performs
many regulatory functions including granting of station licenses and
determining regulations and policies which affect the ownership, operation,
programming and employment practices of broadcast stations. The FCC must
approve all television licenses and therefore compliance with FCC regulations
is essential to the operation of this segment. The maximum term for which the
FCC may grant and renew broadcast licenses was increased from five to eight
years by the 1996 Act. The Company is not aware of any reason why its
television station licenses would not be renewed. The 1996 Act changed the
former ownership limit of twelve television stations or total national audience
reach of no more than 25 percent of television households. Under the 1996 Act,
the 25 percent limit was raised to 35 percent and there is no limit on the
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absolute number of stations that may be owned. (The information given in this
section is not intended to be a complete listing of all regulatory provisions
currently in effect.)
Congressional legislation and FCC rules are subject to change and these groups
may adopt regulations that could affect future operations and profitability of
the Company's Broadcasting segment. The FCC recently proposed the adoption of
rules for implementing digital advanced television service. Additional related
proposals are expected in the near future. The Company cannot predict what
changes to current legislation will be adopted or determine what impact any
changes could have on its television broadcasting operations.
REAL ESTATE
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Years ended June 30 1996 1995 1994
------------------- -------- -------- --------
(in thousands)
Real Estate revenues $ 25,303 $ 24,429 $ 21,813
Real Estate operating profit $ 3,496 $ 2,298 $ 1,914
Increased revenues and operating profit in the Company's Real Estate segment
resulted primarily from increased franchise fees received from member firms.
Operations
- ----------
The Better Homes and Gardens Real Estate Service is a national residential real
estate marketing service which licenses the rights to exclusive territories to
selected real estate firms. Members and affiliates (real estate companies
affiliated with larger member firms) totaled 787 in the United States and 19 in
Canada and other countries on June 30, 1996. The primary revenue sources of
the Real Estate segment are franchise fees (based on a percentage of each
member's gross commission income on residential housing sales) and the sale of
marketing programs and materials to member firms.
Competition
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The real estate business is highly competitive and customer service remains
vital to the success of this segment. The Real Estate Service competes for
members with other national real estate franchise networks primarily on the
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bases of benefits provided to the member and fees for membership. Some
ownership consolidation of national franchise networks has occurred recently in
the industry. Currently, the Better Homes and Gardens Real Estate Service is
one of the five largest residential real estate franchise networks in the
country.
DISCONTINUED OPERATION
- ----------------------
On April 19, 1996, the Company, through its cable venture, Meredith/New
Heritage Partnership, announced the signing of an agreement to sell the
venture's 73 percent ownership interest in Meredith/New Heritage Strategic
Partners, L.P. (Strategic Partners) to its minority partner, Continental
Cablevision, Inc. (Continental). Strategic Partners owns and operates cable
television systems with approximately 126,000 subscribers in the
Minneapolis/St. Paul area. These systems are the only cable television
operations currently owned by Strategic Partners. (Previously, Strategic
Partners also owned a system with 24,000 subscribers in Bismarck, North Dakota,
which was sold in March 1995.) Pending approvals from local franchise
authorities, the FCC and others, the sale is expected to close during the
second quarter of fiscal 1997. The total value of the systems has been placed
at $262.5 million. Meredith Corporation expects to receive approximately $115
to $120 million in cash (net of taxes)and recognize a gain estimated at $15 to
$20 million (net of taxes) from the sale. The calculation of the estimated
gain includes actual deferred and expected net operating results of the Cable
segment from September 30, 1995 until the sale date. (See Note 2 to
Consolidated Financial Statements on page F-32 of this Form 10-K for financial
and other information related to the discontinued cable operation.)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, there unto duly authorized.
MEREDITH CORPORATION
(Registrant)
/s/ Larry D. Hartsook
-------------------------
Larry D. Hartsook
Vice President - Finance
(on behalf of the Registrant and as
principal accounting and financial officer)
Date: October 24, 1996
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