UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 19, 2000
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)
515 - 284-3000
(Registrant's telephone number, including area code)
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Item 5. Other Events
On April 19, 2000, Meredith Corporation issued a news release reporting
earnings for the third fiscal quarter and nine months ended March 31, 2000.
That news release and the related conference call script are attached as
exhibits.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 News release issued by Meredith Corporation dated April 19,
2000 concerning financial results for the quarter and nine-
months ended March 31, 2000.
99.2 Conference call script of conversation with analysts on
April 19, 2000 concerning news release of the same date.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Suku V. Radia)
Suku V. Radia
Vice President - Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: May 2, 2000
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Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
99.1 News release issued by Meredith Corporation dated April 19,
2000 concerning financial results for the quarter and nine-
months ended March 31, 2000.
99.2 Conference call script of conversation with analysts on
April 19, 2000 concerning news release of the same date.
E-1
Exhibit 99.1
------------
MEREDITH CORPORATION REPORTS 15 PERCENT
THIRD QUARTER EARNINGS PER SHARE GROWTH
Strong publishing brands drive 8 percent revenue growth
DES MOINES, Iowa -- (April 19, 2000) -- Meredith Corporation (NYSE: MDP) today
reported net earnings for the fiscal 2000 third quarter ended March 31, 2000,
of $24.8 million or 47 cents per share, compared to $22.1 million or 41 cents
per share in the prior-year third quarter.
For the first three quarters of fiscal 2000, earnings were a record $68.3
million, or $1.29 per share. For the same period in fiscal 1999, earnings
before nonrecurring items were $64.9 million, or $1.20 per share. Net earnings
for the fiscal 1999 year-to-date period were $66.3 million, or $1.23 per share,
including an after-tax gain of $1.4 million, or 3 cents per share, from the
sale of the net assets of the Better Homes and Gardens Real Estate Service in
the fiscal 1999 first quarter.
Fiscal 2000 third quarter earnings before interest, taxes, depreciation and
amortization (EBITDA) increased 16 percent to $62.8 million from $54.1 million
in the prior-year quarter. For the year-to-date period, EBITDA grew 15 percent
to $179.1 million from $155.9 million in the prior-year period.
Company revenues for the fiscal 2000 third quarter grew 8 percent to $286.9
million from $265.1 million in the prior year. For the year-to-date period,
company revenues grew 6 percent to $813.5 million from $765.9 million.
Comparable third quarter and year-to-date revenues grew 8 percent and 5
percent, respectively, when adjusting for discontinued magazine titles and the
impact of the WGNX-TV (CBS, Atlanta) acquisition.
Fiscal 2000 third quarter and year-to-date earnings include dilution of 8
cents per share and 21 cents per share, respectively, from the March 1, 1999,
acquisition of the Atlanta station.
OPERATING RESULTS
Publishing
- ----------
Publishing Group operating profit and revenues increased to record levels in
the fiscal 2000 third quarter and year-to-date periods. Third quarter
operating profit grew 26 percent to $46.5 million from $37.0 million in the
prior-year quarter. For the year-to-date period, operating profit grew 23
percent, to $108.6 million from $88.6 million in fiscal 1999.
Publishing revenues grew 11 percent in the third quarter to $224.1 million,
from $202.1 million in fiscal 1999. For the year-to-date, revenues grew 5
percent to $606.9 million from $575.7 million in the prior year. Comparable
third quarter and year-to-date publishing revenues increased 12 percent and 7
percent, respectively, when adjusting for discontinued titles.
Strong fiscal 2000 third quarter and year-to-date revenues and operating
profits were reported by Better Homes and Gardens, Country Home, and
Traditional Home magazines, along with the company's lineup of Better Homes and
Gardens Special Interest Publications and its book publishing operation.
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"Our Publishing Group is performing extremely well," said Meredith Corporation
chairman and CEO William T. Kerr. "Of special note is Ladies' Home Journal
magazine. It achieved marked improvement in the third quarter, with
advertising pages up 8 percent versus the prior year, and even stronger
advertising revenue growth."
Broadcasting
- ------------
Broadcasting Group operating profit for the fiscal 2000 third quarter was $7.9
million, compared to $14.7 million in the prior year. For the year-to-date
period, operating profit was $42.7 million compared to $53.7 million in fiscal
1999.
Reported third quarter Broadcasting Group revenues were $62.9 million, compared
to $63.1 million in fiscal 1999. For the year-to-date period, reported
Broadcasting Group revenues increased 9 percent to $206.6 million from $190.1
million in the prior-year period. Without the Atlanta station, Broadcasting
Group revenues decreased 6 percent for the quarter and 1 percent for the
year-to-date period.
"Primary factors adversely affecting broadcasting performance included weak
prime time ratings for the FOX network; increased television advertising
inventory; continuing investments in the Atlanta station; and investments in
news expansion and improvement across the Group," Kerr said.
He added that revenue and operating profit growth will be priorities of Cary
Jones, Meredith's new Broadcasting Group president. Jones, who assumed his
position on March 29, brings 28 years of industry experience to the position.
"He is keenly focused on improving the group's performance," Kerr said.
Other
- -----
Third quarter and year-to-date interest expense increased as a result of debt
related to the acquisition of the Atlanta station. Unallocated corporate
expenses declined in both the third quarter and the year-to-date periods
primarily as a result of cost containment activities.
Meredith repurchased approximately 900,000 shares of stock in the third
quarter, increasing total shares repurchased for the fiscal year to date to
nearly 1.3 million. On March 27, the company announced that its board of
directors authorized the repurchase of an additional 2 million shares through
public and private transactions.
"We've significantly accelerated our share repurchase activities," Kerr said.
"We have strong fundamentals, industry-leading brands and a well-respected
management team. At current levels, we believe buying our own stock is a smart
investment."
About Meredith Corporation
- --------------------------
Meredith Corporation (www.meredith.com) is one of the nation's leading media
and marketing companies with businesses centering on magazine and book
publishing, television broadcasting, and interactive and integrated marketing.
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Meredith publishes 20 subscription magazines, including Better Homes and
Gardens and Ladies' Home Journal, and more than 100 special interest
publications. Meredith owns 12 television stations -- located in fast-growing
markets such as Atlanta, Phoenix, Orlando, Portland and Las Vegas -- and
produces original television programming based on its strong brands. Meredith
has nearly 300 books in print and has established marketing relationships with
some of America's leading companies, including The Home Depot, Kraft Foods and
Nestle USA. Meredith's consumer database, which contains more than 60 million
names, is the largest domestic database among media companies and enables
magazine and television advertisers to precisely target marketing campaigns.
Additionally, Meredith has an extensive Internet presence, including branded
anchor tenant positions on America Online.
MEREDITH CORPORATION
FISCAL 2000 THIRD QUARTER AND YEAR-TO-DATE
EARNINGS PER SHARE AT A GLANCE
(Note: All figures are adjusted for stock splits)
The chart below depicts comparable quarterly and fiscal year diluted earnings
per share (EPS) before nonrecurring items and discontinued operations.
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Fiscal Year
-------- -------- -------- -------- -----------
F1993 .06 .09 .10 .10 .35
F1994 .08 .13 .16 .13 .50
F1995 .14 .19 .18 .20 .71
F1996 .17 .22 .24 .28 .91
F1997 .22 .31 .33 .36 1.22
F1998 .27 .40 .37 .42 1.46
F1999 .32 .47 .41 .44 1.64
F2000 .34 .48 .47
- -- Net earnings for the fiscal 2000 third quarter ended March 31, 2000, were
47 cents per share, compared to 41 cents per share in the prior-year third
quarter.
- -- For the first three quarters of fiscal 2000, earnings were a record $1.29
per share. For the same period in fiscal 1999, earnings before
nonrecurring items were $1.20 per share. Net earnings for the fiscal 1999
year-to-date period were $1.23 per share, including an after-tax gain of
3 cents per share from the sale of the net assets of the Better Homes and
Gardens Real Estate Service in the fiscal 1999 first quarter.
- -- Fiscal 2000 third quarter and year-to-date earnings include dilution of
8 cents per share and 21 cents per share, respectively, from the March 1,
1999, acquisition of WGNX-TV (CBS, Atlanta).
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Nine Months
Ended March 31 Ended March 31
------------------- -------------------
2000 1999 2000 1999
- ------------------------------------------------------------------------------
(In thousands except per share)
Revenues:
Advertising $172,478 $158,141 $487,131 $451,679
Circulation 70,273 68,451 208,090 205,018
All other 44,192 38,529 118,255 109,185
-------- -------- -------- --------
Total revenues 286,943 265,121 813,476 765,882
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 121,417 106,867 337,775 316,037
Selling, general & administrative 102,770 104,159 296,600 293,982
Depreciation and amortization 13,000 10,865 39,021 30,925
-------- -------- -------- --------
Total operating costs and expenses 237,187 221,891 673,396 640,944
-------- -------- -------- --------
Income from operations 49,756 43,230 140,080 124,938
Gain from disposition -- -- -- 2,375
Interest income 399 377 836 547
Interest expense (8,657) (5,328) (26,706) (13,014)
-------- -------- -------- --------
Earnings before income taxes 41,498 38,279 114,210 114,846
Income taxes 16,682 16,192 45,912 48,525
-------- -------- -------- --------
Net earnings $ 24,816 $ 22,087 $ 68,298 $ 66,321
======== ======== ======== ========
Basic earnings per share $ 0.48 $ 0.43 $ 1.32 $ 1.27
======== ======== ======== ========
Basic average shares outstanding 51,275 52,061 51,548 52,294
======== ======== ======== ========
Diluted earnings per share $ 0.47 $ 0.41 $ 1.29 $ 1.23
======== ======== ======== ========
Diluted average shares outstanding 52,621 53,598 53,099 53,880
======== ======== ======== ========
Dividends paid per share $ 0.080 $ 0.075 $ 0.230 $ 0.215
======== ======== ======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months Nine Months
Ended March 31 Ended March 31
------------------- -------------------
2000 1999 2000 1999
- ------------------------------------------------------------------------------
(In thousands)
Revenues
Publishing $224,093 $202,071 $606,878 $575,745
Broadcasting 62,850 63,050 206,598 190,137
-------- -------- -------- --------
Total revenues $286,943 $265,121 $813,476 $765,882
======== ======== ======== ========
Operating Profit
Publishing $ 46,532 $ 37,020 $108,609 $ 88,601
Broadcasting 7,930 14,728 42,707 53,703
Unallocated corporate expense (4,706) (8,518) (11,236) (17,366)
-------- -------- -------- --------
Income from Operations $ 49,756 $ 43,230 $140,080 $124,938
Gain from disposition -- -- -- 2,375
Interest income 399 377 836 547
Interest expense (8,657) (5,328) (26,706) (13,014)
-------- -------- -------- --------
Earnings before income taxes 41,498 38,279 114,210 114,846
Income taxes 16,682 16,192 45,912 48,525
-------- -------- -------- --------
Net earnings * $ 24,816 $ 22,087 $ 68,298 $ 66,321
======== ======== ======== ========
Depreciation & Amortization
Publishing $ 2,894 $ 2,826 $ 8,657 $ 8,520
Broadcasting 9,596 7,581 28,784 20,960
Unallocated corporate 510 458 1,580 1,445
-------- -------- -------- --------
Total depreciation & amortization $ 13,000 $ 10,865 $ 39,021 $ 30,925
======== ======== ======== ========
EBITDA
Publishing $ 49,426 $ 39,846 $117,266 $ 97,121
Broadcasting 17,526 22,309 71,491 74,663
Unallocated corporate (4,196) (8,060) (9,656) (15,921)
-------- -------- -------- --------
Total EBITDA $ 62,756 $ 54,095 $179,101 $155,863
======== ======== ======== ========
* Note: Net earnings for the nine months ended March 31, 1999 included a post-
tax gain of $1.4 million, or 3 cents per share from the sale of the net
assets of the Better Homes and Gardens Real Estate Service.
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Exhibit 99.2
------------
MEREDITH CORPORATION
FISCAL 2000 THIRD QUARTER CONFERENCE CALL
April 19, 2000 - 10 a.m. Central
JENNIFER MCCOY:
Good morning. I'm Jenny McCoy, manager of investor communication for Meredith
Corporation. With me are Bill Kerr, chairman and chief executive officer; Suku
Radia, our chief financial officer; Cary Jones, our Broadcasting Group
president; Steve Lacy, president of the new Interactive and Integrated
Marketing Group; and Tom Ferree, our corporate controller.
Bill and Suku will begin the program by discussing our fiscal 2000 third
quarter results, and then we'll respond to your questions.
Before they begin, let me remind you that we'll be discussing forward-looking
information that is subject to certain risks and uncertainties 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 which could adversely affect future results include, but
are not limited to, changes in advertising and consumer demand, paper prices,
postal rates and other adverse economic conditions nationally, regionally or in
specific local markets. A complete description can be found on page 22 of our
fiscal 1999 annual report.
At this time, I'll turn the program over to Bill.
BILL KERR:
Thanks Jenny, and welcome to everyone listening this morning.
First, I'd like to officially welcome Suku Radia to Meredith, as this is the
first conference call in which he will be an active participant. We believe
you will enjoy working with Suku, and we encourage you to call him any time you
have questions or comments about the company.
I'd also like to welcome Cary Jones to our call. He was recently promoted to
president of our Broadcasting Group. His extensive experience in broadcasting
operations will be valuable in improving our Group's performance as we go
forward.
Let's start with Suku giving a quick update on the financial results released
this morning.
SUKU RADIA:
This morning, as you may have seen, we reported net earnings for the quarter
ended March 31, of $24.8 million or 47 cents per share, compared to $22.1
million or 41 cents in the prior-year third quarter. This equates to 15
percent growth in earnings per share for the quarter.
For the first three quarters of fiscal 2000, earnings were $68.3 million, or
$1.29 per share. For the same period in fiscal 1999, earnings before
nonrecurring items were $64.9 million, or $1.20 per share.
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Net earnings for the fiscal 1999 year-to-date period were $66.3 million, or
$1.23 per share, which included an after-tax gain of $1.4 million, or 3 cents
per share from the sale of the net assets of the Better Homes and Gardens real
estate service in the fiscal 1999 first quarter.
Fiscal 2000 third quarter EBITDA increased 16 percent to $62.8 million from
$54.1 million in the prior-year quarter. For the year-to-date, EBITDA grew 15
percent to $179.1 million from $155.9 million.
Fiscal 2000 third quarter and year-to-date earnings include dilution of 8 cents
per share and 21 cents per share, respectively, from our March 1, 1999,
acquisition of WGNX-TV, the CBS affiliate in Atlanta.
Company revenues for the fiscal 2000 third quarter grew 8 percent to $286.9
million from $265.1 million in the prior year. For the year-to-date period,
company revenues grew 6 percent to $813.5 million from $765.9 million.
Comparable third quarter and year-to-date revenues grew 8 percent and 5
percent, respectively, when adjusting for discontinued magazine titles and the
impact of the Atlanta acquisition.
We continue to deliver strong return on equity. At March 31, our trailing
12-month ROE was 21.1 percent.
I will provide more financial details before the end of the call, but first I'm
going to turn it back to Bill for update on a few business developments:
BILL KERR:
Let me start with our Broadcasting Group. The performance of our Broadcasting
Group in the third quarter did not meet our expectations. The group's third
quarter results were impacted by a number of factors:
First, weak ratings for the FOX network affected revenue performance for our
six FOX affiliates -- not only in prime time but in late night news as well.
This year's shift of the Super Bowl from FOX to ABC also had a negative impact.
Second, increased inventory impacted our ability to increase rates --
particularly in Phoenix and Kansas City.
Finally, continued investments in the Atlanta station and news expansions at
several stations also impacted current results, even though they will
contribute to stronger financial performance over time.
As we look to the fiscal fourth quarter, advertising pacings for our
Broadcasting Group are up in the low single digits compared to the prior-year
quarter. Let me remind you that pacings reflect a single point in time and are
subject to change.
We also believe that the back half of calendar 2000 will be stronger than the
first half of the year due in part to the November political elections.
As I mentioned at the outset, Cary Jones has been appointed president of our
Broadcasting Group. His key focus is on making sure we are strategically
deploying our assets to maximize operating profit.
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I know that his 28 years of industry experience will serve him well as he works
to improve our Broadcasting Group's financial results.
We know that you're particularly interested in the progress of our Atlanta CBS
affiliate, acquired in March 1999. Building viewership is our No. 1 priority
for the station. This will enable us to translate that improvement into
revenue gains.
So let me begin this part of the discussion by giving you a few indications of
our progress with regard to ratings. In the following examples, we'll focus on
demographic ratings, since that's what the station targets with its selling
efforts. Each comparison focuses on our core target of adults 25 to 54 for the
February 1999 to February 2000 timeframe.
Ratings increased in 18 of the 22 time periods tracked by Nielsen. Sign-on to
sign-off ratings increased 14 percent, to 1.6 from a 1.4. We're tied for
fourth place in the Atlanta market, up from sixth place in February 1999.
Looking at local news specifically, ratings grew 100 percent at 6 p.m., 27
percent at 11 p.m., 86 percent at noon, 14 percent at 5 p.m., and 100 percent
at 6 a.m.
These improvements are off a small base, but are encouraging. We expect to
continue this momentum and begin converting these ratings improvements into
revenue growth. This will be a critical initiative, as we expect dilution from
the Atlanta acquisition to be slightly higher in the second half of fiscal 2000
than the first half.
In other developments, WSMV-TV in Nashville has reached a favorable long-term
affiliation agreement with NBC. The station will continue to receive
compensation from the network, although at a lower level than under our
previous contract.
We do not release specific numbers related to network compensation. We can
tell you, however, that the effect of the new affiliation agreement in
Nashville does not have a material impact on our Broadcasting business.
We also are making progress on initiatives to develop a revenue-generating
business model for our stations' digital spectrum. We took a significant step
recently with our investment in the iBlast Network. Let me give you some
details.
For those of you not familiar with iBlast, the company was formed when we,
along with 11 other major broadcasters, dedicated a portion of our digital
spectrum so the company could use that resource to deliver digital content to
consumers through their personal computers.
We own a minority equity position in iBlast , and we will share in its revenues
going forward. We expect iBlast services to begin operating in calendar 2001.
We considered several options for using our digital spectrum. We chose iBlast
because we feel it makes an instant, nationwide footprint in terms of wireless
content. Also, we should note that our stake in this company does not preclude
us from developing other applications for our spectrum.
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Now let's turn to the Publishing Group:
Our Publishing Group reported an exceptionally strong third quarter, with
operating profit growth of 26 percent and revenue growth of 11 percent versus
the prior-year period.
Better Homes and Gardens maintained its commanding market share position in the
women's service field. Based on PIB data for the 12-month period ended with the
March issue, Better Homes and Gardens increased its lead in the seven-magazine
field with 28 percent of all advertising revenues.
Its closest competitor had 16 percent. Better Homes and Gardens and Ladies'
Home Journal combined for 40 percent of the revenue in the field, far outpacing
their closest competitors.
We're also pleased with the third quarter improvements at Ladies' Home Journal
magazine. For the quarter, its advertising pages grew 8 percent versus the
prior-year period, and advertising revenues grew at a stronger rate.
We announced some important circulation initiatives, frequency and rate base
increases, and magazine launches on March 8. Let me summarize these
initiatives for you.
On the circulation side, we are expanding our Internet-based programs to
encourage more consumers to use the Web to subscribe to and renew Meredith
magazines. For our fiscal third quarter, the number of magazine subscriptions
sold through the Internet grew 175 percent compared to the prior- year quarter.
While this is off a small base, our progress is encouraging.
Moving subscriptions to the Web has the potential to dramatically increase our
circulation margins, as it eliminates mailing costs related to our subscription
acquisition efforts.
Another circulation initiative is to enhance our single-copy sales efforts.
Unlike many companies in our industry, we have seen an increase in revenues
from single-copy sales during the last four years. We recently secured more
than 50,000 additional magazine checkout pockets at major retailers, bringing
our total pockets at retail to more than 600,000. We believe this will
contribute to further improvement of our circulation margin.
Finally, we are increasing several magazine frequencies and rate bases. We
plan to:
- -- Increase the frequency of MORE magazine to 10 times annually and its rate
base to 600,000 from the current 525,000.
- -- Increase the frequency of Renovation Style magazine to six times annually.
- -- Raise the rate base of Family Money magazine to 525,000.
- -- Increase the frequency of Paint Decor and Scrapbooks Etc. to quarterly.
- -- And launch Hometown Cooking and Antiques Extra as our two newest
subscription titles.
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Before reviewing financial information, let's turn to Interactive and
Integrated Marketing.
As you recall, we announced in March that we are expanding and accelerating our
Internet-related efforts on a company-wide basis. We believe the result will
be stronger revenue growth, which will be instrumental in driving shareholder
value. Let me review the five strategies we are pursuing, along with some
examples of our progress.
First, we will create the premier home and family Internet site, including the
development of vertical portals around our core content areas of decorating,
food, home improvement and remodeling. Employing a modular architecture, we
will use our flagship site -- Better Homes and Gardens.com -- as our launch
platform, with branded content available for our other sites.
Second, we plan to leverage our news assets in the further development of our
television stations' Web sites -- specifically, their transformation into local
community portals.
Third, as I described earlier, we expect to reduce costs by shifting a
meaningful amount of traditional magazine subscription and renewal efforts from
the mail to the Internet.
A fourth strategy is to create and repurpose Meredith-branded content for use
by major advertising and marketing clients on the Internet.
And fifth, we will expand our program of strategic alliances and equity
investments in Internet partners who can accelerate our development efforts.
Let me give you a few examples:
We have signed an agreement with HomePortfolio, Inc., the leading Internet
destination for premium home and home-design products. Highlights of the
agreement include online integration of branded content from both Meredith and
HomePortfolio.com; an e-commerce arrangement; and registration and database
initiatives. Additionally, HomePortfolio.com will advertise in selected
Meredith titles and offer consumers the opportunity to subscribe online to
Meredith magazines.
In addition, MORE magazine and ThirdAge Media have teamed up to create a style
and beauty channel that will benefit consumers and advertisers who want to
reach the powerful and growing demographic group of women over 40.
The launch will extend MORE magazine's reach to the one million registered
users of Thirdage.com. This initiative will enhance our ability to generate
new registrations and additional revenue. As part of the new relationship,
ThirdAge will continue to advertise in MORE and will purchase and promote
subscriptions to the magazine.
On a smaller scale, in February we announced a strategic alliance between Golf
for Women magazine and Golf.com. Under the agreement, the parties will
participate in a cooperative launch of the Golf for Women Internet site at
golfforwomen.com.
This alliance will position Golf for Women as the primary women's golf content
provider to the Golf.com site.
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Our rapid growth in Internet traffic and ability to generate registrations will
be important as we proceed with each of these strategies. For each month of our
fiscal third quarter, page views on our Web sites were more than 15 million.
This represented a 30 percent increase over the same months a year ago. In
addition, unique visitors per month have doubled from the prior year, to a
total of 1.5 million for our measured sites.
The number of registrations generated by our sites continues to accelerate. In
our fiscal third quarter, we added more than 125,000 new registrants, bringing
our total to nearly 800,000.
In addition to expanding our Internet initiatives, an important strategy of the
new operating group is to develop new integrated marketing relationships and
grow our existing relationships.
One example of a new integrated marketing client is Kodak. At Kodak's request,
we are not able today to provide details about this important new relationship.
However, we'll discuss it during our fourth quarter conference call.
We also continue to expand our broad, strategic relationships with our largest
clients, including The Home Depot, Kraft Foods, and Nestle.
Now I'd like to turn the call back to Suku for a look at some financial
details.
SUKU RADIA:
Thanks, Bill. I'd like to begin by briefly discussing printing, paper and
postage cost developments.
Our publishing business is continuing to experience benefits from our new
printing contracts, favorably impacting the second half of our fiscal 2000.
Regarding paper, we have received another increase of 5 to 7 percent depending
on grade, effective April 1. You'll recall that we received a similar increase
last October.
Moving to postage -- at the beginning of the calendar year, the U.S. Postal
Service filed a rate case proposing a 15 percent increase for periodicals,
which would take effect next January. We view this increase as excessive and
have been working diligently with the Postal Service and our peers to moderate
the increase.
We believe these efforts are making an impact. In fact, recently the Postal
Rate Commission expressed concern that the proposed increase for periodicals
was out of line with other recommendations. The Commission has requested
additional evidence from the Postal Service to support its rate case.
In other financial developments, we have significantly accelerated our share
repurchase activities. We believe buying our own stock is a great investment at
current prices, given our strong fundamentals, industry-leading brands and
well-respected management team.
We repurchased nearly 900,000 shares in the third quarter, compared to about
400,000 shares in the entire first half of this fiscal year. Our board of
directors has also authorized the repurchase of an additional 2 million shares
through public and private transactions.
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Before concluding, I'd like to address our fourth quarter outlook. In our
Publishing Group, comparable magazine advertising pages are up in the
high-single digits. This is based on current information and could still
change.
And as Bill referenced, for the Broadcasting Group as a whole, fourth quarter
pacings are up in the low-single digits compared to the prior-year quarter.
Let me remind you again that pacings reflect a single point in time and are
subject to change.
We have noted that most of the First Call analyst estimates for our fiscal 2000
earnings per share -- excluding the non-recurring items announced on March 8 --
are currently clustered around $1.70 to $1.71 per share. While we are not
certain to the penny, we believe that range is achievable.
There are two areas of uncertainty at this point. First, even though our
Publishing Group continues to perform very well, we have not yet finalized all
the details on the previously announced circulation and Internet initiatives
for the fourth quarter. Second the broadcasting industry continues to
experience month-to-month volatility.
Now I'll turn the program back to Bill for some closing remarks.
BILL KERR:
Thanks, Suku.
In closing, I'd like to remind you that our tremendous set of powerful brands
and properties, and our expertise in marketing those assets, have resulted in
an exceptional track record of delivering strong, consistent financial
performance. Those assets also provide us with an outstanding foundation as
the Interactive and Integrated Marketing Group moves forward with its strategic
initiatives.
We're very enthusiastic about the future of our business. We believe the steps
we announced on March 8 are extremely important in securing that future.
With that, we'll be happy to answer your questions.
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