Broadcasting
We enter fiscal 2003 with renewed optimism for our Broadcasting
Group, spurred by two factors. First, in Kevin O'Brien we believe
we have found a leader who can reposition our attractive broadcasting
assets to build shareholder value. Second, although it is too
early to claim a complete victory, it appears the worst downturn
in the history of the television business is behind us.
Though
revenues and profits from our Broadcasting Group were lower
in fiscal 2002 than in the previous fiscal year, we were encouraged
by increases in advertising demand over the last two quarters.
We are positioning the Broadcasting Group to take advantage
of further recovery in fiscal 2003.
Our duopoly - formed by the exchange of our television stations
in Orlando and Ocala, FL, for station KPTV in Portland, OR -
is one example of our repositioning strategy. By creating a
duopoly of KPTV and KPDX, we are improving the efficiency of
both stations and are better serving advertisers and viewers
in the Portland market.
We moved our FOX affiliation to KPTV to use its more powerful
VHF signal to broadcast more popular FOX programming, and we
made KPDX the market's UPN affiliate. In a dynamic, young market
like Portland, we believe advertisers will be especially attracted
to our ability to reach 18- to 49-year-old viewers.
Also, we signed new affiliation agreements for our FOX stations
(Portland, OR; Las Vegas, NV; Greenville, SC; and Bend, OR).
We are interested in creating additional duopolies to improve
the efficiency and revenue potential of our Broadcasting Group.
Our top priority, however, remains improving the overall performance
of each of our existing stations.
That priority is the reason we hired a new group president and
replaced general managers at five of our stations, including
those in our three largest markets. There now are new general
managers in Atlanta, Phoenix, Nashville, Portland and Las Vegas.
We also replaced six news directors and six general sales managers.
In addition to rebuilding the management team, we have injected
enthusiasm, accountability and a winning attitude into each
station. We strive to be market leaders in sales, news and ratings.
In sales, we have set aggressive targets for each station, including
specific share, revenue and profit goals. We are developing
a culture in which each employee is charged with generating
revenues or supporting sales. Everyone from the news anchor
to the general manager is expected to contribute to the sales
effort by calling on clients.
We are working to grow the pool of local advertisers by developing
business from clients new to television advertising.
We are benefiting from efforts to develop sales collaborations
with our Publishing Group, specifically our "Cornerstone" promotions,
which generate more than $1 million in new and incremental revenues
each quarter. Four times a year, we produce eight-page print
pieces - like the Better Homes and Gardens home improvement
programs and the Ladies' Home Journal health planners
- and offer advertisers the opportunity to sponsor these products.
Collaborations like these give us expanded sales opportunities
because they are marketing programs unique to Meredith.
Our second initiative is improving the quality and the ratings
of the local newscasts at all of our stations. Local newscasts
generate a large share of the revenue for a television station
- more than 30 percent on an industrywide average - and are
an income source controlled completely by the station. In addition,
viewers identify us through our news coverage. This quality
is crucial to making sustainable gains in ratings and in advertising
sales.
To help us achieve the quality we want, we created a new position,
group vice president of news, to set specific standards, provide
leadership and ensure consistency. We are changing our news
culture by instilling a fast-paced, quick-response, complete-coverage
team approach to our news reporting. Some of the country's top
news consultants are already conducting market research to help
us gain a greater understanding of what viewers want in our
newscasts and how we can best deliver it to them.
The third initiative is improving our management of syndicated
programming. We are buying better programs, and we are using
our group buying power to contain costs. To get the most out
of every syndicated programming dollar we spend, we are looking
closely at each station and buying the shows that fit its needs.
To conclude, we are focused on improving the performance of
our Broadcasting Group through improved ratings, revenue growth
and restored margins. By accomplishing that, we believe we will
position our Broadcasting Group to be an increasingly valuable
contributor to Meredith's overall goal: creating long-term value
for its shareholders.
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