Publishing
The
Meredith Publishing Group features 16 subscription magazine
brands, including Better Homes and Gardens, Ladies' Home
Journal, Country Home, Traditional Home, MORE and Midwest
Living.
In fiscal 2003, Meredith will publish more than 150 special
interest publications. Our special interest publications focus
on decorating, gardening, crafting, remodeling, cooking and
other subjects. Our book business has nearly 300 titles in print,
which are sold primarily through retail distribution channels.
Meredith Corporate Solutions brings together all of the Company's
assets to offer marketing solutions to clients' advertising
needs.
The Publishing Group also includes integrated marketing, interactive
media and database operations. Integrated marketing uses our
extensive resources to create end-to-end marketing programs
and custom publications for some of America's leading companies,
including Carnival Cruise Lines, DaimlerChrysler and Kraft Foods.
We have an extensive Internet presence. Our interactive media
operations manages 23 Web sites. We also have strategic alliances
with leading Internet destinations such as the Microsoft Network
(MSN) and branded anchor tenant positions on America Online.
Our consumer database, which contains more than 60 million names,
is the largest domestic database among media companies and enables
advertisers to target marketing campaigns precisely.
PUBLISHING REVIEW
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Americans are coming home. Research shows they are devoting
more time to their homes and their families, and the Meredith
Publishing Group is ideally positioned to serve them. Through
our century-long commitment to quality service journalism, we
have built a reputation as a trusted source of information.
Our subscription magazines, special interest publications, books,
Web sites and other materials are respected resources for Americans
seeking to enrich their homes through remodeling, decorating,
gardening and cooking. That foundation helped sustain and guide
us through fiscal 2002, one of the most challenging periods
ever experienced by the publishing industry.
In the face of a difficult economy, we increased market share
for our magazines, beginning with our two largest titles, Better
Homes and Gardens and Ladies' Home Journal. In fiscal
2002, they grew their combined share of the women's service
field advertising revenues by 2.5 percentage points to 40 percent
as measured by the Publishers Information Bureau. The July issue
of Better Homes and Gardens alone achieved a 30 percent
share of advertising revenues in the women's service field,
more than any of our competitors' two-magazine combinations.
To build on the Better Homes and Gardens franchise, we
invested in a major editorial research project for the magazine.
The research will help us develop better profiles of readers
and their aspirations. We believe continued focus on our readers,
along with continuous product improvement, will help propel
Better Homes and Gardens to even greater success.
In her first year on the job, Editor-in-Chief Karol Nickell
has brought a freshness and vitality to Better Homes and
Gardens that is resonating with readers and advertisers
alike. She has broadened the magazine's appeal by embracing
a rich variety of design styles; provided pages with a sense
of everyday life that makes visual and editorial content believable
and relevant; and introduced compelling new features, such as
the popular "American Family" series. Karol and her staff have
worked to fill each article with warmth, emotion and ideas that
carry on the finest traditions of Meredith publishing.
At Ladies' Home Journal, our second-largest subscription
magazine, we hired publishing industry veteran Diane Salvatore
as editor-in-chief. She is working with her staff to reshape
the magazine's vision, with the goal of creating a publication
that attracts new, younger readers and retains them. The sales
team at Ladies' Home Journal held its own in a very difficult
business environment. In fact, the April issue was the largest
in terms of advertising pages in more than three years.
We are growing our promising mid-sized magazines, Country
Home, Traditional Home, Midwest Living and MORE.
These titles have loyal readers and high renewal rates, making
them very attractive to advertisers. Both Country Home and Traditional
Home gained share in their respective categories during fiscal
2002.
To leverage this strength, we raised the rate base of Country
Home by 10 percent, to 1.1 million, and will increase its frequency
to 10 times a year in calendar 2003. We raised the rate base
of Traditional Home by 6 percent, to 850,000, and increased
its frequency to eight times for calendar year 2002.
We are also seeing strong performance from Midwest Living.
The title's March-April 2002 issue had the highest advertising
revenues in the magazine's 15-year history, and it set advertising
revenue records for three consecutive issues through the spring,
summer and fall.
MORE, our lifestyle magazine focused on women over 40,
continues to build readership and advertising revenue. In September,
we raised its rate base to 750,000, a level that is important
in attracting attention from a wide variety of readers and advertisers.
As part of our ongoing effort to serve younger readers, we are
developing LivingRoom, a lifestyle magazine for women
in their late 20s and 30s. We have tested the LivingRoom
concept on focus groups and plan to conduct significant subscription
and newsstand tests in fiscal 2003. We will determine the magazine's
future based on those results.
To better serve the marketing needs of our clients, we are developing
multi-platform advertising and marketing programs through Meredith
Corporate Solutions. The expertise in this organization has
made us an industry leader in terms of linking our magazines,
direct marketing capabilities, television stations and other
assets to create comprehensive marketing programs for our clients.
For example, in fiscal 2002 we developed a comprehensive multimedia
marketing campaign for the allergy medicine Clarinex. The ongoing
program features branded inserts that run in Meredith magazines,
a direct-mail campaign, a major interactive media component
and advertising on Meredith television stations.
Nonadvertising revenues - which are derived from magazine circulation,
special interest publications, books, integrated marketing,
interactive media and brand licensing - accounted for 56 percent
of total publishing revenues in fiscal 2002. These revenues
provided a measure of stability in the recent period of weaker
advertising demand.
One key to increasing nonadvertising revenue is building magazine
circulation, both through subscriptions and newsstand sales.
In fiscal 2002 we grew our subscription revenues through strong
editorial content, a cutting-edge database that helped us effectively
target customers, and creative mailings that made our magazines
attractive to subscribers. Additionally, we continued to post
strong newsstand sales, running counter to industry trends.
We are making progress at generating traditional magazine subscription
orders over the Internet, and we are well-positioned to meet
our goal of acquiring 1.5 million online subscriptions by the
end of fiscal 2003. Increasing magazine subscriptions through
the Internet is a priority primarily because of the potential
savings on subscription acquisition costs.
We are growing our Better Homes and Gardens Special Interest
Publications and the Better Homes and Gardens Creative
Collection, both of which are sold primarily at newsstands.
(Please see sidebar on page 9 for more information on our special
interest publications.)
We continue to develop our book business and increase the number
of retail outlets for our titles. After a post-September 11th
decline, our book shipments rose 12 percent during the second
half of fiscal 2002, and revenues rose nearly 7 percent. We
are creating many new books and updating some of our readers'
favorites. This fall we released the 12th edition of the Better
Homes and Gardens New Cook Book. Early orders for the new
edition have been very strong, and have outpaced early orders
for the book's 11th edition in 1996.
It is very encouraging that - in the post-September 11th world
- all of our consumer touch points (magazine readership, subscription
acquisition and renewals, newsstand sales, book orders, Internet
usage) - showed renewed strength, an indication of our ability
to tap into the needs and wants of the American consumer.
In integrated marketing, we are pursuing in-depth strategic
relationships with marketing partners. For example, in fiscal
2002 we secured a contract from DaimlerChrysler to produce customer
loyalty magazines for the Chrysler, Dodge and Jeep brands. The
circulation for this contract, which will kick off in fiscal
2003, is nearly 6 million for each issue.
In interactive media, we laid the groundwork for advertising
sales growth by assembling an in-house sales team and developing
a suite of niche offerings that have caught hold in the marketplace.
We plan to expand our brand licensing activities in the coming
years, initially focusing on the Better Homes and Gardens
brand. We expect to create new or additional licensing relationships
where they will have the most appeal: building and remodeling,
gardening and outdoor living, seasonal and family celebrations,
and kitchen and food.
Our Publishing Group is positioned to deliver increased revenues,
profits and shareholder value. We have strong brands that consumers
know and trust.
We are implementing solid strategies to sustain growth in both
advertising and nonadvertising revenues and continue to build
on our unique position in the home and family market.
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