The improving advertising performance at Meredith Corporation’s (MDP) National and Local Media groups, and increasing readership and online traffic have been benefiting the company’s top and bottom line results.
 
Meredith is one of the leading media and marketing companies with interests in publishing, broadcasting, integrated marketing and interactive media.
 
The company boasts of a strong portfolio of women’s magazines with a relatively stable circulation, which has helped it gain market share. According to the data from the Publishers Information Bureau, Meredith’s share in the overall magazine industry advertising revenue rose to 12.4% in third-quarter 2010 from 11.2% in the prior-year quarter.
 
Meredith has been working diligently to explore and add alternative revenue generating opportunities in order to reduce its dependency on traditional advertising by entering into strategic alliances. These include the expansion of its integrated marketing offers, video related operations, brand licensing and mobile initiatives.
 
However, more than half of Meredith’s revenue comes from advertising, which depends upon the health of the economy. During an economic downtrend, it has been witnessed that demand for advertising drops. Although the economy is gradually regaining pace, publishing and broadcasting revenues still remain susceptible to changes in advertising demand.
 
Consequently, we prefer to be Neutral on Meredith. Moreover, our Zacks Rank #3, which translates into a short-term ‘Hold’ rating, correlates with our long-term recommendation.
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