It's been a constant endeavor of Meredith Corporation (MDP - Analyst Report) to explore and add alternate revenue generating channels through acquisitions or by entering into strategic alliances in order to reduce its dependence on conventional advertising.
Following its growth trajectory, Meredith recently announced that it has reached an agreement with the Reader's Digest Association to acquire its award-winning magazine Every Day with Rachael Ray.
The publisher of Better Homes and Gardens and Family Circle, Meredith Corporation, will also acquire the digital media assets related to the magazine. The company added that it expects to close the deal this fall.
The buyout will broaden the reach of Meredith, while offering multiple avenues to advertisers. Food remains the top advertising category of the company and the recent developments in food category will facilitate Meredith to better serve its 75 million women consumers through strong multi-channel mechanisms for meeting the ever increasing demand.
Every Day with Rachael Ray witnessed a growth of 2% during the first half of fiscal 2011 with circulation of 1.7 million.
Meredith is one of the leading media and marketing companies engaged in publishing, broadcasting, integrated marketing and interactive media. The company boasts a strong portfolio of women’s magazines with a relatively stable circulation, which has helped it to gain market share.
The company has been taking initiatives to enhance its online presence. These include the acquisition of online marketing firms -- Genex, New Media Strategies and Healia -- along with a mobile marketing firm, The Hyperfactory.
Meredith also launched Meredith Women's Network, covering mostly women-related topics. Monthly average unique visitors to the National Media Group websites were approximately 22 million, while monthly page views averaged 250 million.
However, more than half of Meredith’s revenue comes from advertising depending on the health of the economy. An economic downturn narrows the advertising demand. Although the economy is gradually regaining pace, publishing and broadcasting revenues still remain susceptible to changes in advertising demand.
Meredith is slated to report its first-quarter 2012 results on October 26, 2011 before the opening bell.
Currently, we maintain a long-term Neutral recommendation on the stock. Meredith competes with Martha Stewart Living Omnimedia Inc. (MSO - Snapshot Report) andhas a Zacks #3 Rank, which translates into a short-term Hold rating.