Meredith Invests in Online Activities; Closes Magazines

Meredith Corp., Des Moines, Iowa, has announced a $100 million investment in a number of strategic initiatives including Internet and e-commerce activities.

The company plans to use the funds to create the Meredith Interactive and Integrated Marketing Group , to continue development of its consumer database and to define strategic alliances and partnerships.

Stephen M. Lacy, who has served as Meredith’s vice president and CFO since February 1998, has been promoted to president of the Interactive and Integrated Marketing Group. Lacy will report to Christopher M. Little, who in addition to his present duties as Meredith Publishing Group president, is being named a corporate senior vice president.

In addition, the company plans a series of consumer marketing initiatives designed to grow the profit contribution of its circulation efforts. Those initiatives include increasing its use of direct mail to generate subscriptions, accelerating its mailing schedule this calendar year and increasing frequencies and/or rate bases of several magazines including More, Renovation Style and Family Money.

The initiatives also include expanding and accelerating its current Internet-related activities involving numerous initiatives over the next 12 to 36 months. The initiatives include a significant effort to reduce costs by shifting a “meaningful “amount of traditional magazine circulation and renewal efforts from the mail to the Internet; upgrades to its home and family Internet site; and developing and repurposing Meredith-branded content for use by major marketing partners on the Internet.

The company also plans to close operations that no longer fit its business strategy nor provide significant opportunity for revenue growth. With the July-August issues, Meredith will close Cross Stitch & Needlework, purchased as part of the Craftways Corp. in 1988 with a circulation of 238,000, and Decorative Woodcrafts magazines launched in 1991, with a circulation of 259,000.

Meredith will stop publishing Crayola Kids magazine with its May issue because of what the company said were “strategic differences” with Binney & Smith, which holds the license to the Crayola Kids name. Crayola Kids was launched in 1994, and has a circulation of 550,000.

Outside of the strategic initiatives, Meredith has also decided to close Crayola Kids magazine with the May issue citing “major strategic differences” with the licensor of the Crayola Kids name, Binney & Smith. The company is also launching two magazines that have been in tests for a year–Hometown Cooking and Antiques Extra.

The company believes the overall financial impact of these actions will be in the 45 cents to 50 cents per share range for the fiscal 2000 fourth quarter.