Meredith Corporation (Meredith or the Company) is the leading media and marketing company serving American women. The Company also has television stations in top markets such as Atlanta, Phoenix, and Portland. Each month we reach more than 85 million American consumers through our magazines, books, custom publications, websites, and television stations.

Meredith operates two business segments. Publishing consists of magazine and book publishing, integrated marketing, interactive media, database-related activities, brand licensing, and other related operations. Broadcasting consists of 12 network-affiliated television stations, one radio station, related interactive media operations, and video related operations. Both segments operate primarily in the United States and compete against similar media and other types of media on both a local and national basis. Publishing accounted for 79 percent of the Company's $736.7 million in revenues in the first six months of fiscal 2009 while broadcasting revenues totaled 21 percent.

PUBLISHING

Advertising revenues made up 46 percent of publishing's first six months' revenues. These revenues were generated from the sale of advertising space in the Company's magazines and on websites to clients interested in promoting their brands, products, and services to consumers. Circulation revenues accounted for 25 percent of publishing's fiscal 2009 first six months' revenues. Circulation revenues result from the sale of magazines to consumers through subscriptions and by single copy sales on newsstands, primarily at major retailers and grocery/drug stores. The remaining 29 percent of publishing revenues came from a variety of activities that included integrated marketing services and the sale of books as well as brand licensing, and other related activities. Publishing's major expense categories are production and delivery of publications and promotional mailings and employee compensation costs.

BROADCASTING

Broadcasting derives almost all of its revenues-96 percent in the first six months of fiscal 2009-from the sale of advertising, both on the air and on our stations' websites. The remainder comes from television retransmission fees, television production services, and other services. Political advertising revenues are cyclical in that they are significantly greater during biennial election campaigns (which take place primarily in odd-numbered fiscal years) than at other times. Broadcasting's major expense categories are employee compensation and programming costs.

FIRST SIX MONTHS FISCAL 2009 FINANCIAL OVERVIEW

º Both magazine and broadcasting advertising revenues were affected by a nationwide slowdown in the demand for advertising. As a result, publishing revenues and operating profit decreased 9 percent and 52 percent, respectively. Broadcasting revenues and operating profit declined 5 percent and 20 percent, respectively.

º In December 2008, management committed to a performance improvement plan that includes a companywide workforce reduction, the closing of Country Home magazine, and the relocation of the creative functions of the ReadyMade brand and Parents.com to Des Moines. In connection with this plan, the Company recorded a pre-tax restructuring charge in the second quarter of fiscal 2009 of $15.8 million including severance and benefit costs of $10.0 million, the write-down of various assets of Country Home magazine of $5.6 million, and other accruals of $0.2 million.

º Diluted earnings per share declined 52 percent to $0.69 from prior-year first six months' earnings of $1.43.

º We spent $21.6 million to repurchase 865,000 shares of our common stock.

In April 2008, the Company completed the sale of WFLI, the CW affiliate serving the Chattanooga, Tennessee market. The station's revenues and expenses, along with associated taxes, were removed from continuing operations and reclassified into a single line item amount on the Condensed Consolidated Statements of Earnings titled income from discontinued operations, net of taxes. Unless stated otherwise, as in the section titled Discontinued Operations, all of the information contained in Management's Discussion and Analysis of Financial Condition and Results of Operations relates to continuing operations.

USE OF NON-GAAP FINANCIAL MEASURES

These consolidated financial statements, including the related notes, are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). Our analysis of broadcasting segment results includes references to earnings from continuing operations before interest, taxes, depreciation, and amortization (EBITDA). EBITDA and EBITDA margin are non-GAAP measures. We use EBITDA along with operating profit and other GAAP measures to evaluate the financial performance of our broadcasting segment. EBITDA is a common measure of performance in the broadcasting industry and is used by investors and financial analysts, but its calculation may vary among companies. Broadcasting segment EBITDA is not used as a measure of liquidity, nor is it necessarily indicative of funds available for our discretionary use.

We believe the non-GAAP measures used in Management's Discussion and Analysis of Financial Condition and Results of Operations contribute to an understanding of our financial performance and provide an additional analytic tool to understand our results from core operations and to reveal underlying trends. These measures should not, however, be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

                             RESULTS OF OPERATIONS

          Three Months Ended December 31,          2008      2007    Change
          (In thousands except per share data)
          Total revenues                       $ 366,240 $ 396,245     (8)%
          Operating expenses                     338,257   331,193      2 %
          Income from operations               $  27,983 $  65,052    (57)%
          Earnings from continuing operations  $  12,543 $  35,213    (64)%
          Net earnings                            12,543    36,059    (65)%
          Diluted earnings per share from
            continuing operations                   0.28      0.73    (62)%
          Diluted earnings per share                0.28      0.75    (63)%

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          Six Months Ended December 31,            2008      2007    Change
          (In thousands except per share data)
          Total revenues                       $ 736,678 $ 800,318     (8)%
          Operating expenses                     671,250   674,589      -
          Income from operations               $  65,428 $ 125,729    (48)%
          Earnings from continuing operations  $  31,180 $  68,681    (55)%
          Net earnings                            31,180    69,429    (55)%
          Diluted earnings per share from
            continuing operations                   0.69      1.41    (51)%
          Diluted earnings per share                0.69      1.43    (52)%

The following sections provide an analysis of the results of operations for the publishing and broadcasting segments and an analysis of the consolidated results of operations for the quarter and six months ended December 31, 2008, compared with the prior-year periods. This commentary should be read in conjunction with the interim condensed consolidated financial statements presented elsewhere in this report and with the Company's Annual Report on Form 10-K for the year ended June 30, 2008.

PUBLISHING

Publishing operating results were as follows:

            Three Months Ended December 31,     2008        2007    Change
            (In thousands)
            Advertising revenues            $ 122,491   $ 152,652    (20)%
            Circulation revenues               69,274      72,959     (5)%
            Other revenues                     90,099      82,997      9 %
            Total revenues                    281,864     308,608     (9)%
            Operating expenses                266,623     264,096      1 %
            Operating profit                $  15,241      44,512    (66)%
            Operating profit margin             5.4 %      14.4 %




             Six Months Ended December 31,     2008        2007    Change
             (In thousands)
             Advertising revenues          $ 270,508   $ 333,423    (19)%
             Circulation revenues            143,296     153,245     (6)%
             Other revenues                  168,095     151,462     11 %
             Total revenues                  581,899     638,130     (9)%
             Operating expenses              533,474     538,185     (1)%
             Operating profit              $  48,425      99,945    (52)%
             Operating profit margin           8.3 %       15.7%

Revenues

For the second quarter of fiscal 2009, declines in advertising and circulation revenues of 20 percent and 5 percent, respectively, more than offset a 9 percent increase in other revenues. Results were similar for the six-month period as declines in advertising and circulation revenues of 19 percent and 6 percent, respectively, more than offset an 11 percent increase in other revenues.

Magazine circulation revenues decreased 5 percent in the second quarter and 6 percent in the first six months of fiscal 2009, reflecting declines in both subscription and newsstand revenues. The continued decrease in subscription revenues was anticipated due to the Company's ongoing initiative to move Family Circle, Parents, and Fitness to our direct-to-publisher circulation model. These three titles accounted for the majority of the decrease in subscription revenues. The decrease in newsstand revenues is primarily due to a weaker retail market that affected most of our magazines' newsstand revenues and a change in the mix of and a reduction in the number of special interest publications and craft titles. A decline in the newsstand revenues of Family Circle due to rack spending in the first quarter of fiscal 2009 also affected the six-month period results.

Integrated marketing revenues increased over 30 percent in both the second quarter and the first six months of fiscal 2009 due to the acquisition of Big Communications in June 2008, and growth in the traditional and on-line integrated marketing operations from expanding certain relationships. Revenues from magazine royalties and licensing also increased over 25 percent in the second quarter and over 35 percent in the first six months of fiscal 2009. The introduction of the Better Homes and Gardens line of home products, available now exclusively at Wal-Mart, fueled this growth. These increases were partially offset by decreases in book revenues. Book revenues declined 27 percent in the second quarter and 34 percent for the six-month period primarily due to a significant reduction in the number of new book releases. As previously announced, our book business is now focusing on its core content areas. The aggregate effect of the changes in integrated marketing, brand licensing, and book operations, other publishing revenues increased 9 percent for the second quarter and 11 percent for the first six months of fiscal 2009.

Operating Expenses

Publishing operating costs increased 1 percent in the second quarter; they declined 1 percent in the first six months of fiscal 2009. In the second quarter of fiscal 2009, the write-off of subscription acquisition costs of $5.0 million and of manuscript and art inventory of $0.6 million related to the closing of Country Home magazine, $0.2 million in other miscellaneous accruals, and severance and related benefit costs of $7.0 million related to the companywide reduction in workforce were recorded by the publishing segment. With regard to on-going operating expenses, processing, postage and other delivery expenses, amortization expense and book manufacturing costs declined. While flat for the second quarter, subscription and newsstand expenses declined for the six-month period. Paper expense rose for both the three and six month periods as increases in paper costs of approximately 18 percent more than offset decreases in paper consumption due to a decline in advertising pages sold. Employee compensation costs were up as a result of higher staff levels due to the integrated marketing acquisitions and higher compensation levels due to annual merit increases, while performance-based incentive expensedeclined significantly. Integrated marketing production expenses also increased due to the growth in integrated marketing revenues.

Operating Profit

Publishing operating profit decreased 66 percent in the quarter and 52 percent in the six-month period compared with the respective prior-year periods. The declines primarily reflected the weak demand for advertising partially offset by increased operating profits in our book and brand licensing operations. In addition, the write-down of impaired assets and the severance charges discussed above accounted for 29 percent and 13 percent of the decline in publishing operating profit in the second quarter and first six months of fiscal 2009, respectively.

BROADCASTING

Broadcasting operating results were as follows:

            Three Months Ended December 31,       2008     2007    Change
            (In thousands)
            Non-political advertising revenues $ 64,717 $ 85,168    (24)%
            Political advertising revenues       17,005    1,436     NM
            Other revenues                        2,654    1,033    157 %
            Total revenues                       84,376   87,637     (4)%
            Operating expenses                   62,047   60,073      3 %
            Operating profit                   $ 22,329 $ 27,564    (19)%
            NM - not meaningful




           Six Months Ended December 31,          2008      2007    Change
           (In thousands)
           Non-political advertising revenues $ 126,365 $ 157,660    (20)%
           Political advertising revenues        22,876     2,508    812 %
           Other revenues                         5,538     2,020    174 %
           Total revenues                       154,779   162,188     (5)%
           Operating expenses                   121,754   121,047      1 %
           Operating profit                   $  33,025 $  41,141    (20)%

Revenues

Broadcasting revenues decreased 4 percent in the second quarter and 5 percent in the first six months of fiscal 2009 compared with the respective prior-year periods. Net political advertising revenues related to the November 2008 elections totaled $17.0 million in the second quarter and $22.9 million in the six-month period compared with less than $3.0 million in both the second quarter and first six months of the prior year. The fluctuations in political advertising revenues at our stations, and in the broadcasting industry, generally follow the biennial cycle of election campaigns. Political advertising displaces a certain amount of non-political advertising; therefore, the revenues are not entirely incremental. The recessionary economy continues to impact non-political broadcasting advertising. Non-political advertising revenues decreased 24 percent in the second quarter and 20 percent for the six-month period. For the second quarter and the first six months of fiscal 2009, local non-political advertising revenues declined approximately 25 percent while national non-political advertising revenues decreased approximately 20 percent. Online advertising declined 15 percent in the second quarter and 8 percent as compared to the prior-year six-month period.

Operating Expenses

Broadcasting operating expenses increased 3 percent in the second quarter and 1 percent in the first half of fiscal 2009. In the second quarter of fiscal 2009, severance and related benefit costs of $2.0 million were recorded on the broadcasting segment related to the companywide reduction in workforce. For both the second quarter and the six month period, a credit to expenses for a gain on the Sprint Nextel Corporation equipment exchange offset a slight increase in on-going operating expenses. This gain represents the difference between the fair value of the digital equipment we received and the book value of the analog equipment we exchanged. With respect to on-going operating expenses, higher employee compensation costs, bad debt expense, and legal expense were mostly offset by lower performance-based incentive accruals, share-based compensation, advertising and promotion expenses, and film amortization.

Operating Profit

Broadcasting operating profit declined 19 percent in the second quarter and 20 percent in the first half of fiscal 2009 as compared to the same periods in fiscal 2008. The decline reflected weakened economic conditions and their effect on non-political advertising revenues, which more than offset the strength of political advertising revenues. In addition, the severance charges accounted for 7 percent and 5 percent of the decline in broadcasting operating profit in the second quarter and first six months of fiscal 2009, respectively.

                 Three Months Ended December 31,    2008     2007
                 (In thousands)
                 Revenues                        $ 84,376 $ 87,637
                 Operating profit                $ 22,329 $ 27,564
                 Depreciation and amortization      6,448    6,329
                 EBITDA                          $ 28,777 $ 33,893
                 EBITDA margin                     34.1 %   38.7 %




                 Six Months Ended December 31,     2008      2007
                 (In thousands)
                 Revenues                      $ 154,779 $ 162,188
                 Operating profit              $  33,025 $  41,141
                 Depreciation and amortization    12,517    12,707
                 EBITDA                        $  45,542 $  53,848
                 EBITDA margin                    29.4 %    33.2 %

UNALLOCATED CORPORATE EXPENSES

Unallocated corporate expenses are general corporate overhead expenses not
attributable to the operating groups. These expenses were as follows:

                                                2008     2007    Change
             (In thousands)
             Three months ended December 31, $  9,587 $  7,024     36 %
             Six months ended December 31,     16,022   15,357      4 %

Unallocated corporate expenses increased 36 percent in the second quarter and 4 percent in the first six months of fiscal 2009 compared with the respective prior-year periods. In the second quarter of fiscal 2009, severance and related benefit costs of $1.0 million were recorded in unallocated corporate expenses related to the companywide reduction in workforce. Contributing to the second quarter increase was the Meredith Foundation charitable contribution, which was made in the first quarter in the prior year. For the second quarter and the six-month periods, increases in pension costs, consulting fees, share-based compensation, and legal services expenses approximately offset decreases in performance-based incentive expenses. The increase in share-based compensation is due to certain employees becoming retirement eligible in the current fiscal year and thus their share-based compensation expense is being fully expensed during the current fiscal year.

CONSOLIDATED

Consolidated Operating Expenses
Consolidated operating expenses were as follows:

        Three Months Ended December 31,             2008      2007    Change
        (In thousands)
        Production, distribution, and editorial $ 165,744 $ 166,122      -
        Selling, general, and administrative      161,735   153,046      6 %
        Depreciation and amortization              10,778    12,025    (10)%
        Operating expenses                      $ 338,257 $ 331,193      2 %


        Six Months Ended December 31,               2008      2007    Change
        (In thousands)
        Production, distribution, and editorial $ 338,956 $ 341,830     (1)%
        Selling, general, and administrative      310,658   308,616      1 %
        Depreciation and amortization              21,636    24,143    (10)%
        Operating expenses                      $ 671,250 $ 674,589      -

Fiscal 2009 production, distribution, and editorial costs were flat as compared to the prior-year second quarter and declined 1 percent as compared to the prior-year first six months. In the second quarter of fiscal 2009, a write-off of manuscript and art inventory of $0.6 million was recorded in production, distribution, and editorial costs related to the closing of Country Home magazine. Declines in processing, postage and other delivery expenses, book manufacturing costs, and film amortization more than offset increases in integrated marketing production expenses and paper costs.

Selling, general, and administrative expenses increased 6 percent in the second quarter and 1 percent in the six-month period. In the second quarter of fiscal 2009, severance and related benefit costs of $10.0 million related to the companywide reduction in workforce and the write-off of subscription acquisition costs of $5.0 million related to the closing of Country Home magazine were recorded in selling, general, and administrative expenses. Contributing to the second quarter increase was the Meredith Foundation charitable contribution, which was made in the first quarter in the prior year. While flat for the second quarter, subscription and newsstand expenses declined for the six-month period. With regard to other on-going operating expenses, declines in performance-based incentive accruals, advertising and promotion expenses, and travel and entertainment were partially offset by increases in pension costs, consulting fees, bad debt expenses, and legal expenses.

Depreciation and amortization expenses decreased 10 percent in both the second quarter and in the six-month period primarily due to the customer list intangibles acquired in fiscal 2006 being fully amortized in fiscal 2008.

Income from Operations
Income from operations declined 57 percent in the second quarter; it decreased 48 percent in the first six months of fiscal 2009. The declines reflect recessionary economic conditions and their effect on advertising revenues, which more than offset the strength of broadcasting political advertising. In addition, the severance charges and the write-offs related to the closing of Country Home magazine accounted for 24 percent and 13 percent of the declines in income from operations in the second quarter and first six months of fiscal 2009, respectively.

Net Interest Expense
Net interest expense was $5.2 million in the fiscal 2009 second quarter compared with $5.4 million in the prior-year quarter. For the six months ended December 31, 2008, net interest expense was $10.6 million versus $11.2 million in the comparable prior-year period. The decline for both periods was primarily due to lower average interest rates. Average long-term debt outstanding was $460 million in the second quarter of fiscal 2009 and $465 million for the six-month period compared with $433 million in the prior year second quarter and $450 million in the prior year six-month period.

Earnings from Continuing Operations and Earnings per Share from Continuing Operations
Earnings from continuing operations were $12.5 million ($0.28 per diluted share) for the second quarter, a decrease of 64 percent from fiscal 2008 second quarter earnings from continuing operations of $35.2 million ($0.73 per diluted share). For the six months ended December 31, 2008, earnings were $31.2 million ($0.69 per diluted share), a decrease of 55 percent from prior-year six month earnings of $68.7 million ($1.41 per diluted share). The declines reflect recessionary economic conditions and their effect on advertising revenues, which more than offset the strength of broadcasting political advertising. In addition, an increased effective tax rate and the write-offs related to the closing of Country Home magazine and the severance charges contributed to the declines.

Discontinued Operations

In April 2008, the Company completed the sale of WFLI, the CW affiliate serving the Chattanooga, Tennessee market. For fiscal 2008, the revenues and expenses, along with associated taxes, were removed from continuing operations and reclassified into a single line item on the Condensed Consolidated Statement of Earnings titled loss from discontinued operations, net of taxes. In addition, income from discontinued operations includes the effect of the reversal of a portion of the restructuring charge recorded in fiscal 2007 related to the discontinuation of the print operations of Child magazine. This reversal was a result of changes in the estimated net costs for vacated leased space and employee severance. It is reflected in the special items line in the following table.

Revenues and expenses related to discontinued operations were as follows:

    Periods Ended December 31, 2007                   Three Months     Six Months
    (In thousands except per share data)
    Revenues                                        $          443   $        864
. . .