Meredith Looks To Grow Share In Ad Downturn

Meredith Corp. told Wall Street analysts this morning following release of earnngs numbers that the current quarter is pacing down 40% in advertising revenues for the company’s television and digital properties. That’s in line with what other TV groups had earlier reported.

“While we do not know when advertising conditions will improve, our goal is to grow market share as we had in prior times of economic difficulty,” said Meredith President-CEO Tom Harty. He noted that this advertising downturn has been swifter and more severe than what was experienced in the Great Recession.

Asked about categories impacted for national advertising in Meredith’s magazine business, Harty’s answer will sound quite familiar to people in the television business as well. “What we’re seeing on the national side, not surprisingly, the categories that are feeling pressure: Automotive, entertainment, obviously luxury and retail, and travel are the categories where we are seeing the most pressure. On the positive side, the areas that are holding up well are pharma, pets, home — and food early on. We’re getting a little decline in food now because some food advertisers don’t have enough inventory and have actually paused a little bit in the current month,” the CEO said.

Print, he noted, is repeating the experience of the previous downturn by holding up better than digital and local TV. “But when we come out of the recovery, we believe because of the lead times of print, we believe that the broadcast and digital space will probably come back quicker, so we may see a reverse in timing from quarter to quarter when we start to come out of it,” Harty told analysts.

For the TV group, Local Media Group President Patrick McCreery gave the analysts some detail on category performance. “The most impacted on Local Media was automotive. Our largest category now — as has been for the last year — is professional services. And that seems to be suffering less than some of the other categories,” he said.

Political was four times that of 2018 in the fiscal third quarter ended March 31 and double that of the previous presidential election year in 2016. New CFO Jason Frierott pegged political as up $10 million in the quarter, while ad cancellations across both the local and national media segments totaled $17 million as the pandemic impact hit. A plus was retransmission consent revenues, which rose by $8 million.

Like other broadcasters, Meredith’s TV group is seeing a gradual decline in subscribers at the MVPDs and vMVPDs paying retrans. Nonetheless, McCreery insisted, “We still have a few turns of the screw on retransmission growth.”

Meredith initiated cash conservation moves in April. That included the board of directors “pausing” the stock dividend, which Harty insists will be resumed when certain financial objectives are met. Directors’ fees were cut and salaries were reduced for top executives and the company’s more highly compensated employees. Frierott reported that the pay reductions affected 60% of Meredith’s employees. The company has also reduced planned capital expenditures by about half.