Meredith Optimistic On Post-Election Advertising

Meredith Corp., reporting on its fiscal second quarter ended Dec. 31, 2020, noted a big jump in local television ad revenues driven by political spending. Meredith had benefitted from the dual Senate runoffs in Georgia, extending heavy spending from the regularly scheduled Senate elections in Arizona and Georgia.

Total revenues for the quarter (including the National Media magazine/related online operations) were up 11% to $901.5 million. Adjusted EBITDA rose 57% to $304.4 million

For the Local Media Group (TV and related) revenues were up 53% to $328.4 million. Political spot and digital revenues shot up 96% from the previous election cycle two years ago. Political spot hit $117.7 million, while non-political TV spot advertising was down 16% to $75.3 million.

“We estimate crowd-out from political spot advertising revenues lowered second quarter non-political spot advertising revenues by approximately 14 points to 16 points,” CFO Jason Frierott told analysts in the company’s conference call. “Adjusted EBITDA more than doubled to $161 million, driven primarily by political demand,” he added.

Also for the quarter, retransmission consent revenues rose 8% to $91.9 million. Digital (including record political sales), third-party and other revenues reported in the Local Media Group rose 24% to $43.5 million.

“Our local digital efforts have gained significant traction and are giving us a platform to capture digital political growth. Our team delivered $12 million of digital political advertising revenues in the quarter compared to less than $1 million two years ago,” said Meredith CEO Tom Harty.

One analyst asked whether core TV business is getting back to relatively flat pacings, post the political windfall. While not offering official guidance, Local Media Group President Patrick McCreery agreed with that assessment.

“And for those stations of ours that were not heavy in political, that’s exactly what we saw, flattish,” McCreery said. “But we’ve seen strong growth in professional services quarter-over-quarter, and we’ve even seen strong growth quarter-over-quarter in auto. I mean, look, retail and restaurants are still really challenged, no doubt about it,” he explained.

“There is a level of uncertainty there, but we are seeing continued sequential quarter-over-quarter improvement. I think there’s also a lot of frankly pent-up demand out there, right, for these businesses that would like to grow and need a way to do that,” McCreery added.

Even without political, Meredith’s TV stations have some reason to be optimistic about the current quarter.

“I’m looking I’m looking forward to this quarter because I’ve got the Super Bowl on CBS, and that’s a nice bump. And then, we’re up against not having the NCAA Tournament last March and April, which are returning for this year and that will provide another nice secular bump,” said McCreery.

Once again cautioning that he wasn’t giving official guidance, McCreery predicted continuation of the quarter-over-quarter improvement in advertising that has been seen for core business. He noted that “we’re seeing good pacings this quarter that continue that trend.”

CEO Tom Harty did provide some official guidance to Wall Street, which was in line with that flattish outlook for post-election TV ad revenues. “As we look into our fiscal 2021 third quarter, compared to the prior year period, assuming no changes in trajectory due to COVID or other macro factors, we expect National Media Group digital advertising revenues up in the mid-teens. Magazine advertising revenues down in the high-teens. Local Media Group non-political spot advertising revenues to be approximately flat,” the CEO told analysts.