Meredith Expects To Rise On Political Wave

Only one of the two major presidential campaign organizations is buying ads so far, but Meredith Local Media Group President Paul Karpowicz isn’t worried, since the presidential battle represents only the tip of the political advertising iceberg.

The Clinton camp is buying, while the Trump camp is only inquiring. But 85% of political cash coming into the group is typically generated from down-ballot campaigns, he said.

Meredith, which is currently in the first quarter of its fiscal 2017, is not necessarily expecting to increase its political income compared to its results during the previous midterm cycle, when it pulled in $44 million.

But its political guidance of $40 million-$50 million for fiscal 2017 will certainly eclipse the $13 million in political that CFO Joe Ceryanec reported for fiscal 2016 which it completed June 30. Two-thirds of this year’s take is expected to be placed in Meredith’s 2Q, which begins in October.

Karpowicz noted: “What we’ve seen to date is obviously just a ton of activity in a battleground state like Nevada. However, beyond that we’re seeing activity in places like Missouri and now Arizona which gives us more optimism that we’ll be at the higher end of the range that we’ve given.”

The hotter the political market, the greater the impact on core advertising, and it’s something Karpowicz believes needs to be taken in to account by advertisers who like to book close to their desired air date. “If you’ve got a heavy political market like Vegas, traditional advertisers have been advised that you better get in early because if you don’t you’re not going to get in at all,” he said.

Ceryanec said core advertising is expected to shrink a bit during the company’s next quarter, and the key automotive category is pacing down mid-single digits.

Karpowicz offered some color, noting, “One auto issue that is out there … is where we’ve seen Ford moving some money into a digital play off of broadcast. Right now we’re seeing it in just a few markets, and right now it’s just kind of a month-by-month deal, so that’s one of the factors that is impacting that auto number.”

Rounding out guidance for fiscal 2017 is an expected $10 million increase in retransmission consent income. Taken altogether, an overall 20% gain in revenue is seen to be in the offing for the upcoming fiscal year.

On the M&A front, Chairman-CEO Stephen M. Lacy is ready to come out swinging once the spectrum auction is completed and the station-trading market comes back to life. “I think we’re all frustrated about this lull in transaction activity on the … television side until we get through the auction. Our objective has been to have as much dry powder as possible.”

Lacy said the success the company has had buying and integrating properties in the past few years has whetted its appetite for more of the same. To that end, he noted, the company is concentrating on keeping its leverage low and its access to credit at an optimal level.