Meredith Still Shopping For TV Stations

Meredith Corp. has been active in recent months in acquiring assets for its magazine side, but not for its television group. That’s not for lack of effort, Chairman-CEO Stephen Lacy assured analysts as the company reported fiscal first quarter (July-Sept.) results.

“We’ve been very active on the TV side, but we haven’t been able to close a transaction — yet — because Paul is very disciplined as an owner-operator in terms of what he will pay,” Lacy said, referring to Local Media Group President Paul Karpowicz.

The acquisitions of Allrecipies.com, EveryDay with Rachael Ray and FamilyFun helped the magazine side of Meredith, National Media Group, to post a 3% gain in revenues to $267 million, with advertising revenues up 7%. However, excluding those acquisitions ad revenues were down 9%.

With no acquisitions at all, the Local Media Group grew revenues 26% to a record high 1Q tally of $87.2 million. Non-political ad revenues for the TV group gained 5% to $62 million as political ballooned to $12.2 million from $583,000 a year earlier. EBITDA for the broadcast operation nearly doubled to $33.7 million from $17 million.

Meredith reported to Wall Street that “other” revenues for the Local Media Group increased to $12.7 million from $9.4 million a year earlier, with most of that from increased retransmission consent fees. But while retrans rose by $2.5 million or so, reverse retrans payments to the TV networks kicked in to the tune of $3 million. Analysts were told that the net for retrans will be down for the first half of the fiscal year, but then higher in the back half after retrans agreements with MVPDs come up for renewal, so net retrans for the full fiscal year should be about flat with the previous year figure of about $28 million.

Looking ahead to the current fiscal 2Q, Meredith is projecting that total company revenues should be up by a percentage in the high teens, led by growth of more than 20% in TV. That includes an estimated $18 million to $20 million in political advertising, bringing the total for two quarters to $30 million to $32 million. Lacy told analysts to expect Local Media Group non-political revenues to be flat to down slightly in 2Q due to crowding out of regular advertising by political.

“Post-election there is going to be a lot of displaced advertising that’s going to need to be put back into the system. We truly do believe that as we get into the rest of November and December that we’ll be able to clear a lot of the inventory that was cleaned out, or bumped, for political [advertising] reasons. On top of that, we’re still seeing a pretty strong push on automotive. That is what is really driving our non-political advertising,” said Karpowicz.

“So it’s a combination of the spots that have been preempted that will filter back in in November and December and then automotive — and holiday advertisers. We hear about some pretty positive retail business that may be coming for November and December to get us into the holiday season,” he added.