Meredith Corp (NYSE: MDP) reported decreases in revenue and earnings for the first quarter of its fiscal year 2020 for the period ended September 30, 2019. Total company revenues from continuing operations were $725 million, compared to $774 million for the same period last year. The prior year period, however, included $33 million in high-margin political advertising for the Local Media Group, which the company did not have this year. Earnings from continuing operations were $12 million, down from $16 million for the same period last year.

Meredith Corp president and CEO Tom Harty put a positive spin on the results.

“Our Local Media Group delivered record revenue for a first quarter in a non-political year, driven by growth in non-political related advertising and consumer revenues,” said Harty. “Our National Media Group results reflect advertising performance which met our long-term expectations on a comparable basis, including high-single digit growth in digital advertising revenues. We also continued our track record of strong expense control. These factors helped drive a 55 percent increase in National Media Group operating profit in the quarter.”

Other highlights from the first quarter of fiscal year 2020 included:

• National Media Group revenues were $533 million. Operating profit was $28 million, a 55% increase yoy.
• Local Media Group revenues were $193 million, and operating profit was $38 million.
• Total company digital advertising revenue was a record for a first fiscal quarter. National Media Group and Local Media Group digital ad revenues each grew 8%.
• Total advertising related revenues were $271 million, a decrease in the mid-single digits.
• Print advertising revenues were down in the low teens. Meredith attributes this to changes the company has made to its magazine portfolio, including making Coastal Living and Traditional premium newsstand totals, merging Cooking Light into EatingWell, and shuttering MONEY and Martha Stewart Wedding magazines.
• Consumer-related revenues were $244 million, down $10 million.
• Expenses dropped 7%.

Despite some of the negative results of the first fiscal quarter, Meredith is optimistic about the remainder of fiscal 2020. Some of the changes include:

• The pending launch of a new lifestyle magazine featuring Drew and Jonathan Scott, the stars of Property Brothers
• Transitioning Rachael Ray Every Day to a premium newsstand title, published quarterly starting in January
• Additional asset sales, including the sale of the MONEY brand
• The launch of a TV show based on the Southern Living brand

We are encouraged by advertising trends across our powerful and diversified portfolio, said Harty. To that point, we are currently forecasting year-over-year growth in comparable print advertising revenues for the second quarter of fiscal 2020. At the same time, we continue to innovate, be it launching a new title based on the Property Brothers; repositioning popular brands as consumer-driven newsstand products; or creating sophisticated targeted digital advertising programs for clients. Additionally, we are driving growth in our consumer driven business lines, particularly e-commerce and performance marketing, key pieces of our revenue diversification strategy.

Meredith Corp offered the following outlook for the second fiscal quarter of 2020:

• National Media Group revenue between $570 million and $590 million
• Local Media Group revenue between $215 million to $220 million
• Earnings from continuing operations between $54 million and $60 million, or $0.73 to $0.86 per share
• Adjusted EBITDA between $173 million to $181 million

Insider Take:

In September, when Q4 FY2019 earnings were released, Meredith stock dropped. It dipped again, now into the first quarter. With earnings and revenue both dipping, it is beginning to look like a trend. The company is making a lot of moves, strategic and financial, but it does not look like investors are confident that those moves will turn things around fast enough. Meredith has a lot going for it, and it may be going through some growing pains – as are most publishers – but we think they will turn things around. It is just a question of how long it will take.