Meredith Reports Lower Revenue But Higher Earnings for Q2 FY2020

Lower revenue attributed to portfolio changes and decreases in spot political ad revenue.

Meredith Reports Lower Revenue But Higher Earnings for Q2 FY2020

Source: Meredith Corp

Meredith Corp’s second quarter earnings report for fiscal year 2020 was a mixed bag. The media and marketing company calls the quarter “strong” and reaffirms its full year 2020 guidance, but the results weren’t all rosy. For example, total company revenue was $810.5 million, compared to $878.4 million for the same period last year. Meredith attributes this decline to lower political spot advertising revenue in its Local Media Group and lower advertising and subscription revenue in its National Media Group, due to changes in the company’s portfolio and operations.

On the flip side, operating expenses were only $676.6 million, compared to $744.7 million, helping the company post an increase in net earnings. Earnings for the second quarter of fiscal year 2020 were $37.8 million, or $0.39 per common share, compared to $18.6 million, or a loss of $0.03 per common share for the same period last year.

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“We are pleased to report a strong second quarter driven by excellent advertising performance across both businesses,” said Tom Harty, Meredith president and CEO in the company’s February 6 earnings report.

“With our two-year integration process of the Time Inc. acquisition largely complete, we are now in the strongest competitive position in Meredith’s history. We’ve built a significant digital business of scale with tremendous reach to American women and unmatched first-party data; we are clearly the country’s top magazine publisher and are taking share at a strong rate; and we are growing consumer related revenues that is reducing our reliance on traditional advertising. At the same time, our local television business continues to perform at record levels, and we anticipate strong political advertising in calendar 2020,” Harty added.

Here are additional highlights for the second quarter:

  • National Media Group had revenue of $597 million, compared to $616 million year-over-year. The change in revenue is due to moving Coastal Living and Traditional Home to newsstand titles, merging Cooking Light and EatingWell together, and discontinuing Family Circle, MONEY and Martha Stewart Weddings.
  • Total advertising revenue decreased 1% to $302 million, due to portfolio changes.
  • Though Meredith doesn’t specify which ones, the company said “many” of its magazines had print advertising revenue growth during the quarter, including PEOPLE who had double-digit growth.
  • Digital advertising revenue increased 8% and made up 44% of National Media Group ad revenue, a 4% increase over the same period last year. Meredith attributes the growth to increased traffic, impressions per visit, ad rates and the popularity of its videos.
  • Total consumer-related revenues decreased 10% to $264 million, because of the portfolio changes which impacted both subscription and newsstand revenue.
  • Total readership for Meredith magazines increased by 4%, and several of its digital sites – like Allrecipes.com – hit all-time traffic highs during the quarter.
  • Also during the quarter, Meredith launched new products including Reveal, a new lifestyle magazine featuring Drew and Jonathan Scott (the Property Brothers).

Meredith offered the following guidance for the third quarter:

  • National Media Group revenue of $515-$535 million
  • Local Media Group revenue of $205-$215 million
  • Earnings from continuing operations of $38-$45 million, or $0.39-$0.55 per share
  • Adjusted EBITDA of $145-$155 million

Meredith Reports Lower Revenue But Higher Earnings for Q2 FY2020

Source: Meredith Corp

Insider Take:

Since its acquisition of TIME Inc. two years ago, Meredith Corp. has done a good job of stripping away brands that don’t align with their target audience. They’ve also done some testing to see what works and what doesn’t, shuttering some brands, while launching news and experimenting with others. Revenue might be down, but that’s to be expected considering the changes to their portfolio and in an “off” political year. This time next year, they are likely to soar past this year’s results in the political advertising category. Who knows what new changes Meredith will bring in the second half of their fiscal year, but you can bet they will be strategic, positioning the company for a solid finish.