Mega media company Meredith Corp. reported its third quarter financials for its fiscal year 2020 on May 14. For the period ended March 31, 2020, Meredith reported total revenue of $701.7 million, a 6% drop over the prior year. The company said this was due to portfolio adjustments made to improve profitability which, in turn, reduced advertising and subscription revenue by $40 million. Ad cancellations and delays due to COVID-19 reduced revenue by another $17 million. This $57 million decline was partially offset by a $10 million increase in revenue from political advertising.
The company also reported a $289.4 million loss from continuing operations, adjusted EBITDA of $151.8 million, and free cash flow of $99.8 million.
“Our performance for the fiscal 2020 third quarter was largely in-line with our expectations until mid-March when the outbreak of COVID-19 created an extremely challenging advertising environment,” said Tom Harty, Meredith president and CEO, in a news release. “In response, we took a series of proactive steps to strengthen our liquidity and enhance our financial flexibility in the near-term to effectively navigate the current environment.”
Those measures include temporarily holding stock dividend payments; pay cuts for the Meredith Board, executives and other employees who comprise 60% of the workforce; reducing capital expenditures; and optimizing capital by working with customers and suppliers. Meredith has also withdrawn its guidance for FY2020, not knowing what the last quarter of its fiscal year holds.
Despite the negatives, Meredith reported some positive trends:
- Traffic to Meredith’s National Media Group sites increased 6%, including strong growth at Allrecipes.com, Instyle.com and EW.com. Traffic to Local Media Group sites increased by more than 75%.
- Revenues from licensing, digital and other consumer activities grew 27%. This was primarily from an increase in royalties from Apple News+, ecommerce product sales, and lead generation.
- Viewership at Meredith’s broadcast TV stations increased, and Meredith’s morning and late night news broadcasts increased 10%, while evening news broadcasts increased 35% year-over-year.
- Meredith has experienced growth in direct-to-publisher magazine solicitations via digital properties, paid search and direct mail.
“In this difficult environment, we are and will continue to be differentiated by our growing consumer engagement and reach to 95 percent of all American women, our first party data and insights, and our vibrant, trusted brands,” said Harty. “I believe Meredith will weather this difficult period and emerge in a stronger and more competitive position.”
Meredith Corp. had originally planned to release its quarterly financials on May 11, but told the SEC the company would delay the update due to “an extremely challenging business environment” caused by the coronavirus pandemic.
In their SEC filing, the company said, “The effects of the recent outbreak of the novel coronavirus pandemic have had and may continue to have an adverse impact on our business, financial condition, operations, and prospects.”
Insider Take
Meredith is just one of many media organizations losing advertising revenue and making big cuts, including pay reductions, furloughs and staff layoffs. Meredith was fortunate to only have lost 6% of revenue, but the quarter ended March 31, only a month into significant COVID-19 impacts. It is likely that the company’s fourth quarter of its fiscal year 2020 will see more significant impacts.
