Meredith Reports Thin Margins in First Post-Acquisition Fiscal Results
National Media Group revenue is up, but profits slim as the company continues its Time Inc. integration strategy.
Meredith Corp.’s ongoing integration of Time Inc. has nearly doubled revenues for its national media business, but drastically thinned its profit margins, according to a quarterly earnings report issued Thursday morning—the first since completing a $2.8 billion acquisition of its former competitor.
Revenues for the company’s National Media Group—which essentially comprises its magazine and digital media business—jumped to $479.3 million for the three months ending March 31, a 69 percent increase over the same period a year ago. Operating profit, however, tumbled to just $9 million, down from $41.3 million for the same period in 2017.
“Our legacy Meredith businesses are performing in-line with our stated expectations, and we are aggressively focused on successfully integrating the acquired Time Inc. properties; strengthening our leading national and local media brands; executing our planned asset divestitures; and delivering on our synergy targets,” said Stephen Lacy, who transitioned from CEO to executive chairman in January, in a statement.
To alleviate the burden of the massive acquisition, the company’s strategy remains unchanged from prior statements; selling off “non-core” properties like Time, Sports Illustrated, Fortune, Money, and a 60-percent stake in ad-tech subsidiary Viant; improving advertising and circulation performance of the remaining Time Inc. titles “to at least industry norms;” and investing further in native advertising, video production, shopper marketing, programmatic advertising, and social media.
“We are aggressively integrating the acquisition and forging a path for the ‘New Meredith’ in the marketplace,” added president and CEO Tom Harty. “Most notably, we have named publishers for all legacy Time Inc. premium-content brands.”
The company says it expects advertising performance to begin to see “meaningful improvement” beginning in its 2019 fiscal year—which, for Meredith Corp., will begin on July 1—and that it still envisions up to $500 million in cost-saving synergies within the next two years, primarily by reducing headcount. Meredith announced in March that it intends to lay off about 1,200 employees by year’s end, on top of the 600 who will be let go with the shuttering of Time Inc.’s Tampa, Florida customer service facility.
The company says it expects National Media Group revenues to climb as high as $600 million for its next fiscal quarter.
Meredith’s Board of Directors declared a quarterly dividend of $0.545 per share, keeping alive a 71-year streak of paying out regular quarterly dividends to shareholders.