Why Did Meredith Slide On Good Fiscal Q1 News?


It was a solid start to fiscal 2017 for Des Moines-based Meredith Communications, as the diversified media company reported Q1 2017 revenue of $399.88 million, up from $384.67 in the year-ago period.

Advertising revenue increased from $218.67 million to $225.89 million.

But, circulation revenue declined from $72.18 million to $68.67 million.

Perhaps that is a key reason why Meredith shares fell 5.2% in Thursday’s trading, to $46 — aside from a wholesale slide for TV companies on Wall Street as all eyes turned to Gannett Co., which reportedly cannot procede with a merger with Tribune Media Co. after banks backed out of a financing arrangement.

Meredith divides its business into its Local Media Group and a National Media Group.

In its Local Media Group are 17 O&O television stations, including CBS affiliate KPHO-5 and news-focused independent KTVK-3 in Phoenix; FOX affiliate KPTV-12 and MyNetwork affiliate KPDX-49 in Portland, Ore.; CBS affiliate KCTV-5 and MyNetwork KSMO-TV 62 in Kansas City; longtime CBS affiliate WFSB-3 in Hartford; and NBC affiliate WSMV-4 in Nashville, among its other properties.

The National Media Group is home to its wide array of female-targeted glossy publications, including Parents, SHAPE and Better Homes & Gardens.

And, as is the case with many media companies engaged in print operations, revenues are suffering from The Great Digital Migration.

Fiscal Q1 revenue for the National Media Group dipped from $258.2 million to $247.29 million.

Segment advertising fell from $127.24 million to $125.35 million, while segment circulation dollars dipped from $72.18 million to $68.69 million.

In fact, it was the Local Media Group that proved to be the key driver for Meredith — thanks to a boost in political advertising.

Breaking out election-oriented ads, Meredith saw year-over-year political growth from $2.12 million to $16.53 million.

Without the political dollars, advertising revenue shrunk from $89.3 million to $84.2 million — another fact that may have struck a sour chord with investors.

Otherwise, Meredith’s finances are quite solid, with cash and cash equivalents at the end of fiscal Q1 at $32.13 million, up from $29.94 million.

The key, again, is convincing investors that its female-focused branding strategy will prove richer than its aborted merger with Nexstar. With local media operating profit higher than national media operating profit by $6.5 million, all eyes will be on Meredith to grow profits with far more high-profile assets than its TV stations.