Meredith Shares Surge On Strong Fiscal Q2, Even For Local Media


The Thursday release of Meredith Corp.‘s fiscal Q2 2020 couldn’t have come at a better time for shareholders. It’s been nearly 7 1/2 years since MDP has been trading so low, off from a November 2017 finish of $68.15.

That said, Meredith is a bit of a different company today, and its investors may finally be pleased with the path its leadership has paved — and how its local media arm is performing. The second quarter was a good one, sending Meredith shares into a strong rebound on the NYSE.

As of 11:30am Eastern, MDP was up 14.6% to $34.77, erasing a downtrend that began Dec. 20, 2019.

Volume was higher than average, with 1.36 million shares already traded in just two hours on Wall Street.

At the closing bell, a 15.1% gain was registered for MDP, placing it at $34.90.

With a 1-year target estimate of $38 from analysts, MDP is in great shape.

What about the Local Media division led by Pat McCreery?

The Meredith arm comprised of 17 local television stations including WSMV-4 in Nashville and Phoenix duopoly KPHO-5 and KTVK-3 “Arizona’s Family” enjoyed growth in non-political related advertising and consumer related revenues.

This was noted by Meredith President/CEO Tom Harty, who harped on the company’s ad prowess despite the lack of political dollars.

It was an important point to make indelible in the minds of Meredith’s investors, as Local Media adjusted EBITDA shifted to $66.7 million in fiscal Q2 ’20 from $116.2 million in the year-ago period. Operating profit shrank to $54.8 million in the most recent quarter, from $106.6 million.

But, while total local media revenue dipped to $214 million from $262.4 million, non-political spot revenue was up to $89.5 million, from $87.6 million. This, Meredith says, was led by growth in the Kansas City, Las Vegas and Phoenix markets. In Kansas City, the Super Bowl Champion Chiefs helped, as Meredith owns MyNetwork TV affiliate KSMO-62 and CBS affiliate KCTV-5, which aired most Chiefs regular-season and post-season games, outside of the Big Game.

Meredith’s Las Vegas station is FOX affiliate KVVU-5.

From a category standpoint, the professional services, pharmaceutical and home services categories were stronger, partially offset by softer results in the automotive category.

“This marked the fourth consecutive quarter of non-political spot advertising growth,” Meredith notes.

Digital revenue inched ahead to $4.9 million, from $4 million, in fiscal Q2 ’20.

Then, there is retransmission consent revenue, defined as “consumer related” dollars by Meredith. In fiscal Q2, they climbed to $85.1 million from $74.1 million.

This suggests that retrans dollars are closer than ever to eclipsing non-spot political money at Meredith’s broadcast TV stations — even as the company stressed yet again in its earnings release that Local Media’s final dollar tallies “were records for a fiscal second quarter in a non-political year.”

Meanwhile, Meredith plans to expand its Southern Living-branded TV show to weekly syndication in April across Meredith’s station group. It also plans to launch its People Now weekend show in daily syndication beginning in Fall 2020, with distribution across its local television markets.

Meredith says it is “actively engaged in discussions with other broadcast television owners” to carry the People-branded show — one way Meredith is cross-promoting its National Media print and digital lifestyle brands, of particular appeal to women.

This could help Meredith in further reducing some $2.4 billion in long-term debt, as of Dec. 31, 2019.

Meredith had $55 million drawn against its revolving credit facility, reflecting repayment of $40 million compared to September 30, 2019.

Looking ahead, Meredith expects fiscal Q3 Local Media Group revenue to range from $205 million to $215 million.

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