Fiscal Q2 (October-December) broadcast revenues were down only 3.7% for Meredith Corporation, despite a sharp decline in auto advertising. But the current quarter is looking much worse, with pacings currently down 40%. CEO Steve Lacy is pointing to ratings gains for the company’s TV station group as it positions itself for the eventual advertising recovery.
Meredith actually beat the Thomson/First Call analysts’ consensus with fiscal Q2 earnings per share of 49 cents, excluding a one-time charge, and revenues were in line with expectations. But the company’s stock fell 5.3% as it announced forward guidance below Street expectations.
As of now, said Lacy, publishing revenues are pacing down less than 15% in fiscal Q3 (January-March), which is an improvement over the 20% decline in Q2. But television pacings are currently down 40%, including a drop of around 70% for the auto category. Auto had been down 40% in Q2 as TV revenues declined only 3.7% to $84.4 million. TV operating profits were down 19% to $22.3 million.
In a Q&A with analysts, Meredith Broadcasting President Paul Karpowicz noted that bookings are coming in very close to air date. Karpowicz happened to be at the company’s KVUU-TV (Fox) Las Vegas and noted that an avail request from Jeep-Chrysler had come in with a start date of January 26th, just a few days away. “I think it’s a reflection of how uncertain the environment is,” he said. Karpowicz also noted that the downturn in domestic auto advertising is twice as bad as for imports.
There has been some shifting of the auto advertising market at the local market level.
“There has been a weeding out process, where we have seen some dealers go out of business and literally just shut their doors. However, in the aftermath of that, we’ve seen adjacent dealerships realizing that that has now opened up potentially a new market for them and have come back on the air and tried to fill that void,” Karpowicz noted.