Meredith Corp. Blames Ad Revenue Declines On Portfolio Changes, Pandemic

After delaying the release of its third-quarter earnings by a few days, magazine publisher Meredith Corp. shared the report Thursday. It revealed drops in ad revenue due to portfolio changes, the impact of COVID-19, and surges in digital engagement.

"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," stated Meredith president-CEO Tom Harty. "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.”

Adjusted EBITDA totaled $152 million, from $161 million in Q3 2019, for the quarter that ended March 31.

Meredith Corp.’s revenue fell 6.5% year-over-year, “due primarily to previously announced magazine portfolio adjustments to improve profitability that reduced advertising and consumer-related revenues by a total of $40 million and COVID-19 related advertising cancellations and delays that reduced revenues by $17 million,” according to the earnings report.

These changes were “partially offset by $10 million of incremental broadcasting political advertising revenues compared to the prior year period.” 

Advertising, which accounted for $332.5 million in revenue, declined by $36 million in the third quarter.

Print advertising was down 17.9% year-over-year, digital advertising took a hit of 3.6%.

Licensing and other consumer-related revenue, which accounts for roughly half the company’s business, grew 27%, “due primarily to increases in royalties from Apple News+, ecommerce product sales and lead generation referrals,” according to the report.

Visits across Meredith's digital properties increased in the third quarter — traffic to Meredith's National Media Group sites grew 6%, with particularly strong growth at Allrecipes.com, InStyle.com and EW.com (Entertainment Weekly). 

"In these unprecedented times, we are seeing… robust traffic to our digital properties, strong upticks in our ecommerce activities, increased viewership to our local newscasts and solid subscription metrics," Harty added. "We remain confident in the strength and resilience of the diversified business model we have built."

Traffic to Meredith's Local Media Group sites grew more than 75%. 

Meredith Corp. delayed the release of its quarterly earnings report, which was supposed to come out on Monday, due to "an extremely challenging business environment" caused by the COVID-19 pandemic.

The company recently announced short-term pay reductions that would affect roughly 60% of its staff, as well as a salary and hiring freeze, to cut costs during this difficult time for the industry

Meredith Corp.’s fiscal year ends June 30.

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