Commentary

Meredith's Sale Of Local Broadcast Business Is Positive

Meredith Corp.'s sale of its broadcast-television business to Gray Television Inc. for $2.7 billion is a good move for the publisher, whose titles include People, InStyle, Food & Wineand Better Homes & Gardens.
Proceeds from the sale can help Meredith cut its debt of $2.6 billion, including the financing for its $3 billion acquisition of Time Inc. three years ago. Since then, Meredith sold off Time, Fortune, Sports Illustrated, Money and Travel + Leisure and focused on its lifestyle brands.
By dispensing with its 17 local TV stations, Meredith can give more attention to its magazine and digital properties that collectively reach 95% of U.S. women. The local TV business had been steadily profitable, though it showed meager growth of 3% from a year earlier to $201 million during the most recently completed quarter.
Gains in non-political advertising and retransmission fees paid by cable, satellite and streaming services more than offset declines in political ads. Still, the local TV business is only about one-third of Meredith's total revenue.
The publisher's digital ad revenue grew 21% to $102.4 million to overtake its print ad sales for the second straight quarter as brands sought to reach consumers  spending more time online. Digital growth has been a bright spot for Meredith's national media business, which includes its print and online properties, though its revenue fell 8.3% to $465 million.
The company also has worked to engage print subscribers directly, rather than through third-party services, to reap more profits and maintain its total rate base of 36 million.
As media spending continues to recover and consumer spending grows, Meredith is well positioned to parlay its reach among U.S. women into continued digital ad growth. Plus, lightening its debt load -- which last year included $251 million in redemptions -- should make a big difference in having more resources to invest in its media brands.

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