IAC's Merger With Meredith Can Boost Value As Ad Market Recovers

  • by September 27, 2021
Meredith’s stock surged as much as 31% on Friday after a newspaper report said Barry Diller’s IAC/InterActive was in talks to buy the magazine publisher, whose titles include People and Better Homes & Gardens for about $2.5 billion.

IAC seeks to expand its online publishing business with the deal, The Wall Street Journal reported, citing sources familiar with the matter.

IAC’s stable of media brands include Brides, Serious Eats and TripSavvy; they don’t overlap much with Meredith’s bigger trove of print and digital titles. The publisher reaches more than 120 million adult women with titles such as AllRecipes, Entertainment Weekly, Martha Stewart Living, RealSimple and Food & Wine.

Meredith’s digital business is valuable, with advertising revenue that rose 31% to $491.8 million in the year ended June 30, though it should be noted the prior year was especially weak as the pandemic triggered a significant pullback in media spending. Its licensing revenue also grew 27% to $124.9 million from Apple News+, while digital and other consumer-driven revenue expanded by 25% to $90.9 million.
The sum of those revenues is $707.6 million, which would significantly expand the scale of IAC’s Dotdash online publishing business, which generated $264 million during the same period.
The deal with Meredith also would reverse IAC’s strategy of spinning off assets like online dating giant Match Group and video platform Vimeo. The company also used to own Home Shopping Network, Expedia, Ticketmaster and LendingTree.
Meredith has trimmed assets with its agreement this year to sell its local TV business to Gray Television. That deal had been expected to reduce Meredith’s debt, which had risen with its deal to buy Time Inc. for $1.85 billion excluding debt in 2018. The company subsequently sold off Time, Fortune, Sports Illustrated and Money.
IAC can realize some cost savings in a combination with Meredith, which already made efforts to slash expenses as the pandemic pressured revenue and hastened the decline in print advertising. As the digital economy continues to grow, the combined company has an opportunity to expand advertising and ecommerce revenue.



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