One of the big questions is: "Will it in fact unlock value?" Lacy explained on a conference call to announce results from the recently completed quarter. "I guess time will tell." He did allow that the company will monitor market trends and discuss this at its next board meeting.
Potentially, Meredith could split its magazine and other operations from its local stations, but Lacy said the "core businesses are performing well" and offering opportunities for synergies "to build additional businesses around."
On the call, Lacy said "a key factor in our advertising success is an increased emphasis on developing multiplatform advertising and marketing programs." (Company-wide ad revenue rose 7% to $254 million in the quarter.) He cited an initiative for Clorox that included ad pages in Better Homes and Gardens, and the creation of a microsite affiliated with the magazine along with spots on the Meredith TV stations.
One reason that media companies, such as Belo and Scripps, have opted to divide into two publicly traded entities is to separate slower-growing businesses from others as they look to boost share prices. In Belo's case, the move will split the plodding newspapers from TV stations. In the Scripps example, the booming cable networks will be separated from what it refers to as local media, newspapers and TV stations.
In Meredith's case, a potentially different dynamic exists. Its publishing operations, with Family Circle and Better Homes, grew in the just-completed quarter (overall revenues up 8% to $330 million), while its TV stations' revenue was down (7% in a non-political year to $75 million).
Last week, both Gannett and Media General, with newspapers and local stations, said they had no plans to follow the Belo model. And privately held Hearst Corp. recently made a move that could have further tied its publishing operations (newspapers and magazines) with TV stations. But the effort--to acquire the remaining portion of the publicly traded Hearst-Argyle station group it doesn't own and take it private--failed.
Meredith's TV portfolio includes duopolies in Kansas City and Portland and the CBS affiliates in the booming Atlanta and Phoenix markets.
CEO Lacy said dividing into two companies could actually increase costs, suggesting that back-office synergies currently lower them.