After a few days of delay, Meredith released its Q3 earnings, which closed on March 31.
Starting with the bottom line, adjusted EBITDA totaled $151.8 million, a 5.5% decline versus the same period last year. The top line illustrates why.
Overall, the company’s revenue fell 6.5% versus 2019. Meredith attributes some of the decline to portfolio and title changes. Among those shifts were the rebranding of Rachael Ray In Season, which is now a quarterly newsstand magazine, transitioning Traditional Home to a newsstand-only model, as well as reducing Entertainment Weekly’s frequency to monthly and shuttering Family Circle and Money magazines. Given these changes, the comparable YoY revenue outlook is still down, but only 1.2%.
The company also indicates that COVID-19 impacted ad spend as early as March, and among the categories hit hardest were automotive, entertainment and travel. Some categories were more stable, including pharama, pet, and home. CEO and president of Meredith, Tom Harty, did suggest food is beginning to tick back up in this morning’s earnings call. That said, he forecasted significant advertising declines in Q4. Magazine advertising is pacing 30% below Q4 2019, and digital down 40%. That would mean that the economic impact of the pandemic is worse than what the company experienced in the trough of The Great Recession.
Advertising, which accounted for $332.1 million in revenue, declined by $36 million in the third quarter, which is a 9.8% total decrease, or 4.8% comparable change YoY.
Print advertising took an especially hard hit, comparably down 7.5%, which was an overall decrease of 17.9% YoY. Digital advertising saw a decrease of 3.6% YoY, despite a 6% increase in digital engagement. The company points to its demand-driven model as the reason for the decline, so despite increased engagement, CPMs fell.
Using April as an example, the company said engagement continues to increase into Q4. Last month saw a 30% increase in digital engagement versus the same period last year. How that actually translates into revenue will not be evident until the Q4 filing. Its fiscal year ends on June 30.
Consumer related revenue, which accounts for roughly half the company’s business, had a modest comparable increase of .6%. However, the $345.6 million it earned in Q3 is 5.3% less than the same period last year. When drilling down, the company saw a 27% increase in licensing and other consumer-driven revenues, which includes income from Apple News+, ecommerce and lead generation.
The quarter ended with a healthy cash flow of $99.8 million, a 22.5% increase YoY. Last month the company took measures to protect that cash flow to offset the impacts of COVID-19 by reducing the salaries of 3,000 employees through September, as well as suspending its quarterly dividends. But during today’s earnings call Harty expressed that restarting dividend payments as soon as possible is a high priority for its board of directors.