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Meredith Corp., the owner of People and InStyle, said digital advertising in its magazine division outperformed its print component for the first time as it reported better-than-expected results for its fiscal second quarter.
The Des Moines, Iowa-based publisher recorded a 22 percent increase in digital advertising revenues to $161.2 million in its national media group, comprising its magazine business, in the three months ended Dec. 31 compared to the prior year. Print advertising revenues fell almost 20 percent to $120.4 million.
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This is a trend that some other publishers have witnessed as more advertisers favor digital advertising during the pandemic as it allows them to turn their spend on and off more easily depending on how business is faring. Print was already a declining area before the virus struck.
At the same time, Meredith’s local media group, made up of a network of local broadcast stations, saw a 96 percent increase in political spot and digital advertising from the prior election cycle two years ago. Performance was led by the Phoenix and Atlanta markets, which combined accounted for about 60 percent of total political advertising revenues.
“Our audiences are engaging with Meredith’s trusted brands more than ever before, and our advertisers are responding in kind — both factors driving our record second-quarter revenue and profit performance even as the COVID-19 pandemic continues to impact certain aspects of our business,” said Meredith chairman and chief executive officer Tom Harty. “Of particular note, national media group digital advertising revenues surpassed magazine advertising for the first time, marking a historic accomplishment and a critical piece of our long-term strategy.”
As a result of the increases in digital revenues in its magazine business and political spot advertising, revenues grew 11 percent to a record $902 million from the prior-year period. Analysts had been expecting revenues of $849 million.
Operating profits more than doubled to $149 million from the prior-year period. Earnings per share from continuing operations before special items were $3.13, up from $1.14 and beating analysts’ predictions of $2.19.
But despite the better than expected results, Jason Frierott, Meredith’s chief financial officer, cautioned that COVID-19 continues to impact results, particularly in its legacy magazine and non-political advertising channels. “As we continue to progress through the pandemic, quantifying a precise impact has become more challenging. Our estimate of the COVID-19-related revenue impact to advertising, consumer related, and other activities for the second quarter totaled between $25 million and $35 million, with the majority of declines in the national media group.”
Recently, Meredith sold Travel + Leisure for $100 million to Wyndham Destinations despite the travel industry largely grinding to a halt on an international scale. At the time, Harty signaled that more deals like this could be on the horizon. “This is a great demonstration of the value that strong brands deliver when expanded beyond the media space, and we look forward to developing more of these creative, value-enhancing programs across our portfolio,” he explained.
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