Meredith Calls Off View, Updates Plans on Tackling Coronavirus
Meredith Corporation MDP has announced several actions in the wake of heightened volatility stemming from the coronavirus outbreak. Management has called-off third quarter and fiscal 2020 guidance, provided on Feb 6, and provided details on its business trends.
The diversified media company has decided to put dividends on hold for now. It however is determined to pay out dividends in the long term and resume dividend policy on an improvement in advertising market conditions. It is also resorting to a host of cost-containment actions, such as cut in executive and exempt employee salaries, reduction in board of directors’ fees, lowering of capital spend, optimized working capital, and control of production and variable costs. As far as the company’s financial liquidity is concerned, Meredith has access to a $350-million revolving credit facility for general corporate projects.
As of Mar 31, the company had roughly $100 million cash and cash equivalents, and had drawn $35 million from its revolving credit facility. This compared with $21 million of cash and cash equivalents and $55 million drawn on its committed revolving credit facility as Dec 31, 2019.
Business Updates
Meredith has drastically lowered its dependence on traditional advertising with increased focus on retransmission consent, brand licensing and e-commerce revenues. Also, magazine subscription solicitations remain robust on account of order renewals. Meanwhile, the company informed that there has been steady demand for magazines at newsstands.
Meredith also saw high-single digit increase in traffic at its digital properties in the fiscal third quarter. Notably, traffic is up 40% so far in April. We also note that after increasing news hours, Meredith Local Media Group television stations are experiencing viewership growth of 15-40%. Management also informed that traffic at Meredith's local news digital sites surged 50% in the third quarter.
Shares of this Des Moines, IA-based company have plummeted 57.6% compared with the industry’s 24.5% fall over the past three months.
The Larger Scene
Like various other sectors, the research, media and entertainment space is grappling with the impacts of the coronavirus pandemic. Integrated media and entertainment company, World Wrestling Entertainment WWE has also decided to cut down on expenses and furlough employees to address challenges tied to the outbreak. It has taken several actions, including reduction in executive and board member compensation, cutting down on operating and talent expenses, and deferring spend related to the build out of its new headquarters for a minimum of six months. Leading research and learning company, John Wiley JW.A has trimmed guidance for the current fiscal year and put share buybacks on hold.
Renowned media and entertainment conglomerate Disney DIS has also been facing the brunt. Its theme parks, hotels and other entertainment areas remain shut. Per media reports, Disney parks are unlikely to fully recover anytime soon and the company will stop paying roughly 100,000 employees amid the crisis.
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