Meredith Doubles Down on Its Magazine Roots

From a post on by Rick Edmonds and Al Tompkins headlined “Meredith sells its local broadcast division, doubling down on its magazine roots”:

In a transaction with implications for both the local broadcast and magazine businesses, Gray Television is buying Meredith Corporation’s 17 television stations for $2.7 billion….

Gray will become one of the top three local broadcasters (along with Sinclair and Nexstar) when the deal closes….

It continues a yearslong consolidation trend in the profitable local television business, partly driven by the better retransmission deals that station groups can negotiate with cable companies as they gain leverage by growing larger.

For Meredith, the deal will reduce the substantial debt it assumed when it acquired the larger Time Inc. magazine group in 2018 in a deal valued at $3 billion. The Des Moines-based company said that it will invest in the growth of the magazines and their digital properties. Its titles include People, Better Homes and Gardens and All Recipes.

Meredith sold Time along with Fortune and the Sports Illustrated brand to three separate buyers for $450 million. It explained that hard news was not its specialty….

As we wrote in October, despite a strong record of management and financial performance, Meredith hit trouble in the Time purchase. Costs of combining the two big companies were higher than expected and revenues less.

Then came the pandemic recession of 2020, which hit the advertising base of Meredith’s lifestyle titles especially hard.

Meredith was vague about its plans of how it will use the $2.7 million beyond paying down its debt of $2.6 billion and reducing its interest costs….

The company claims its titles reach 96% of adult women in the U.S.

“We will invest to accelerate our digital growth and leverage our industry-leading first party data to deepen engagement with consumers across multiple platforms and provide advertising partners with greater value.”…

Gray Television burst into the top tier of owners when it purchased Raycom in 2018 for $3.6 billion. In the same month, Nexstar bought Tribune Media’s 42 TV stations. Since the pandemic, the flurry of acquisitions had cooled until now. The major roadblock for another round of shopping sprees is the Federal Communications Commission’s national TV ownership rule, which allows a company to own stations serving no more than 39% of all U.S. TV households.

However, the Supreme Court recently ruled that the FCC could loosen the ownership rules, as owners have claimed for years. The justices said that the current ownership limits may be outdated since they were written in a pre-internet era….

Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years.

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