quick thoughts on the IAC/MDP acquisition rumor
I have a writeup on Teladoc (TDOC) coming next week but felt like throwing out some first impressions on the possibility of IAC acquiring Meredith. I don’t normally comment on rumors but I typed up some thoughts yesterday for my personal file and figured why not share.
This past May, Meredith Corp. agreed sell its 17 local TV stations to Grey Television1, leaving behind a so-so print and online publishing business that IAC is apparently in talks to buy for $2.5bn, according to the Wall Street Journal. Meredith’s publications include lifestyle brands with evergreen content that meshes well with DotDash’s portfolio, as well as several celebrity gossip and news titles that do not:
(this is not a comprehensive list of Meredith’s titles)
Much of Meredith’s portfolio comes from its 2018 acquisition of Time ($2.8bn – 0.9x revenue; 7x EBITDA before synergies), whose online properties at the time boasted nearly 140 million unique visitors/month. But even with such illustrious titles as People, Food & Wine and Southern Living, Time was experiencing 20%+ declines in its print business, in large part due to management turnover2 and a misguided sales strategy3. By applying operational discipline and sensible sales practices, Meredith, whose own Print business was shrinking by “just” mid/high single-digits, believed it could stem Time’s Print ad declines and improve operating margins in its digital business. But the turnaround took longer than expected (and arguably never really materialized) while the subscription portfolio had more unprofitable titles than management realized.
From the fiscal year ending June 2019, the first full year following the Time acquisition, to today, here’s how Meredith’s National Media Segment (Meredith minus the local TV biz) has fared: