Meredith Reshapes Media Portfolio For Time Inc's Integration

Meredith Corporation (NYSE:MDP) unveiled strategic plans to smoothly integrate its recent buyout of Time Inc. This strategy mainly comprises reviewing of media assets’ portfolio and divestiture of non-core brands; augment advertising as well as circulation feat of the Time Inc. properties; increasing revenue and profits of Time Inc. digital assets; and generate cost synergies in a band of $400-$500 million annually in the first two years of operations.

With the completion of portfolio review, Meredith intends to sell the TIME, Sports Illustrated, Money and Fortune magazine brands. This follows the recent divestiture of Time Inc. UK and Golf media brands. Meredith, which reaches 175 million American consumers every month, has divested Time Inc. UK to Epiris.

Management cited the reason behind these potential divestitures, to diverse target viewers and advertising bases as these iconic brands have a huge customer base. Therefore, it believes that each of these brands will be efficiently managed by their respective new owners, positioning them well for growth. Meredith also revealed that it has received certain offers for the brands, however, it suspended any further talks until final agreements have been made.

Meredith is planning a modern brand-centered sales organization and go-to-market strategy, which is expected to leverage the new media portfolio comprising the enhanced digital footprint. These plans will be further highlighted in all-employee meetings starting Mar 28.

In an another move, Meredith, the publisher of Family Circle and Better Homes & Gardens, retrenched 200 positions to achieve cost synergies of $400-$500 million. Further, it is well on track to cut 1,000 additional positions in the coming 10 months. These job layoffs have not resulted from the aforesaid potential divestitures, but forms major part of Meredith's previously announced strategy of eradicating duplicative positions and consolidating definite functions at its headquarters, where operational expenses are considerably low.

Earlier, the media behemoth had laid-off nearly 600 positions due to the transitioning of a Time subscription fulfillment functions to a lower-cost provider.

The merger of Time Inc. and Meredith has created a leading media company serving nearly 200 million Americans across industry-leading digital, television, print, video, mobile, and social platforms positioned for growth. The combined mega company is a diversified media and marketing hub.

This merger has brought together the strong television business of Meredith as well as the trusted, premium multiplatform content creation of both Meredith and Time Inc., which are capable of serving consumers and advertisers alike.

Stock Performance

However, shares of Meredith lost 2.9% in the past six months against the industry’s 24.9% upside. The decline can be attributed to the waning print media trends due to shift from traditional advertising.

Nevertheless, this Zacks Rank #1 (Strong Buy) stock has enough potential to turnaround in the near term. The company’s strategic initiatives particularly in the digital space, brand licensing activities, solid portfolio of television stations and a robust earnings surprise history reinforce its position as one of the leading media and marketing companies.

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