May 3, 2021 - Economy

Meredith sells local TV business to Gray for $2.7 billion

Parents magazine

Photo: Daniel Acker/Bloomberg via Getty Images

Meredith Corp. has agreed to sell its local media group for $2.7 billion in cash to Gray Television, opting to focus on its portfolio of national brands like People, Better Homes & Gardens, and Allrecipes.

Why it matters: Moving forward, Meredith will focus its business on two reporting segments: magazines and digital.

Details: Meredith's National Media Group will be spun out to shareholders as a standalone publicly traded company.

  • The post-close company will retain the Meredith Corporation name and will continue trading on the New York Stock Exchange under the ticker MDP.
  • It will remain headquartered in Des Moines, Iowa, and will continue to be led by Meredith's existing senior executive team, including chairman and CEO Tom Harty.
  • The brands that will live within that company will continue to serve mostly U.S. women via topic categories like celebrity and entertainment news, house and home, food, style, health, fitness, and parenting.

The goal of the deal is for Meredith to streamline its focus around its digital business and reduce its debt.

  • Meredith's digital business now accounts for more than half of the company’s total expected advertising revenues.
  • A heightened focus on digital will allow Meredith to invest more in building direct-to-consumer products, as well as its privacy-centric, first-party data solutions for advertisers to reach its customers in a more efficient way.

Be smart: The digital era has been brutal for magazine giants that have long depended on lucrative print advertising revenues for the bulk of their sales.

  • Meredith has been able to escape some of that strain by divesting key assets. The pandemic has also given a boost to some of Meredith's brands, which have been focused on stay-at-home activities.
  • The company says its licensing and performance marketing revenues, which anchor its digital consumer activities, are "additional key growth drivers."

The big picture: It's the latest local TV consolidation deal to occur in the past few years in light of relaxed regulations around cross-media ownership rules.

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