general investor presentation · 2017-08-17 · experienced management team with a proven record of...
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General Investor PresentationAugust 2017
SAFE HARBOR
This presentation and management’s commentary relating thereto may contain certain forward-looking statements
that are subject to risks and uncertainties. These statements are based on management’s current knowledge and
estimates of factors affecting the Company and its operations. Statements in this presentation that are forward-
looking include, but are not limited to, the Company’s estimates of future revenues, profits and earnings per share.
Actual results may differ materially from those currently anticipated. Factors that could adversely affect future
results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic
advertising market; world, national or local events that could disrupt broadcast television; increased consolidation
among major advertisers or other events depressing the level of advertising spending; the unexpected loss or
insolvency of one or more major clients or vendors; the integration of acquired businesses; changes in consumer
reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated
programming or other costs; changes in television network affiliation agreements; technological developments
affecting products or methods of distribution; changes in government regulations affecting the Company’s
industries; increases in interest rates; and the consequences of acquisitions and/or dispositions. The Company
undertakes no obligation to update any forward-looking statement, whether as a result of new information, future
events or otherwise.
2
MEREDITH’S INVESTMENT THESIS
❖ Portfolio of highly rated television stations in large and fast-growing markets
❖ Trusted national brands with an unrivaled female reach
❖ Profitable and growing digital business
❖ Growing consumer-generated revenue
Experienced management team with a proven record of operational excellence and shareholder value creation over time
Strong and consistent cash flow generation, driven by:
Commitment to delivering Top-Third Total Shareholder Return:
1.
2.
3.
❖ Balanced capital allocation strategy
❖ Dividend payer for 70 years; increases for 24 consecutive years
❖ Share buyback program
❖ Accretive strategic acquisitions
3
MEREDITH AT A GLANCE
Local MediaRevenue: $630M
Op. Profit: $215M
EBITDA: $250M WORKING YOUWSM V -TV WSM V-DT NASHVILL E
National MediaRevenue: $1.1B
Op. Profit: $147M
EBITDA: $164M
4Results for fiscal 2017 ended June 30
SUCCESSFUL EXECUTION OF STRATEGIC PLAN OVER TIME
National Media Group
Local Media Group
Corporate
❖ Built fast-growing and profitable digital business with a scale audience
❖ Added leading digital ad technology companies Selectable, Qponix & ShopNation
❖ Achieved inflection in advertising revenues with digital driving overall growth
❖ Added Allrecipes, Shape and Martha Stewart brands targeting younger women
❖ Grew brand licensing business at Walmart to 3,000+ SKUs at 5,000 stores
❖ Acquired and integrated 5 strong stations, achieving 3 additional duopolies
❖ Grew news programming by 50% across portfolio
❖ Significantly grew retransmission revenues and contribution
❖ Expanded digital and mobile platforms
❖ Implemented and aggressively pursuing Total Shareholder Return program
❖ Grew dividend at 10% average annual rate to $2.08; currently yielding 4%
❖ 2.8% weighted-average interest rate and 1.9x debt-to-EBITDA leverage
5
❖ Record Local Media advertising revenue, led by political dollars
❖ Retransmission contribution continues to grow
❖ Achieved network affiliation renewal in important markets
❖ Strong digital driving overall National Media advertising growth
❖ Renewed highly profitable licensing agreement with Walmart
❖ Rapid growth in consumer connection across media platforms
❖ Strong cash flow fueling 24th-straight dividend increase
Highest earnings per share in Company’s 115-year history
STRONG ACHIEVEMENTS IN FISCAL 2017 TOWARD VISION
6
TODAY’S AGENDA
7
❖ Meredith Overview
❖ National Media Group Growth Strategies
❖ Local Media Group Growth Strategies
❖ Total Shareholder Return Strategies
❖ Q&A
NATIONAL BRANDS POSSESSES STRONG CONSUMER REACH
80MILLION
UNIQUE
VISITORS
31%FY-17
DIGITAL
AD REVENUES
110MILLION
UNDUPLICATED
WOMEN
70%REACH TO
MILLENNIAL
WOMEN
CROSS-CHANNEL GROWTH STRATEGY
Growth & Diversification in
Advertising Revenue
Growth & Diversification in
Consumer Revenue
Audience &
Engagement
Growth
Best-In-Class
Branded
Experiences
Proprietary
Technology
Platforms
Proprietary First-
Party Data, Insights
& Analytics
1. 2. 3. 4.
9
PILLAR 1: BRANDED EXPERIENCES
10
Notification Email
Saved recipeFollow streams
and brands
User Comments (To Come)
10
PILLAR 1: NEW BRAND LAUNCHES
❖ Launched in fall 2016 as a
newsstand title
❖ Strongest-selling launch in recent
history
❖ Transitioned to quarterly
subscription title with one million
ratebase (May 2017)
❖ On track to be most profitable title
in first year of operation in
Meredith history
11
PILLAR 2: CROSS-PLATFORM AUDIENCE GROWTH
Digital is adding to Meredith’s total audience, and is not cannibalizing print
50
75
100
125
150
175
200
2010 2011 2012 2013 2014 2015 2016
Tota
l Audie
nce (
in m
illions)
Print Digital40% of audience 60% of audience
12
PILLAR 2: STRONG MILLENNIAL REACH
13
14
Understand Her
Interests
Understand Her
Intent
Understand
When She’s
In-market
Driven by ‘Visit’ data- Visits/ Content
- Emails
- Subscriptions
Driven by ‘Action’ data- ‘I Made it’
- Add to Shopping List
- Share
Driven by ‘Real-time’ data- Mobile – in-store recipes
- Shopper Marketing
- ShopNation Commerce
50% of Allrecipes
visitors are in
store w/in 24 hrs.
Meredith
Differentiates
(in food)
interest + intent We understand her
PILLAR 3: FIRST-PARTY DATA & ANALYTICS
PILLAR 4: TECHNOLOGY PLATFORMS
15
Recent platform-centric acquisitions
• Social platform for food
• Native and engagement-based video
• Shopper marketing
• eCommerce and affiliate marketing
• Lead generation / performance
marketing
Existing /
Home-Grown
Technology
Platforms
(Consumer
Revenue,
etc.)
+
PLATFORMS DRIVING PREMIUM MONETIZATION
GROWTH & REVENUE DIVERSIFICATION
16
PREMIUM
MONETIZATION
UNITS
NATIVE VIDEO SPONSORSHIPS INFLUENCER SHOPPER
MARKETING
SOCIAL
Traditional Display vs. Premium Monetization
Traditional Display Premium Monetization
eCPM Ranges:
$10 – $30+
eCPM Ranges:
< $10
82%
18%
52%
48%
0
100
200
300
400
500
600
2012 2017
RESULTS: TOTAL AD REVENUE GROWTH,
FUELED BY DIGITAL CHANNELS
$ in millions
Fiscal years ended June 30
PrintDigital
$492$520
10% 30%
$
$
91% 70%
5-YEAR CAGR
Digital: 30%
17
RESULTS: CONSUMER REVENUE DIVERSIFICATION
18
❖ Magazine subscriptions: stable revenue source
❖ Auto-renewal has large upside (2x profit)
❖ Launch promising new products
❖ World’s No. 2 licensor behind Disney
❖ Renewed Walmart relationship
❖ Several new programs launched
Circulation & New Paid Products
Brand licensing
eCommerce❖ Newer, fast-growing revenue source
❖ Turning inspiration to action
TODAY’S AGENDA
19
❖ Meredith Overview
❖ National Media Group Growth Strategies
❖ Local Media Group Growth Strategies
❖ Total Shareholder Return Strategies
❖ Q&A
20
LOCAL BRANDS IN LARGE AND GROWING MARKETS
#1 or 2SIGN-ON to SIGN-OFF
RANK IN 6 MARKETS
17STATIONS IN
PORTFOLIO
13STATIONS
IN TOP 50
MARKETS
5
EAST & SOUTHEAST:
ATLANTA, MKT 10
NASHVILLE, MKT 29
HARTFORD, MKT 30
GREENVILLE, MKT 37
MOBILE, MKT 60
SPRINGFIELD, MKT 114
WEST & SOUTHWEST:
PHOENIX, MKT 12
PORTLAND, MKT 25
LAS VEGAS, MKT 40
MIDWEST:
ST. LOUIS, MKT 21
KANSAS CITY, MKT 33
SAGINAW, MKT 72
DUOPOLY
MARKETS
LOCAL MEDIA GROUP GROWTH STRATEGIES
21
❖ Increase Viewership
❖ Grow Revenue and Profit
❖ Scale Digital Businesses
❖ Increase Net Retransmission Contribution
❖ Expand our Television Station Portfolio
CY06 CY11 CY16
300
400
9%
CAGR
ADDING LOCAL NEWS PROGRAMMING STRENGTHENS MARGINS
700
22
$124 $113
$163 $158
$215
FY13 FY14 FY15 FY16 FY17
$376 $403
$534 $548
$630
FY13 FY14 FY15 FY16 FY17
GROWING REVENUES AND PROFIT
23$ in millions
Revenues Operating Profit
14%
CAGR
15%
CAGR
$63
FY2013 FY2015FY2011 FY2017
RECORD POLITICAL ADVERTISING REVENUES
$35
$44$39
Presidential Election Year
Mid-term Election Year
24$ in millions
10%
CAGR
FISCAL 2019 POLITICAL ADVERTISING OUTLOOK
Senate Races
Jeff Flake (R-AZ)
Dean Heller (R-NV)
Bob Corker (R-TN)
Chris Murphy (D-CT)
Bill Nelson (D-FL)
Elizabeth Warren (D-MA)
Debbie Stabenow (D-MI)
Claire McCaskill (D-MO)
Maria Cantwell (D-WA)
Governor Races
Doug Ducey (R-AZ)
Bruce Ranner (R-IL)
Charlie Baker (R-MA)
Dan Malloy (D-CT)
Kate Brown (D-OR)
Alabama (Open)
Florida (Open)
Georgia (Open)
Kansas (Open)
Michigan (Open)
Nevada (Open)
South Carolina (Open)
Tennessee (Open)
25
40%
Las Vegas
Portland
Greenville
Mobile
Springfield
(FOX)
Fiscal
2021
MVPD Renewal Schedule
Affiliation Renewal Schedule
Nashville
(NBC)
RETRANSMISSION RENEWALS SCHEDULE
Fiscal
2018
Fiscal
2019
Fiscal
2017
10%
Fiscal
2020
25%
St. Louis
Hartford
Springfield
(CBS)
Springfield
(ABC)
50% of Meredith Subscriber Households Will be Renewed in FY2017 and 2018
Atlanta
Phoenix
Kansas City
Saginaw
(CBS)
35%
26
TODAY’S AGENDA
27
❖ Meredith Overview
❖ National Media Group Growth Strategies
❖ Local Media Group Growth Strategies
❖ Total Shareholder Return Strategies
❖ Q&A
USE OF CASH PRIORITIES
28
Strong commitment to returning cash and maintaining dividend growth
Tuck-in acquisitions to strengthen existing portfolio
Larger acquisitions only if extremely strategic at attractive valuation with strong synergies
Selective share repurchases enabling shareholders to benefit from dips in price – current authorization of $100 million with $68 million remaining
Target maintaining current conservative net debt levels
Priority
This strategy seeks to optimize free cash flow driving Total Shareholder Return while pursuing organic growth in its core businesses
ACQUISITION AND INVESTMENT PRIORITIES
❖ Local media brands in large faster-growing markets that add network and geographic diversity
❖ Multi-platform national media brands that provide access to new audiences and advertising categories
❖ Digital businesses that support growth strategy
29
TOP-THIRD TSR EXPECTATIONS
❖ Organic revenue growth
❖ Margin expansion
❖ Dividend yield
❖ Buybacks
TSR Drivers through FY19:
+3-4%
+3-4%
+3-4%
+0-1%
Organic TSR 9-13%
❖ Acquisitions and/or
multiple expansion+++
Robust digital strategy with range of monetization options fueled by leading brands, content and scale
Stronger broadcasting revenue upside from political year, retransmission uplift, and non-political advertising
Planned annual dividend increases to deliver peer-leading, stable yield, and floor on stock
Aggressive buyback program that capitalizes on current undervaluation and returns excess cash
Total TSR At Least Top Third 30
MEREDITH’S INVESTMENT THESIS
❖ Portfolio of highly rated television stations in large and fast-growing markets
❖ Trusted national brands with an unrivaled female reach
❖ Profitable and growing digital business
❖ Growing consumer-generated revenue
Experienced management team with a proven record of operational excellence and shareholder value creation over time
Strong and consistent cash flow generation, driven by:
Commitment to delivering Top-Third Total Shareholder Return:
1.
2.
3.
❖ Balanced capital allocation strategy
❖ Dividend payer for 70 years; increases for 24 consecutive years
❖ Share buyback program
❖ Accretive strategic acquisitions
31
General Investor PresentationAugust 2017