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August 13, 2020

August 13, 2020

Publishing News

Meredith Sees Net Earnings Loss of $234M in Fiscal 2020
Meredith Corp. reported a net earnings loss of $234.3M for its fiscal 2020 ended June 30. Adjusted EBITDA declined 22%, to $548M. Revenues fell 11%, to $2.9B. Ad-related revenues fell 17%, to $1.4B; consumer-related revenues declined 4.8%, to $1.4B. Q4 net earnings were $6.2M, vs. a loss of $13M in the year-ago period. Q4 adjusted EBITDA fell 53%, to $80M. Q4 revenues fell 22%, to $611.2M. In the National Media Group, full-year print revenues fell 19.8%, to $554.5M, and digital revenues fell 4.6%, to $376.8M. Subscription revenues fell 14.6%, to $611.8M. Newsstand revenue fell 8.9% to $150.8M. Affinity marketing and licensing revenues rose by $7M and $2.8M, respectively. "Digital and other consumer-driven" revenues rose 28%, to $72.8M. Meredith said it "experienced increases in consumer metrics across its media platforms" during its Q4, "particularly its brands focused on food, health, home, and local news and other programming," with total visits to NMG sites up 14%. Revenues from licensing, digital and other consumer-driven activities, due primarily to increases in royalties from Apple News+, ecommerce product sales and lead generation referrals, rose 8% in the quarter. "We took important steps in fiscal 2020 to strengthen Meredith's competitive position over the long term, including accelerating our digital businesses and capabilities; strengthening our market-leading portfolio of brands; and growing our connection to more than 190M consumers who interact with our brands," said Meredith President and CEO Tom Harty. "While the COVID-19 pandemic continues to materially impact our business, we saw continued strong consumer engagement along with improvement in advertising revenue performance during the course of the fourth quarter, particularly for our digital and broadcast properties. Additionally, we continue to take proactive action to maximize free cash flow, ensure ample liquidity, and enhance our financial flexibility. Looking ahead, we believe our strong brands and audience reach -- which includes nearly 95% of American women, 155 million unique monthly digital visitors, and a paid subscription base of 36 million consumers -- positions us to enhance the value we deliver to our advertising and marketing partners and continue growing our consumer connection."

Sports Illustrated Prepping Deal With Sports Betting Company
NY Post: "The owner of Sports Illustrated is gearing up to complete a deal with a sports betting company before year end, Media Ink has learned.“It will be a game changer,” ­Authentic Brands Group chairman Jamie Salter predicted in a recent interview. Salter declined to identify the potential gaming partner, but a second source familiar with the company behind 50 brands, including Barneys New York and Frederick’s of Hollywood, said talks are underway with more than one sports gambling company to ­license the SI Bets name. ABG paid $110 million in May 2019 to acquire the Sports Illustrated brand from publishing company Meredith — and then turned around and licensed the media ­operations to Maven, a tech and digital publisher. A sports gaming deal would involve a similar transaction to ­license the SI Bets name, the source said. Salter said the potential partnership will help generate SI digital traffic, and that any gaming company that licenses the SI Bets name “will sit on the Sports Illustrated website,” he added. He also dismissed talk of a “civil war” at Sports Illustrated, which the Daily Beast on Monday said was raging due to staffers upset with Maven-led cutbacks and some affiliated sites that have popped up on Maven-controlled platforms. After taking on the SI project in October 2019, Maven downsized more than half the SI editorial staff, cutting nearly 50 editorial staffers, jettisoning all of its long-form video producers and switching the top ­editors. Maven has since made more cuts amid the advertising slump brought on by the coronavirus and has endured sharp criticism from inside for hosting a pro-cop Black Lives Matter blog site on its platform. Maven does not own or produce editorial content for the blog, which has drawn what critics say are racist comments to the site, but it man­ages the platform, and the traffic the site generates figures into the overall traffic for Maven’s other publishing platforms. Staffers at SI have said the site is “an embarrassment” and want Maven, a tech vendor for a wide number of blogs and sites including The History Channel, Yoga Journal and Maxim, to stop hosting it. Salter addressed SI staff on July 31, and according to The Daily Beast, ordered staffers to keep their complaints in-house and out of the press... [Speaking to MediaInk, he] denied reports of financial problems between Maven and ABG. “They paid me for three years in advance,” he said. “They don’t owe me any money.” Asked about a report that Maven has been cut off from access to SI’s vast photo ­archives held by Meredith, he said that if it was true, it did not reach his level. Meredith declined to comment. “The Maven guys are not bad guys,” said Salter, “but they are fighting some of the old ways from people who have been at SI a long time. The world is moving fast; if you are not jumping into the digital world, you will be left behind.”

Time Out to Fold Most Print Editions
MediaPost: "Time Out will likely cease printing most of its 40 magazine editions based in cities worldwide. The company plans to continue printing the magazine in London, Madrid and Barcelona, Time Out Group CEO Julio Bruno told the Financial Times. However, the group is “unlikely” to resume printing in the US and Portugal, according to the report. Other territories are “under review by management.” “The world has changed in the last few months, and we need to adapt and change with it. However, we still want to be part of the city and bring you information, innovation and inspiration,” Bruno wrote in a post published on LinkedIn for London readers. Time Out stopped printing its free magazines when the COVID-19 pandemic hit. The company went fully digital and rebranded as Time In. The London magazine resumed printing this week, with an issue dedicated to Time Out founder Tony Elliott, who passed away from lung cancer in July. The Time Out New York brand will live on both digitally and experientially. The Time Out Market New York food hall in the Dumbo neighborhood of Brooklyn reopened last week, after shutting down temporarily due to the pandemic. The market in Boston reopened a few weeks ago. Other Time Out Markets are located in Lisbon, Montreal, Chicago and Miami. Time Out Media covers 328 cities in 58 countries." NY Post: Founder Tony Elliott, who passed away last month, started with a single publication in London in 1968 and launched Time Out New York in 1995. It was popular among young people with listings that mined cheap entertainment and less expensive dining and bar venues. Initially, it was a paid circulation title, but in 2015, after a successful conversion to free circulation in London, TONY followed suit in New York and initially paid newsstand hawkers to hand out the weekly magazine for free at subways and other transport terminals. The company even before the pandemic had been struggling: The FT reported losses last year of $26.7M. But despite the print pullback, the company digital editions in 328 cities in 58 countries and that effort will continue, [Julio Bruno, CEO of Time Out Group] said. The print edition in London will initially be monthly and will circulate 250,000 copies. “We’ll have to see what the public and advertisers want,” he said."



Retail News

New Pandemic Stimulus Payments Would Go Toward Groceries and Essentials
PG: "As lawmakers debate a new round of pandemic stimulus payments, new research from IRI finds that 27% of U.S. consumers used their first stimulus payments for groceries and household essentials. In fact, IRI found, those consumers would use a new round of stimulus payments in much the same way. The categories most likely to benefit from additional stimulus payments include meat and produce. As well, e-commerce and membership-driven food retail also stand to benefit if lawmakers approve another similar round of stimulus payments. The report also found that: Shoppers anticipate fewer purchases of meat, fresh foods and snacks if unemployment benefits are reduced. If unemployment benefits are reduced, shoppers report they will spend less at most channels; only the Dollar channel nets out with no change in spending. Nearly 40% of respondents report feeling stressed; 49% of those unemployed are stressed. 38% of consumers wish retailers could solve out-of-stock issues; more than a quarter want retailers to support local food banks. Parents anticipate spending less on back-to-school purchases. New stimulus money would not only go toward groceries and household essentials. Consumers would also put that money toward savings accounts and to pay rent and mortgages. Less popular targets of a new round of stimulus payments include home improvements, healthcare bills, furniture, appliances and electronics, clothing, and treating themselves or their families to something extra. The report’s findings are based on surveys conducted between July 31 and Aug. 2."

Opinion: Retailers Should Push Congress for a Robust Stimulus Plan
In RetailWire, Ken Cassar, principal, Cassarco Strategy & Analytic Consultants, writes: "As Congress struggles to find common ground on a second round of fiscal stimulus, it feels like an important time to review the impact of the CARES (Coronavirus Aid, Relief, and Economic Security) Act legislation. The first program totaled almost $1.8 trillion and was delivered through one-time checks to most households, expanded unemployment benefits and the Paycheck Protection Program. Here’s what we know about its effects. During March, April and May, $103B in consumer spending disappeared. We spent more money on groceries and liquor, but far less on almost everything else. We also know that by June, the Census Bureau’s Advanced Monthly Retail Trade report showed that sales had rebounded to the 2019 June level. [Cassarco data show] total U.S. retail (excluding auto) and restaurant sales from credit and debit cards between March and June, vs. same weeks in the prior year, show a huge decrease in spending by all income groups in the early stage of COVID lockdowns, followed by a sharp rebound in spending as stimulus payments were released. The stimulus was intended to benefit those in lower income groups and we did indeed see a far sharper increase in spending amongst households making less than $50,000 annually (+22% vs. +15% for households with more than $100,000 in annual income). The stimulus worked and was a significant factor in June’s rebound. The Census Bureau will release critical July retail sales numbers on Friday. These numbers include the continued impact of the extra $600 weekly unemployment payments that expired at the end of the month. Anything below July 2019’s numbers ought to shock legislators into quick action on more stimulus. Numbers on par with or better than July 2019 may lead legislators to conclude that their work is done. However, with a national unemployment rate of 10.2%, there are millions of workers who have suddenly experienced a $600 weekly drop in income. The trick is that this impact will not be visible until August numbers are released in mid-September. We’ve seen no evidence that Washington’s work is done. All we know is that the action Congress and the Trump administration took in the spring was effective. This should only double the resolve to continue to support struggling Americans until unemployment comes down to a palatable level."

Metro Bets on Prepaid
PG: "Canada-based food and pharmacy retailer Metro Inc. with launch a prepaid and payments program in Ontario and Quebec this summer thank to a partnership with Atlanta-based payments technology provider InComm. Payments are becoming ever more varied, digital and sophisticated in the food retail world, a trend that was in place before the pandemic but has since grown even more as the outbreak continues. At the same time, the world of prepaid payment offerings is also growing as retailers of all types rush to fulfill that particular consumer demand. This latest effort represents an expansion of InComm's 14-year partnership with the Jean Coutu Group, a pharmacy retail leader in Canada that was bought by Metro in 2018. In addition to the 415 Jean Coutu stores InComm currently serves, the payments technology company will work with Metro's 704 retail stores and affiliate banners to offer shoppers an inclusive range of open- and closed-loop prepaid products as well as innovative payment solutions. In addition to products, InComm will provide Metro stores with a comprehensive suite of services to ensure the prepaid program is seamlessly executed across all channels. InComm said that all customers will be able to conveniently find great gifting options, reliable financial services products, and prepaid payments options to fund their preferred accounts. The rollout of the prepaid mall program will occur in all Metro stores and affiliate banners over the course of the summer of 2020.

Indie Grocers Built on 2019 Gains to Win in Pandemic
PG: "The 2020 Independent Grocers Financial Survey, from the National Grocers Association (NGA) and FMS Solutions, found that independent grocers have fared well generally amid the coronavirus crisis, thanks to strategic investments they made in 2019. “Independent grocers started to see positive trends pre-pandemic, which is a great sign of the strengthening,” noted Robert Graybill, CEO and president of Baltimore-based FMS, an accounting solutions firm that works exclusively with the retail grocery industry. “While the overall numbers were up, it was the profit leaders once again driving those increases. Their financial performance and operational execution served as a building block to respond to the extraordinary spikes in traffic, sales and engagement during the COVID-19 pandemic. ”In 2019, the economy was strong, with low unemployment driving consumer spending, including grocery shopping. Independent grocers saw same-store sales rise by 2.5% in 2019, with 56% boosting same-store sales growth. Gains were a little higher among multistore operators. Nearly four in 10 dollars were generated by perimeter departments, with an above-average contribution by fresh in larger-volume stores. These solid gains were attributable to higher inventory turns, at 18.7 times for the total store, together with improved margins that hit 28% across departments. Many indies continued to focus on inventory management, achieving a reduction in total store shrink, at 2.9%, by deploying shrink management programs that concentrated on reporting, learning and correcting each week. Indies were able to increase sales gains despite tough competition and a tight labor market. Employee turnover at indies rose to 19.5% among full-time employees and 63.2% among part-time workers. Yet indies proved better able to control personnel-related costs, with the result that total labor and benefits expenses declined somewhat to 15.7% of total 2019 sales. Further, reductions in rent, utility costs and a few other expense areas helped lower total expenses slightly to 28.8% of total sales. With increases in same-store sales and margins and a decrease in expenses, net profit before taxes rose considerably, from 0.63% in 2018 to 1.05% in 2019. Beyond the overall increase in net profits, the study found that the independent marketplace became more divided. The profit leaders, those in the 25 percentile in net profit performance, outpaced the rest by wide margin. Their strong performance boosted the average profit across independents, while the bottom 75 percentile didn’t change. Profit leaders garnered an average of 5.3% net profit before taxes. Among the common traits of profit leaders were a high focus on fresh, especially meat and produce, as well as strong margin and expense management. The total store gross margin of profit leaders was 2.1 percentage points higher than that of the retailers in the bottom 75 percentile, identified in the survey as “the pack”. Also, the leaders’ total expenses, excluding the costs of goods and labor, were more than 1.7 percentage points lower than those of the pack. Crucially, indies understood the need to keep stores fresh and therefore boosted capital expenditures to 1.96% of sales. More than one-quarter of indies remodeled one or more stores last year. Independents additionally invested in e-commerce, which was offered by 64% of them in 2019, up from 32% in 2018. Many operators offer both delivery and pickup (30%) or pickup only (26%). These same investments in their stores, marketing, advertising and e-commerce enabled indies to accommodate the onslaught of shoppers during this year’s pandemic. Coronavirus drove two of the biggest weeks in grocery retailing in mid-March, and higher everyday demand has spurred gains well above the 2019 base level ever since then. While shoppers have embarked on fewer shopping trips during this time, they spend more money per visit, with the result that total store sales for indies were up 13.3% through the first half of 2020. Large contributors to this increase are frozen foods, center store items, meat and produce"...


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