Q3 2020 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Meritas fiscal 2023rd quarter earnings call.

At this time, all participants are in listen only mode.

After the speakers presentation, there will be a question and answer session.

Ask a question. During this time you can press star one on your telephone keypad.

Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your home.

Sure Michael level.

Good morning, and thanks, everyone for joining us.

Our call will begin with comments from President and Chief Executive Officer, Tom Harty.

Followed by Chief Financial Officer, Jason for Iraq.

Remarks. This morning will include forward looking statements and actual results may differ from our forecast.

Reasons for differences are described at the end of our news release that was issued earlier this morning.

And in our FCC filings.

Certain financial measures that were discussing on this call or expressed on a non-GAAP basis and have been adjusted to exclude the impact of special items.

Reconciliations of these non-GAAP measures are included in our slide presentation.

Which is available in the Investor Relations section of Meritas Dot com.

Finally, an archive of the call will be available on our website later today.

Now I'll turn the call over to Tom.

Thank you, Mike and good morning, everyone.

Hope you've had the opportunity to see our news release issued earlier this morning.

I want to introduce Jason This morning, who joined US in March. He was most recently at Wabtec Corporation, Jason as a 20 year plus veteran of general electric where he held senior finance roles and its transportation power and water energy businesses.

Jason brings with him strong financial analysts capabilities and attention to detail, while still being able to see the big picture.

Experience focusing on cash flow and liquidity and most importantly strong leadership skills.

We're glad to have him lead our financial organization and be part of our senior leadership team as we announced last year, Jason succeeds, Joe ceramic who retired during the quarter.

We're doing things a little differently today, which you probably already noticed starting with our press release.

We've also posted a presentation that Mike referenced to our Investor Relations website to complement our fiscal third quarter earnings release, and our update this morning.

They include additional disclosures would think you'll find very useful.

I'll start with slide three.

The outbreak of Cobot 19 and efforts to slow.

It's Cree has created an environment. Unlike anything we've seen a mid great uncertainty, we're adapting quickly and focusing on what we can control and our strengths.

Our top priorities are one keeping our employees safe to continue to deliver trusted news an inspiration to our audience nearly 200 million Americans.

Three supporting our advertising and marketing partners and for maximizing free cash flow.

Our employees have risen to the challenge.

We have transition seamlessly to the new rules that govern our daily lives with no production disruptions.

All National Media group content is being produced remotely we have been large asset library of evergreen content.

Last count it contains 6 million editorial images illustrations in videos.

Or television stations remain open to serve their communities.

Our stations have increased use hours to meet consumer demand and bill programming holes created by the absence of live events.

Now let me update you on our two primary revenue drivers advertising and consumers.

Our advertising and marketing partners are facing tremendous challenges and that means challenges for us as advertising accounts for approximately half our revenues.

We are responding across the merits organization with innovative and actionable consumer insights to support our partners.

For example.

We announced last month and expansion of our marriage sales guarantee program called the Meredith audience action guarantee.

The Meredith audience action guaranteed guarantees advertisers were investing in merits brands that a specific number of readers will take action as a result, seeing a brand campaign and merit magazines.

As a reminder, the marriage sales guarantee provides proved to advertisers across all platforms that their investment in marriage brands increases product sales at retail.

Our digital properties are seeing record traffic growth as they provide informative content across categories. There are a key importance during this time.

I'm cooking to health to parenting to home projects and even recommendations on what the stream for entertainment.

We're collecting data and providing real time insights to our advertising clients about changing consumer habits and trends.

Reworking their creative campaigns with messaging, there's more appropriate to the current environment and driving sales and direct connections to retailers, where consumers can buy these products for home delivery.

Our local media group is creating new advertising sponsorship opportunities based on consumer trends that have emerged during the cobot 19 pandemic.

For example, our Fox affiliates in Las Vegas is featuring local restaurants via new feature called drive through dining.

W.A.O.L.A. Imobile, we're profiling, graduating high school students with a feature called saluting our seniors.

There are a host of other innovative programs in place at or other stations.

These programs and others have have launched and are designed to support our advertising and marketing clients.

While we do not know when advertising conditions will improve our goal is to grow market share as we had had been prior times of economic difficulty.

For example, our share of U.S. magazine advertising rose to 12.1% in calendar 2010 from 9.7% in calendar 2008.

For perspective, our market share in calendar 2019.

Is that 31% according to media radar.

Since the cobot 19 outbreak, we're seeing stronger engagement across all of our media platforms.

Americans have made adjustments to their lifestyles, and we believe our content and brands are more relevant than ever.

We'll go into more detail on the next slide.

Turning to slide for.

The consumer metrics were seeing or doubtlessly driven in part by stayed home directives.

But the stronger engagement is also driven by our brands and the content they provide.

Americans had many choices for media and they are turning to us for trusted news and information, let me provide more detail.

We delivered mid single digit growth in visits across National Media group digital properties in the third quarter compared to the prior year.

In April we saw visits grow by more than 30%, including strong digital performance in the all recipes Instyle Entertainment weekly brands.

Our licensing and digital consumer driven activities grew more than 25% in the third quarter due to royalties from Apple news, plus and E commerce revenues from direct product sales and lead generation referrals.

We're seeing the strongest reading gains in more than a decade across our television portfolio.

March ratings for our morning, and late newscasts were up approximately 10% from a year ago, an evening, new cash were up approximately 35%.

In April we saw growth of 45% from or even newscasts we responded by adding more local news production.

Since late March we're seeing growth ranging from 30 to more than 90% in various magazine subscription channels that drive high lifetime subscriber value.

These include our owned and operated digital properties paid search and direct mail campaigns.

We're adding investment dollars are the most promising of these channels capitalizing on demand and advancing two long standing goals.

First to move to a greater percentage of our subscriber mix to credit card auto renewal and second to transition more subscriber acquisition activity to our own director publisher model and away from less profitable agent sources.

Finally, and perhaps more importantly, we're reaching more americans than ever before and our reach to women continues to grow today. Our reach includes 120 million American women and 90% of all millennial women.

There are three reasons consumer metrics matter first consumers, our second largest source of revenue.

Since the last recession over a decade ago, we have grown consumer related revenues 10 years ago, a little more than 25% of our revenues came from consumers today retransmission brand licensing and digital sources, along with stable subscription results have grown consumer related revs.

Earnings for approximately 50% of total revenues.

Importantly, most of these revenues our contractual ranging from one to five years.

Second these difficult times are driving us are giving us the opportunity to grow our audience organically by strengthening our relationship with our long standing consumers and introducing our brands to new consumers.

Finally, these consumer metrics form the basis of our value proposition advertisers.

While the advertising marketplace is challenging now our consumer engagement positions us well with the economy when the economy recovers.

With that introduction I'll turn it over to Jason and I'll come back with some closing comments and then will invite your questions.

Thanks, Tom Good morning, everyone I'm really excited to join the company was such a proud history and demonstrated success at growing the portfolio. So many well known and relevant brands, it's clear Meredith brands matter more to cost consumers now more than ever.

I'm looking forward to partnering with Tom and leadership team and our board of directors to successfully navigate mirror through this challenging environment.

At Green Tom's comments, we're introducing some changes to our earnings presentation with a goal being greater have been greater clarity transparency with our stakeholders.

Let me begin on slide five.

Given the current environment, we announced in April Twentyth, a series of targeted measures to conserve cash and provide as much financial flexibility as possible.

As we evaluated areas of opportunity to conserve cash or actions impacted a variety of stakeholders, including our shareholders employees suppliers and partners.

We also initially focused on actions that can be executed quickly with immediate impact.

The first item was our board's unanimous decision to pause or dividend, giving us maximum financial flexibility during the downturn.

In this economic environment financial Prudence and flexibility are critical.

The board remains committed to resume the dividend in the future when circumstances permit and we will we see three factors when considering our dividend policy going forward.

Seen a path to economic recovery and in particular, the advertising market recovery.

Our cash flow needs, including investment to support future growth and ensuring compliance with terms in our debt and preferred stock agreements.

Second.

We implemented a series of compensation and salary reductions, including reductions and board of director fees and officer executive and other employee salaries.

These reductions effected 60% of employees, an increase in impact for higher earning employees.

The third area is limiting capital expenditures, we will continue to prioritize business critical investments above discretionary items, but for the short and medium term, we like many others are managing with reduced investment.

The fourth focus area is working capital.

Closely monitoring accounts receivable and accounts payable.

On the front, we're optimizing scheduling with our suppliers and vendors to be consistent with market norms for the month of April a are in ATP combined we are seeing net cash activity consistent with recent history.

Finally, we continue to evaluate other cost across the company as we seek to optimize capital allocation and aligning the organization to be as efficient as possible.

In terms of impact while we don't know the duration of all these measures and much can change over time on an annualized basis the buckets breakdown as follows.

Pausing, our dividends saves approximately $115 million annualized.

Salary actions temporarily lowers compensation expense by approximately $60 million to $65 million.

In the past we've stated we budget between 60 and $70 million for capital expenditures going forward in this environment I expect we will invest roughly half that amount plus or minus a few million dollars annually.

We expect to improve working capital generating cash of approximately $25 million and the last bucket includes taking a hard look at the organization and how capital is allocated and its effect on costs and cash.

Turning to slide six.

Looking at Threeq 2020, consolidated performance, our revenue and EBITDA was largely inline with our stated expectations until mid March then cobot 19 net.

For the quarter revenues were down 6.5% from the prior year period or $48 million.

Advertised advertising related was down 60 $36 million of that National Media group portfolio changes were $19 million.

As a reminder, these portfolio changes include transitioning Rachael ray everyday and traditional home to premium newsstand titles, while adjusting the frequency of entertainment weekly to monthly publication and closing family circle and money magazines.

We also experienced cobot related cancellations and delays in advertising totaling $17 million across both the national and local media groups. These declines were partially offset by political advertising revenues, which were up $10 million.

Consumer related revenues were down by $19 million National Media group portfolio changes accounted for a $21 million decline.

Other items that netted to zero or a net negligible variance include lower volume attributable primarily to our subscription and affinity marketing businesses that accounted for another $60 million decline.

These declines were partially offset by 9 million of growth in licensing and digital and other consumer driven an $8 million of growth in retransmission consent fees.

Other revenues were up $7 million, primarily related to custom print work.

Adjusting for portfolio changes announced over the last year total revenues have been down one point would have been down at 1.2% on a comparable basis adjusting for portfolio changes and coated revenue would have been up slightly.

Bringing the cobot impact together at the top and bottom line revenues were down $17 million with some of that decline offset by reduced expenses, including compensation related items, resulting in a $6 million decline in EBITDA.

We recorded a $395 million charge related to special items. There are two areas to highlight both of which are noncash.

Our goodwill trademarks and FCC licenses balance as of December 30, Onest was $3.4 billion given declines in advertising revenues and our lower market valuation. We tested devaluation of these balances as of March 30, Onest, which resulted in a $296 million impairment.

The majority of this impairment is in our National Media group and related to time Inc. assets acquired in 2018.

With respect to lease related assets, we had an 88 million dollar impairment as a result of our ongoing synergy work also related to timing.

Our work to rightsize, the organization and sell noncore brands allowed us to exit two floors in New York.

Our two components to this impairment.

The majority relates to write abuse assets tied to the floors being exited and these assets were established on our balance sheet on July one 2019 due to our adoption of the new FC eight four to.

The second relates to capitalize leasehold improvements associated with those same two floors.

On a consolidated basis, adjusted EBITDA was down 5.5%.

As disclosed in our 10-Q filing in the third quarter fiscal 2019 and referenced in last quarter's investor update we recorded a $2 million reduction industry in a last year in the third quarter that did not repeat.

That said fiscal 2023rd quarter EBITDA results were driven primarily by higher investment spending in our National Media group digital business, along with lower volume in our affinity marketing activities. These declines were partially offset by strong growth in licensing and digital and other consumer driven along with political advertising growth.

Our local media group.

Free cash flow grew 22% due primarily to strong accounts receivable collections, specifically past dues and lower restructuring expenses as compared to last year.

Turning to slide seven from a segment performance standpoint, I'll start in the left side with National Media Group.

Revenues were down 55 million 40 million from the portfolio changes I mentioned earlier evenly split between advertising and consumer.

Colin related cancellations and delays in advertising accounted for 10 million and reduce revenue.

The remainder was lower volume driven by our subscription and affinity marketing businesses that combined accounted for $16 million in reduced revenue, partially offset by growth of $9 million in our licensing and digital consumer driven activities.

Operating profit was materially impacted by the special item I just walk through a.

Adjusted EBITDA was down 18 million with 10 million driven by the prior year favorable adjustment fiscal 2023rd quarter. Adjusted EBITDA was driven by lower volume and are affinity marketing activities, along with the drag in our digital business related to invest in spending we communicated at the beginning of fiscal 2020.

These factors were partially offset by growth in licensing.

The cobot impact was partially offset by more profitable subscription source mix.

On the right side of the page local media group delivered strong political performance in up nearly fourx versus fiscal 18 and up to X from the last presidential cycle in fiscal 2016, along with 9% growth in retransmission consent fees.

This growth was partially offset by declines and nonpolitical advertising revenue 7 million of which is related to covert 19 cancellations and delays.

Again, similar to National Media group operating profit was impacted by the special items I walk through on the previous page.

Local media group adjusted EBITA EBITDA increased by nearly $5 million with growth coming from strong political advertising and retransmission related revenues, partially offset by the impact of cobot 19.

Now turning to slide eight liquidity and free cash flow are critically important to us at Meredith starting at the top of the slide we ended Threeq 2020 with more than $100 million of cash in the bank nearly double what we had in the prior year period. We currently have access to another $312 million three or 300.

$30 million revolver compared to Twoq, you 20, or revolver utilization decreased by $20 million.

Our banking relationships are strong and we have great partners and we have no immediate maturities our revolver comes due in 2023, our term loan B and 25 in our senior notes in 2026.

As a company we're measuring our performance in this environment through cash flows from operating activities and free cash flow for clarity our definition of free cash flow as CFO away minus capex.

We generated $100 million a free cash flow in Threeq 2020 up 22% from the prior year. This improvement was primarily driven by strong collections, including reducing past dues greater than 90 days and lower restructuring costs.

Just to add some current color to the quarter.

I can tell you that our cash and bank balance as of the end of April was approximately $150 million with no change in revolver utilization.

Now I'll turn it back to Tom for closing thoughts on slide nine.

Thanks, Jason.

Clearly we are experiencing an environment unlike anything we've ever seen.

While we do not know when the advertising environment will return to normal or what the new normal will bring we've adapted swiftly focusing on what we can control and emphasizing our strengths.

That includes continuing to create without interruption content and products that inspire and inform consumers across all media platforms.

We are encouraged by the engagement, we're seeing across digital social television video and print.

We know that connection with the individual consumer who accounts for approximately 50% of our revenues will also inform our advertising and performance when the advertising recovery happens.

Until then we have and we will continue to take strong measures to protect and grow our cash position.

Enhance our flex a financial flexibility and position Meredith for the future.

This includes the cash conservation measures discussed this morning.

As Jason mentioned these measures are already driving results at April Thirtyth, We had 150 million of cash with no change in our revolver utilization.

I want to reiterate the board's intention to resume the dividend when circumstances permit.

The framework will used to evaluate includes the factors, Jason mentioned seeing a path to economic recovery and in particular, the advertising recovery, our cash flow needs, including investment to support future growth and ensuring compliance with the terms of our outstanding debt and preferred stock agreements.

I know a lot of you want to know what we're seeing in the advertising marketplace.

This advertising downturn has been swifter and more severe than what we experienced during the trough the great recession, when local media group Nonpolitical advertising revenues were down 30% National Media group digital advertising revenues were down 24% and National Media group print advertising revenues were down 8%.

With April complete we see fourth quarter pacing for local television nonpolitical advertising and National Media group digital advertising revenues down approximately 40% and print advertising revenues down approximately 30%.

Our other major source of revenue comes from the tens of millions of consumers, who engage with our products every day accounting for approximately half our total revenue.

As I detailed earlier, we're seeing strong growth from consumers across our platforms, including traffic to our digital properties E Commerce product sales lead generation referrals and viewership to our television newscasts and high value magazine subscription solicitation channels.

As an example, so far this quarter traffic to all recipes more than doubled what it was at this point in the quarter a year ago.

Traffic to shape.

Martha Stewart and Instyle sites is also up more than 80% each.

For this reason while the advertising marketplace is challenging now in the short term we remain confident over the long term in our brands, which were among the best and most effective in media and our vast reached nearly 200 million Americans in particular are reached to 120 million American women, including nine.

<unk> percent millennial women is unparalleled media.

Another important strength has been the unwavering support and commitment of the Meredith family that has enabled us to focus on the long term opportunities and success, while managing through the weathering short term storms.

While this is currently a difficult time for our employees shareholders and other stakeholders together, we will navigate this difficult period as we have during times difficult times in our hundred 18 year history.

I'm confident we will emerge in an even stronger competitive position.

In the meantime, as I've mentioned at the start this morning, our priorities remain keeping our employees safe continue to operate seamlessly supporting our advertising and marketing partners and maximizing free cash flow with that we'd be happy to take your questions.

Have you would like ask a question. Please press star one on your telephone keypad.

In that Istar wine.

Well pause for just a moment tick up how the community roster.

Your first question comes from the line of John to Native with Wolfe Research.

Hi, good morning, guys.

Tom I think your category mix and national and local a very different. So can you talk about what you're seeing from your large national categories like prescription enough prescription drugs are those holding up better and based on the way the money flows than you think national print.

We'll continue to outperform local and then it can you give us some color on a national digital is the traffic being offset by CPM pressure.

Thanks, John Yes, or no also asked Patrick Mccurry who's on the phone to kind of timing a little bit about the local media group categories, but what we're seeing on the national side.

Not a surprise the categories that are feeling pressure automotive.

Entertainment, obviously luxury and retail and travel are the categories were seeing the most pressure on the on the positive side the areas that are holding up well pharma.

At home and seen early on we're seeing a little little decline now because some food advertisers.

Don't have enough inventory and I've actually paused, a little bit and the current month, but those are the categories that were seeing overall.

In the last financial downturn, great held up better than it Didnt digital and also the local media group, we're experiencing that now.

These are a lot of brand activities that go on not a lot of bottom of the funnel activity branding opportunities in print.

And we believe that that will continue but when we come out of the recovery. We believe because the lead times of print, we believe that the broadcast and digital space will probably come back quicker. So we may see a reverse.

Kind of in timing from quarter to quarter as we start to come out of it.

Patrick do you want to make it a few comments about the category that you're seeing the local media group.

Yeah, I mean, obviously the largest but the most impacted on local media was automotive.

And our largest category now as has been for the last year's professional services and that seems to be suffering a less than somebody other categories.

Yes, John and on your question on on on rates, Yes. So the demand isn't there. So when you look at the programmatic area from a digital perspective.

When there's not a lot of demand you're actually seeing cpms fall in the last couple of weeks here. The last two weeks, we're seeing some firming of the rates actually rates are starting to increase a little bit which gives us a little bit of.

Optimism, but that really is it's a demand driven inventory.

Model that we've seen decline so we have huge increases in traffic, but not as much demand in that puts the cpms down from programmatic standpoint.

Great. Thank you very much.

And your next question comes from the line of Dan Kurnos benchmark.

Thanks, Good morning, Tom just maybe to go back on some things you commented on I guess based on this environment.

Does this give you sort of the opportunity to accelerate sort of the.

Rightsizing were or the way that you want to go about frequency changes within your portfolio and then we've heard a lot from.

Private and that sort of other channels and certainly in this environment that theres been more of a shift towards an ecommerce focus given the shelter in place orders and.

I know that magazine has historically been more of like a catalog, but can you maybe speak to if you're thinking about getting even more involved then you already are in the affiliate channel with some of your brands.

Sure. So we don't have any pause as Dan on the frequency change we've done a lot of work on frequency in the past, we kind of take a once a year view, where we go and look at.

The frequency that we have rate basis et cetera. So currently we don't have any plans to do that.

Actually on the consumer side as we mentioned on the call I think one of the biggest learnings into bigger surprises that we've had is the such the increases in demand for magazines that I'd make a lot of comments in the past that we're past the point, where consumers are looking at one medium versus the other we have I always like to say that I have.

Two sisters that are 10 12 years older than me that are both digital natives now and they consume magazines and they consume digital so in the in the last six weeks, we've seen incredible demand for printed magazines. When we run direct mail campaigns for people magazine on a quarterly basis. So it's a regular thing.

Every quarter, we're running these and the one that we just dropped in March so up 50% increase.

In demand versus the prior year, so huge renewable for people are up 13%. So when other support some of our competitors are looking at lowering rate bases and and change in frequency, we're being kind of leaning in to actually in the last month, it actually been making investments.

Latin acquire more magazine subscriptions, because the lifetime value was there and actually the media that we can engage is actually a lot less throughout and acquire subscription. So we don't have any plans, but we do look at that in the future on an ongoing basis. Your second question was related to.

And so our E commerce and affiliate Yeah. Yeah. So we're seeing you know again, we're seeing great demand from our ecommerce affiliate early on in the.

In the crisis actually Amazon was putting a little bit of a halt to some of our links to some of our products because they weren't being treated as critical so that was a little bit only lasted a couple of weeks, but actually now we're kind of reengaged in getting that backup so we're seeing.

Not unexpected you're seeing huge shifts in consumer is buying and transacting online for goods and services and our investments that we made a few years ago in E. Commerce affiliate marketing has really paid dividends and we're seeing big big increases in that.

Just just housekeeping I'm, assuming you're one of your latter responses to want to John's questions that in terms of the timing of recovery part of the national.

Timing issue is because April and probably some of may already printed correct.

That's correct so I think.

The early May and April I don't think April was completely closed yet but may may was but we have people magazine now so it's a little different obviously, we're still closing people magazine in the quarter, but that did help some of the demand, but but historically and we believe this is true that the magazine.

Demand will be better than what we see in local broadcast and digital.

For the current quarter and possibly into the future.

Can you just talk about people a little bit Tom and just in general how it's performing obviously given sort of the big being a big profit center and sort of relative also in general to what you're seeing in transit newsstand.

We had we had newsstand overall early on in the crisis, because there was so much demand with people going to the grocery store in retail we actually had large increases in the first couple of weeks not surprising.

Longer checkout lines more more checkout lines open then we saw some some not insignificant decreases and actually now that's actually starting to rebound. So the occurred last week. We have some early reads on people magazine and the last week's issue was almost back to pre cobot from that perspective.

From a newsstand sale again, it's early.

Got it Super helpful color. Thanks, guys.

And your next question comes from the line of Jason Bazinet with Citi.

Thanks for the April patients I, just had a broader question in terms of what your salespeople are saying about the environment I can imagine.

Advertisers.

One leg of this was just the locked down where everyone's at home and then there's the sort of second part which is the recession.

Yes.

Based on what your salespeople are saying just there anyway, just sort of teach those parts, we can get a better sense of.

How the how the AD environment might improve some even if we're still in a recession given the sharp drawdown. Thanks.

Yes, Jason what's what we kind of look at it in three buckets and again.

I understand that this can change day to day week to week, but what we've been seeing early on from our largest clients. We would say that we have three kind of buckets one being.

They are taking a complete pause so we've had some some not insignificant clients have turned in said you know for the next quarter, we're going to go dark and we're not going to we're not going to be advertising at all we've had another bucket to clients that are calling saying, we don't know how to react.

As to what's going on in this crisis. So we're actually going to keep our commitment to tell you that we're going to move these so like insertions and the magazine, we're going to move the instructions from June. So August so we have that bucket and then we have other not an insignificant bucket of advertising some of our largest specifically in the consumer package.

Good arena that have actually Havent changed at all having decrease see as an opportunity for them to build share their business is actually doing fairly well and their remaining their commitments. So I can't give you a specific dollar amount for each but that's how we're kind of looking at it from when we look at obviously at the corporate accounts.

Yeah.

Can I just one follow for that first bucket, where people just went dark.

Our though I can understand travel or maybe auto to extend on can go by car, but are there other buckets.

At went dark where you sort of theres, a little bit of head scratcher, well well I think I think the tier 2000, right. So if you're if you're in the cruise line business are you hearing that luxury travel and your your understanding that you're trying to drive people that to get online and Signup recruiters are order book of vacation and that actually stops.

So those are the ones that do that which we have a smaller number of people that work that we're taking a pause there were some there were some beauty clients that actually took up they took a pause they weren't saying they're going to go dark forever, but they turned around and said hey, this quarter, we're going to come back and we're going to say, we're going to go dark for this period of time.

But overall I would say that you know it's kind of across the gamut and then we get new news every single day, we get yet news like I mentioned actually early on the food category was doing really well and then we have some specific advertisers.

With the current demand where there is not enough me because some of the meat processes are closed down that theyre actually pulling some of their advertising. So it just kind of changes the demand that is what you would expect through this crisis.

Don't have product, they're not going to advertise.

In the short term.

Understood. Thank you.

Your final question comes from the line of Kyle Evans with Stephens.

Welcome Jim.

On magazines first should we view the adjustments that you've been making to the portfolio frequency on people and closing down family circle and money or though is that an ongoing process, where we're going to be going to continually adjusting going forward.

Expect to pause on that front.

So we didn't make any adjustments to people magazine, but we did the changes were related to family circle and some of the others right. So I think it's something that we've done if you look historically back at merit in that 16 years that I've been here, we have always kind of looked at that we've actually in some cases, we we've increased.

Rate basis, we've decreased rate base is we've actually closed magazines or converted them to a newsstand only title. So it's just something I think that isn't going to end I think it drives some of our analyst Crazy because you've got it had to do the comparable figure that out but as we sit here today, we don't have any plans for any changes.

In frequency or rate basis, but again, that's something that's not saying, we're not going to make any those changes in the future, but thats just as we look at our business model. It's all built on profitability and shareholder return in and sometimes we make those choices to.

Increased profitability and also.

Our resources against where we think the brands are that should have been happy biggest opportunity for growth.

Got it I misspoke I'm in entertainment weekly sorry about that yes.

Spanning on an earlier question on newsstand for people can you just kind of step back and talk about to stand at a higher level, how much of that airport versus.

It's hard to believe that you're back to pre.

On newsstand people and maybe I don't understand exactly where those understands our.

Yes, so I think listen overall, the newsstand side of the business or Meredith as a whole as we've talked about previously isn't such a big part of our business. So when we look at the number of copies that we used for rate base to generate are guaranteed advertisers will like 90, 10, so were 90% subscriptions.

The only 10% newsstand, we have a very big but we would call S&P or special interest publication business, where we create one offs and sell those four book is even thanks for over.

$10, a pop, but when we look at the short term to your point exactly right that obviously people are traveling and.

New stands at airports are our way way way down and then what we saw as I mentioned, we saw grocery store sales up. So it's it's overall what I would say is that it was down significantly let's say around what we were seeing from a print decline we mentioned as we kind of came.

Not at the gate overall and again, we had some channels that were up in some were down but obviously the changing retail patterns and then as we've kind of move through kind of week to week in the last couple of weeks, we're starting to see that come back we're not back to being flat, but we're seeing some some things that make us you know.

Little Brightside on something and again back to people it wasn't quite back last week to what we would say was the average before pre covance, but it was you know what I would say is fairly close on a percentage basis.

And then last one in magazines that I know, it's hard to to judge progress you've made on the digital side on Cpms are getting pressed on this as hard as they are but maybe just an update on those digital investments.

Perfect around projects and then what are some longer term milestones that we should be tracking on the digital side.

Yeah. So you know our digital investments we are again, we were making those investments through three quarters of the year. Some of those are capitalized expenses investments that we make we've talked about that we are still on track to get us on a unified platform last I heard so that.

We had put that as a benchmark that we were going to be on Oh.

Our one platform by the end of the fiscal year or by June were right around we're going to be right around that target, but we might be what I would say as we're probably pulling back as Jason talked about on capital expenditures. So some of that investment might be pulled back but the big areas that we've been we've talked about in the past. This is video so that was a huge part of.

The digital investment that if we knew we could create more video we could monetize that and that's been our plan and we've been doing that and then obviously content to commerce as we talked about was Dan's question.

We create more content online data shoppable, that's an area that we've been making investments and also.

Got it switch over to TV, thanks for those answers.

Could you give.

Most recent quarter sub count trends on the Retrans side, maybe just some speculation on how you think this up.

For the rest of this calendar year and then pointed question do you expect.

As you look out 123 years.

Thanks, I'll turn that over to Patrick Mccleary to give you kind of his take on what are you seeing from sub count perspective.

And outlook.

Yeah. Good morning, our sub count trends are are very much in line with the industry that we've seen year over year decline.

What we're seeing in the most recent set of numbers is what I would say about a 1% decline and I think thats right on target with what we've seen.

We successfully concluded our negotiations with all of our CBS affiliates and so to answer the second part of your question about what we're going to see in growth I think we still have a few turning to the screw it retransmission as growth.

On a net basis.

Yes, Okay, and then well have you Patrick the.

Threeq you political could you could you square that up against the 16 at 18 cycles. Just in terms of what you saw there and then kind of how much of that growth would you expect to significantly.

Thanks.

Yeah, I don't have the exact percentage of Bloomberg for the breakdown, but it was our political was double the previous cycle and.

A big chunk of that was Bloomberg I don't have the exact breakdown, but I can get that free after the call.

Thank you Sir.

Great. So we don't have any more questions. We appreciate everyone's time. This morning, and we hope that all you and your family's stay safe and healthy and well and we look forward to talking to you in the near future. Thank you very much.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect.