Q4 2020 Meredith Corp Earnings Call
So nothing significant contributors.
[music].
Good morning, My name is Cree and I'll be your conference operator today.
At this time always welcome everyone to the Marriott did this school 2024th quarter earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks that window question and answer session. If you like to ask a question. During this time simply press Star then the number one on your telephone keypad if people like to Gary a question press the pound key and I'd like to turn the conference over to Mr., Mike Lovell, Sir you may be getting.
Good morning, and thanks, everyone for joining us or call will begin with comments from President and Chief Executive Officer, Tom Harty, followed by Chief Financial Officer, Jason for.
Remarks. This morning will include forward looking statements and actual results may differ from our forecasts.
Reasons for differences are described at the end of our news release that was issued earlier this morning.
Ended our FCC filings.
Certain financial measures that were discussing on this call are 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 has merit of 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.
I want to start by saying Thank you the Mike.
Many you've gotten to know him over his 14 years of service investors relations role.
Mike has recently taken a new communications for focused role at Marigold.
He will continue to support the Investor relations function, but is expanding his scope to include other communication responsibilities.
We expect to name a new IR lead in the near future.
Turning now to our results.
I hope you've had the opportunity to see our news release issued earlier this morning.
We've also posted a presentation that Mike referenced tore investor relations website to complement our fiscal 2020 earnings release and update this morning.
They include additional disclosures, we think you'll find useful.
I'll start with slide three.
Covert 19, and its impact on our business remains front and center with everyone. Today as it was last quarter and our top priorities continue to be one keeping our employees safe.
To delivering trusted news and inspiration to our audience of more than 190 million Americans.
Sorry, supporting our advertising and marketing partners and for maximizing free cash flow.
Jason will take you through our financial performance in greater detail, we've accomplished a number of initiatives in fiscal 2020, including increasing brand engagement with consumers and advertisers and improving our competitive position.
Let me share a few highlights.
First in fiscal 2020, we added toward digital businesses and capabilities. For example, we built a new technology platform with robust data capabilities supporting our expanding digital activities.
This new proprietary platform, which unifies legacy platforms onto the same technology stack includes not only our content management system, but also our proprietary taxonomy, our first party data and our user identity graph.
This prepares us well for a world where third party cookies are no longer supported.
It also allows us to bring together consumer profiles real time insights and intense signals.
Trends than a former editorial and product road map.
Provide personalized experience to our consumers and give advertisers the ability to tailor the right messages and products to the users most likely to buy at any given time.
We advanced our video and audio strategies.
Video views grew more than 50% in fiscal 2020 across our owned and operated properties.
Responding to consumer demand, we published a third more videos during the year.
We also launched a series of new podcast under the all recipes southern living and parents brands as a way to tell stories increasingly popular way.
Well, we have more planned including a new people podcast.
We've added to our subscription acquisition and ecommerce capabilities, which are important avenues for growth.
First entered the E commerce space with the acquisition of shop nation seven years ago.
Since then revenue growth from our E commerce activities, including digital couponing.
Content and affiliate Commerce has an up strong 28% in the year.
Digital advertising revenues grew to 38% of total National Media group advertising revenue in fiscal 2020.
Importantly, these content and product offerings increased engagement with our brands allow us to reach new audiences and provide new exciting high value inventory for our sales team.
They also demonstrate our brands and content, our platform agnostic and trends will translate well across channels.
Our new platform and data capabilities are already paying playing a role in recent wins, including an exciting new opportunity with Kroger.
This partnership brings Kroger's household sales data and Meritas first party data.
Together to help marketers identify which shoppers are most relevant to their brands enrollment.
The partnership marks the first time brand advertisers on many of the properties have access to close loop sales data from Kroger, allowing them to directly measure incremental sales attributable to their campaigns.
Second we launched a series of new brands product expansions realignments to improve profitability fiscal 2020.
And our National Media Group. This includes the launch of reveal.
A new lifestyle magazine, we're doing with property brothers television host drew and Jonathan Scott.
Suite July with bestselling author restaurant tour and television hosts are you sure Curry and a new multimedia personal finance bran Millie that's dedicated to helping women achieved their financial goals.
We realized several brands that are national media group portfolio to improve efficiency.
This includes closing family Circle magazine, and transitioning Rachael Ray everyday to a premium newsstand title published on a quarterly basis.
This strategy has proven successful with other of our brands, including coastal living cooking light and traditional home.
No. The latter three brands are now also offerings subscriptions at a higher price point that under the previous advertising driven model.
Finally, we completed the last of our planned asset sales in fiscal 2020.
This includes the money brand than sided emeritus interest Viant Zuma.
In our local media group, we launched two national television shows based on the people in southern living brands.
People now was a weekend program during fiscal 2020 and becomes a daily Primetime show across our network in early fiscal 2021.
Similarly, southern living has been expanded to weekly syndication.
Leveraging our leading brands across additional platforms is an exciting opportunity and something we hope to scale over time, our local media group also continue to expand news and production is now producing 745 hours of local content each week.
We've seen significant growth in ratings as a result consumer interest in local news during the covert 19 crisis turning to slide four we pursued a number of initiatives in fiscal 2020 to grow engagement in revenues from the more than 190 million us consumers, who regularly interact with our brands.
In these challenging times consumers are looking to meritas trusted brands for important news and information practical advice home improvement ideas recipes inspirations and moments of escape for example, and our National Media group visits toward digital brands grew by 14%.
In our fiscal 2024th quarter compared to the prior year period, driven by strong gross and brand focused on food health and home lifestyle categories that give marius access to an extremely wide audience.
These include all recipes shape and Martha Stewart.
Our licensing and digital and other consumer revenues grew 8% in the fourth quarter fiscal 2020, and 12% in the full year fiscal 2020.
This growth was driven by Apple news, plus royalties E commerce and our performance marketing activities. It also includes stronger sales from our branded products at retail, particularly better homes and gardens line at Walmart.
Our magazine business is the largest in United States, reaching more than 120 million women. This is nearly 95% of all women as one of the most powerful points of our differentiation.
People is the industry's largest brand, reaching nearly 90 million unduplicated consumers.
While recipes, which has seen strong consumer growth with an acceleration due to covert 19 is now the industry's number two brands.
Better homes and gardens is also the in the top 10.
On average we sell approximately 70 magazines that newsstand and 30 subscriptions every minute.
We continue to see strong growth in various subscription channels that drive high lifetime subscriber value in our fiscal 2024th quarter even.
These include our owned and operated digital properties paid search direct mail and renewable campaigns for example demand via our digital and partner networks a strong since mid March we've seen consistent year over year growth with conversion rates, 50% higher than normal.
Traditional magazine subscription that acquisition and renewable efforts for all of our major titles are up strongly as well for example to direct mail campaigns for the people brands are performing more than 50% above our target may campaign for southern living is performing at twice our expectations other.
Brands are seeing similar levels of performance. In addition, we newell's are pacing well above historical trends.
Additionally, our newsstand business Meredith premium publishing produced 300 special interest issues annually at prices ranging from 10 to $15.
Our strong consumer data capability in high quality brands are competitive advantages, giving us the ability to adapt quickly the changing trends and produced content consumers want under brands that have strong consumer recognition.
During fiscal 2020, we added 13% more magazine pockets that newsstand, bringing our total to 1.9 million.
And our local media group, our television stations focus on their individual markets drove strong ratings performance throughout the year.
For example, during the July ratings period, our stations in seven of our 12 markets ranked number one or a number two from sign on to sign off.
It also drove digital results as the number of unique visitors to our local media group sites grew 18% fiscal 2020.
The green transmission revenues by 10% in fiscal 2020, as we renewed 60% of a retransmission consent relationships and all of our CBS affiliations.
With that overview I'll turn it over Jason and I'll come back to update the proactive steps, we're taking to address current revenue trends across our portfolio and off for closing comments, then will invite you to join us with your questions.
Thanks, Tom Let me begin on slide five looking at for Q2 thousand 20 consolidated performance revenues were $611 million down $174 million are down 22% from the prior year period.
Adjusting for portfolio changes announced over the last year total revenues would have been down 18% on a comparable basis.
As a reminder, these strategic portfolio changes lower revenue, while improving profitability.
These changes include transition Rachael ray everyday and traditional home to premium newsstand titles adjusting the frequency of entertainment weekly to a monthly publication and closing family circle and money magazines.
Advertising related was $260 million down 141 million or down 35% of that cobot related cancellations and delays totaled an estimated $110 million across both the national and local media groups.
National Media group portfolio changes were another $18 million on a comparable basis, excluding portfolio changes advertising related revenues were down 32%.
Consumer related revenues were $331 million down 25 million or down 7%.
Of that National Media group portfolio changes accounted for a majority or an estimated $22 million on a comparable basis, excluding portfolio changes consumer related revenues were down 1%.
For Q2 thousand 20 coated related declines in new steam performance total estimated $18 million.
We generated earnings from continuing operations of $6 million compared to prior year loss of $4 million.
On a consolidated level.
We estimate the cobot impact across advertising consumer and other revenues was $136 million.
Swift cost actions were taken including with reductions in certain employee related costs and the deferral of certain investments, which partially offset the sales decline, resulting an estimated $77 million decline in adjusted EBITDA as economic activity begins to normalize we expect these costs to return to normal levels.
On a consolidated basis, adjusted EBITDA was $80 million down $89 million or down 53% with co that being the largest driver of the decline adjusted EBITDA results were also impacted by higher digital resource investment.
Cash flow from operating activities grew 33% and free cash flow grew 52% due primarily to working capital improvements lower capex and lower restructuring cost as compared to last year.
Turning to slide six from the segment performance standpoint, I'll start on the left side with the National Media group.
Revenues for $445 million down 143 million or down at 24%, we estimate covert related cancellations and delays in advertising and the impact consumer related and other activities reduced revenues by $98 million the portfolio changes I mentioned earlier accounted for another $40 million.
With slightly more impact from consumer than advertising.
On a comparable basis, excluding portfolio changes National media group revenues were down 19%.
To give some more context on brand performance during the quarter those brands focused on what's most important to consumers today, including food home and lifestyle fared better than the National Media group as a whole as you expect brands driven by travel luxury and entertainment or more negatively impacted in the quarter.
Operating profit was $7 million, while slightly while up slightly year over year. The fourth quarter of 2019 included $42 million of trademark impairment that did not repeat.
Adjusted EBITDA was $48 million down $67 million are down 58% the key drivers when estimate.
We're an estimated $52 million reduction in due to coated along with higher digital resource investment.
On the right side of the page local media group revenues were $167 million are down 31 million or down 16% coated related cancellations and delays in nonpolitical advertising accounted for an estimated $38 million in reduced revenue, partially offset by growth in retransmission and political advertising revenue.
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Operating profit was $28 million down $34 million are down, 55%, driven primarily by Tobin related cancellations and delays.
Local media group, adjusted EBITDA was $38 million down $34 million or down 47% for the vast majority due to coated.
Looking at full year 2020 consolidated performance revenues were $2.8 billion down $340 million are down 11% from the prior year period on a comparable basis, excluding portfolio changes revenues were down 7%.
Advertising related revenues were 1.4 billion down $288 million or down 17%.
We estimate coated related cancellations and delays reduced advertising related revenues by $127 million across both the national and local media groups.
National Media group portfolio changes amounted to an estimated $59 million.
On a comparable basis, excluding portfolio changes advertising revenues were down 14%.
Additionally, political advertising revenues were lower by $79 million as expected and an nonpolitical year.
Consumer related revenues were $1.3 billion down $68 million or down 5% National Media group portfolio changes accounted for an estimated $67 million on comparable basis, excluding portfolio changes consumer related revenues were flat.
We'll go to related declines and newsstand performance totaled an estimated $18 million.
These declines were partially offset by $31 million and retransmission consent fee growth.
Other revenue was $101 million up $16 million or 19% as the revenues include third party projects production support for brands sold an episodic programming performance was driven by third party video projects.
For the full year 2020, we recorded $358 million of net special items. The majority of which were taking in Threeq 2020 and related to noncash impairments of goodwill intangibles and lease related assets.
These special items drove a loss from continuing operations of $209 million.
Bringing the cobot impact together across advertising consumer and other revenue impacting the last three or four months of the year. We estimate revenues were down $154 million with wrote resulting profit decline, partially offset by cost actions previously mentioned.
Given the economic uncertainty, we felt it necessary to take these actions to conserve cash until we had a better understanding of the environment.
In total we estimate the cobot impact to be $83 million decline in adjusted EBITDA.
On a consolidated basis, adjusted EBITDA was down 22% to $548 million. The decline was driven by Covidien and a lower political and lower political advertising as expected and the nonpolitical year.
Cash flow from operating activities grew 25% and free cash flow grew 26% due to improved working capital lower capex and lower restructuring as compared to last year.
Turning to slide eight.
Liquidity and cash flow are critically important to Meredith, particularly during this time of heightened uncertainty starting at the top of the slide we ended for Q2 thousand 20 with $132 million of cash in the bank nearly three times the prior year period and up $29 million from March 31 2020.
Our revolver balance decreased as zero at June Thirtyth, reflecting $35 million repayment made since the end of Threeq 2020 as of today and the revolver remains unused.
As a company when measuring our performance in this environment by free cash flow, we generated $124 million a free cash flow from operating activities $114 million of free cash flow in Fourq you 20.
Up 52% from the prior year. This improvement was primarily driven by working capital improvement lower restructuring cost and lower Capex, we had approximately $165 million of cash in the bank at the end of July and we expect free cash flow in the first quarter fiscal 2021 to be positive.
Turning to slide nine during Fourq, you 2020, we refinanced our preferred equity while we appreciate the partnership with support from our preferred equity partner over the last two and half years. This component of our capital structure was more expensive compared to the rest of our debt.
For reference our preferred equity carried an interest rate of 8.5% the increase annually for capping at LIBOR plus 10.5%.
By taking these actions we estimate our annual cash savings at approximately $35 million through both lower interest rates and the new debt being tax deductible.
We also entered into an amendment to our revolving credit facility that increases the consolidated net leverage ratio in the financial covenants, providing us more short term financial flexibility.
We have no immediate maturities our revolver comes due in 2023 secured notes and term loans in calendar 2005, an unsecured notes in calendar 2006, now I'll turn it back to Tom for closing thoughts on slide 10.
Thanks, Jason our consumers today are focused on food home and the health and wellbeing of their families along with news and information about their local communities.
These subjects are the cornerstone of the Marriott Corporation, and our brands that cover these subjects, including all recipes better homes and gardens and southern living our the stronger performers and our portfolio today.
Since our last earnings update on May 14 advertising trends became less negative during the course of the fourth quarter. In July we are seeing fewer client cancellations indoor campaign delays.
RFP activity has picked up and cpms are strengthening in our digital business.
As we look into our fiscal 2021 first quarter, assuming no changes in trajectory due to cobot 19, or other macro factors, we see national Media group digital advertising flat to down low single digits in comparable print advertising revenues down in the mid.
To high 20% range.
We see nonpolitical advertising in our local media group down in the mid 20% range as well due impart to expected crowding out by the coming political advertising cycle.
We expect political advertising revenues in fiscal 2021 at levels similar to fiscal 2019.
As we look ahead to full year fiscal 2021, we're pursuing several strategies to best position Merit for growth.
First we will continue to innovate our digital capabilities to support our advertising and marketing partners with innovative and actionable consumer insights.
As an example, we've signed 15 clients to the new Meredith audience action guarantee program that we launched in May This program guarantees to advertisers that are investing in the Marriott brands that a specific number of readers will take action as a result of seeing a brand campaign and merit magazines.
This program and others helped grow our share of US magazine advertising by four points to 35% for the first six months of calendar 2020.
We're collecting data and providing real time insights to our advertising clients about changing consumer habits and trends.
This enables us to help our clients tailor their creative campaigns with messaging appropriate to the current environment. It also helps us create direct connections between consumers and our clients to pursue purchasing products.
Our local media group is also creating new advertising and sponsorship opportunities based on consumer trends that have emerged during the coded 19 pandemic.
These include a new series called frontline heroes sponsored by local clients that recognize workers, who put themselves in harm's way to help those in need.
Next we are focused on continuing to develop our portfolio and strengthened both our competitive position and connection to the individual consumer.
Consumer demand for our brands and services remains strong and we believe offers a long runway of opportunity.
Consumer related revenues now account for approximately 50% of total company revenues up from approximately 25% over a decade ago.
A consumer focus strategy offer several benefits.
These important activities are mostly contractual include retransmission brand licensing and digital sources, along with stable subscription revenues.
The consumer reach of our portfolio consists coupled with engagement form the basis of our value proposition to advertisers.
Our consumer engagement is a differentiator and positions us to benefit from incremental advertising spend when the economy recovers and finally, we continued optimizing cash and costs.
We took a number of proactive steps towards this goal in fiscal 2020, including refinancing our preferred equity to lower cost of capital and amending our revolving credit facility.
We also paused our common dividend temporarily reduced the pay for 60% of our highest paid employees and reduce capital expenditures and other expenses. These activities taken in the fourth quarter fiscal 2020 in response to covert 19 helped drive strong growth in cash flow and provide more.
Financial liquidity and these uncertain times with that we'll open it up to your questions.
Yes.
Good question.
All right and then.
On your telephone keypad again best item number one on your telephone keypad pause for just a moment decontamination and you asked there.
Your first question comes from Johnson is spread ball free search.
Thanks, Good morning.
You talked about your digital platform strategy.
Seems like this year is going to bring it in more of a shift and then what the increasing traffic dominance in the demo I guess can you talk a little more about the potential to further increase monetization given your comments on that first party data and then secondly on the cost side can you guys could clarify what's costs are in terms of the savings are permanent versus.
Alright. Thanks.
Sure and I'll ask Jason the kind of weigh in on on the cost question, but yet John Weve been.
Obviously working on this has been a multiyear process for us and we talked about it before investment in this kind of unified platform.
There's a lot of advantages that we have you have a single editorial tool set across the entire portfolio. We have a centralized data platform and now we have what we would call a front end to 10 plate engine and this really drives brand efficiency. So now it will have the same the same platform.
For 40 plus of our digital brands.
We have a consolidated view of first party data and it drives obviously faster innovation, but to your point, what this really the combination and our investment in data on our first party data. This goes back to when we hired Alisha Boris.
As our chief data officer, so going back five years, where we started making investments in our data so by marrying up.
Our view of all this data that we have first party data, which is just billions of pieces of data and that with our platform. Just allow so much efficiency and then allows new opportunities for us to monetize with things like Kroger, So kroger or what this is about is really it's about content.
It's about targeting and it's about measurement right. So for the first time.
Youre going to be able to have and we're going to be able to offer we've offered before we've offered shoppable add but now you have target targeted shoppable ads.
That consumers can kind of seamlessly add to a shopping cart and then you have the close loop of the actual data from Kroger actually show the CPG companies how their ads are actually.
Delivering and for their investment in the status. So we think this is very exciting really big opportunity in something that we've been working on obviously for a number of years and now ask Jason talk about the cost piece that.
Yeah, John in terms of the cost.
As we said in the prepared remarks.
The specifically is you've got employee salaries in the temporary.
Reduction in those obviously that those are temporary.
As we continue to look at areas to took to reduce costs. Those are obviously more permanent other areas that are more specific to.
Cool weather related items.
In terms of some aspects and employee compensation.
I would say other things like travel living nurtured the travel and expenses type of thing where nobody.
No. He is traveling these days, obviously thats temporary it up until.
You find kind of a return to normalcy, so it's a little bit of a mixed bag there its a.
Okay.
If I remember another half.
No no.
Okay. Thank you.
Your next question is from Dan Kurnos with a benchmark company.
Thanks, Good morning.
Tom will have to find someone else, who recently named making pressure when they announce the IRS lead and side.
Yes.
[laughter]. So unfortunately, we didn't get a lavelle this morning, Mike you'll be missed.
So.
Just a couple a couple from me I don't know Tom or Jason is there anyway to quantify that drag it people on the portfolio. Obviously, it's a big components at both revenue and more importantly profitability and to the extent that it turns around our trend you've seen there.
Celebrities not in both at the moment I guess, so that would be kind of one helpful piece and then maybe following up a little bit on John's question around digital look we've seen a pretty big.
Shift to digital E. Commerce particular, all recipe should be doing well I guess I don't know how much.
And our down there, but just curious a our give a target for how much E. Com is ultimately going to be as a percentage of digital Rav and then be just can you maybe quantify a little bit more the trajectory of cpms, whether its programmatic still lagging or what your.
Seeing are you working on getting more video out there just help us understand sort of the digital trajectory.
Yes, so I'll start out there was a few few questions, but let me let me start with.
With people.
Obviously people as are our number one brand and profit generator. It's the number one brand in the industry and to your point early on on the on the digital side of the business when when the pandemic first broke.
Traffic from a celebrity standpoint wasn't as hot were also up against some comps from some issues that happening.
Last year related could loyals and things like that but we've actually seen the traffic come back and actually.
During the month in July there's been.
A lot of a lot of full even not celebrity activity going on and very very important to us. So we were seeing that trend kind of reverse.
On on on digital as a whole.
The trends early on were similar to the broadcast business and just to make a comment we have Patrick recurring who's on the phone. If we have any broadcast question, specifically, but but you know you very different than the last recession.
From a broadcast perspective, our remember it because I lived it.
Five quarters for us to see the worst performing quarter in our local television business that is kind of that in ripple through the economy and took a long time. This side of the this this time around you had.
The business basically stopping show the magazine business actually early on held up better some of it was because of timing, but digital was was performing closer to broadcast those trends have actually reverse quite a bit and I think you heard me say.
In my remarks that we're projecting in the first quarter of that were in currently that our digital business is going to be kind of flat to down down slightly and a lot of those trends have reversed to your question about programmatic programmatic inventory in pricing has firmed, it's not quite back and it.
Again, it changes ebbs and flows. It was it was released are coming back really strong in June and we had a slight pullback.
In the beginning in July and now week over week, it's been up again. So we're seeing you know rates firming up in that area, which is obviously a very good trend and chose demand in the marketplace on the cost side.
Thank you were asking about I'm only go back I think I'll take the last part of it I think we're not going to be able to give you an exact number today about what we're projecting from a commerce perspective, but what I will say is that that business has been up in the fiscal year over 20% kind of mid twentys for fiscal.
2020, as we closed it but looking further out it's it's hard for me to give you a projection on exactly what that business is going to do but but obviously, we're leaning into it and we think that our brands inspire women to take action and and we're taking a piece of that pie now through through our ecommerce activity.
Sure.
Yes, now you got to all of my 13 price sneak into thank you.
Right.
Your next question Anthony Davis, Hebert with Wells Fargo.
Good morning, everyone. Thanks for taking the questions.
The credit side after the transaction you guys did earlier this year.
I Wonder if you could talk about your debt reduction plan.
Over time.
Is there possibilities for asset sales things of that nature to accelerate celery bad debt reduction and maybe talk about your free cash flow.
Expectations over the next year so thanks.
Jason get into the specifics about some of our goals on that but our underlying goal our top priority as we said before is obviously to reduce our debt.
We obviously took on a lot of debt in transformational transaction with time Inc. and we're firmly thats one of our top priorities. We just finished our board meeting this weekend and Thats a top priority for us moving forward, but maybe Jason can give you a little bit more specifics, yes in terms of our debt reduction in terms of free cash flow right now are.
Main priority onset is to is to reduce debt on in terms of specific.
Non core asset sales or possibilities.
We're always evaluating the portfolio in terms of would fit what would fits what doesn't et cetera. So that that could create opportunities that those are more ad hoc and not really planned at this time. So I wouldn't want to give you a specific direction, but let me give evaluated in terms the overall portfolio.
As of right now, it's more of a free cash flow generation in terms of reduction and debt.
So you will prioritize the debt in terms of most expensive.
Just on first in terms of reduction of interest.
But really the key point right now is to focus on.
Cash conservation early liquidity and.
Unknown markets here.
Looking forward in terms of either coated and the advertising environment, having to add more liquidity at this point in time is obviously important to us and everybody else in terms of that priority, but over the long term definitely debt reduction as the number one priority for us.
Okay and just following up on that note on the must extend our that I mean your bonds trade at a discount to par right. Now. So is that do you have flexibility from a strict payment prospective too.
Bonds in the open market is that something you would consider.
What we would absolutely consider it but I think the consideration is at the point in time, when you have more transparency and clarity into the future.
I wouldn't be unit will be a situation where you pay down.
The unsecured at achieved rate, but something changes in the market that increases our need for liquidity, mostly in the balance of timing I'd say I mean, I think just you probably living this obviously also ellis our optimism ebbs and flows right. So I think right now we have some were cautiously optimistic that we're seeing.
Kind of sequential improvements in advertising.
But it still down year over year, but we think we've kind of maybe cross the worst time that we experienced.
Earlier in the beginning of Kobe, but it's hard to know so I think that what we're doing as we're being prudent.
With our cash position to Jason's point, and if you look at the numbers. We quoted today, we we've been really improving our cash position in one of the most difficult times for the company. So we're going out we're going to kind of looking at just as we look out and see some of the trend as we enter into fiscal year, and then act appropriately on our debt.
Great.
And I did have a couple of follow ups on the Retran side.
Can you talk about the 18, TV digital where that stands and the percentage of subscribers you have coming out this fiscal year for renewal.
Yes, we are Patrick clearly on the phone who runs the local media group, but I'll ask Patrick to take that.
Hi, David Thanks for your question, Yes, we were successful renewal would they TNT and this late last cycle and coming up in fiscal 2001, we have about 7% of ourselves up for renewal.
7%, so you've gotten a TNT in Directv all wrapped up yes, Sir.
Okay, Great and then my last question is the the guidance are pacing you gave for the.
The advertising piece that was for the first fiscal quarter correct that were not over a longer just just for that period correct, especially if that's the first quarter ending in September that's correct.
Okay, Great just wanted to confirm that.
Thank you guys. So much appreciate it.
Next question is from Kyle Evans with Stephens.
Hi, Thanks, Mike Congrats I'm glad Patrick is on the call have a lot of.
Local segment questions, maybe start with core.
Down 40, with the down mid Twentys.
One Q guide could you tell us what you saw intra quarter for fourth quarter and give us a july patients number.
Yes.
Hi, how are you doing.
For.
Second calendar fourth fiscal week, and I'd give you a month by month breakout April was minus 49 may minus 43 in June minus 28, and July is even better yet.
We are seeing month over month sequential improvement.
Okay No number for July.
Okay.
I don't I don't have a specific number for July or we really seeing that I'm, sorry, you can give that Patrick.
I believe our July number down.
I want to say it's.
25.
Okay that right Thats correct, yes.
Great.
Patrick.
Flat political guide for fiscal 21 off of fiscal 19, despite presidential cycle versus last could you help us think about the puts and takes.
Now it there.
Yes, absolutely in the last cycle, we had 14 Senate seats 11 governors races. This time around we've got 11 Senate seats in three governors races across our footprint a majority of our political dollars really come from those two categories senatorial and gubernatorial races about 10% to 15% of our president or.
Political money comes from the presidential race, that's why we're seeing that that flat guide.
Cycle the cycle, but what you will see if you look back to see fiscal 17, and you'll see about a 55% growth over the fiscal 17 presidential cycle in political spend.
Got it so 55% growth off of last presidential Yeah got it does that make sense.
Maybe moving onto to national.
The people now in southern living southern living TV efforts.
Very interesting are there what's the distribution plan there what's the revenue model on those and are there other titles that have similar potential.
Yes, so Patrick take that question because we're actually he is responsible for that in the local media group So Patrick Greg.
Yes, so really the big focus is on people. We have our showed launching September 14 into syndication so that will be very traditional syndicated television business model.
With what I consider to be and I think everyone else does the strongest entertainment brand in the industry.
Moving that ramp from the pages of our magazine the television makes a lot of sense.
The content that rich content, the Tom talked about with our other brands of southern living which which is a frankly, a little bit easier lift you guys on the air which is why we started with southern living I see that expanding over the next year year, and a half and we'd like to take that to the marketplace as well, but we don't have a rollout plan for that today.
Great and what have you want to.
Question on this.
You mean I want to answer would only 7% renewing them on the subside for for Retrans do you think you can put up net growth in return in Retrans.
21 thanks.
I think the answer to that is a short yes.
We have no network contract affiliation renewals coming up in this fiscal year.
And the way the cycle works is you know these are all the small guys in our markets 87 different cable operators across our footprint as what's being renewed but thats only as I mentioned, 7% of our total footprint. So I think the short answer is yes, you will see some growth.
Great. Thank you.
Your final question comes from Jason Bandel, but city.
Good morning, Jason.
Morning.
Just have a longer term question not for this fiscal year next but given that you've said debt as a priority and you've described get dividend is being on on pause.
As the board sort of thinks about resumption to dividend is it more about.
Getting a sufficient quantum of cash flows such that the dividend isn't an outsized portion of the cash or worse, the ending the pause more about getting leverage.
To a level that was closer to.
The time acquisition pre coated and broad brush strokes.
Yes, I think I think it will be ladder in.
In other words were 40, we'd look at it from as a percentage of what's the free cash flow that where we're generating in and and obviously with a lot of uncertainty, we're we're being cautious so.
And then in the short term number one priority for US is is to reduce debt and also right behind that number one number two priority right behind or one d. is is to bring back our dividend to our shareholders. So.
As I mentioned before we just finished our board meeting its we presented our three year plan and had a robust discussion about what cash we're going to generate from our three year plan again with a lot of market uncertainty.
And then where we're going to we're going to adjust as we go for it but you know dividend remains a top priority for the for the for the company to bring it back to our shareholders absolutely okay.
Okay. Thank you very much.
Okay. Thank you.
Great. So that concludes our call. Thank everyone for participating and I hope that you all stay healthy and safe and enjoy the rest of your summer. Thank you very much.
Okay.
This concludes today's conference you may now disconnect.