The Meredith Corp. headquarters building in Des Moines, Iowa. Media General is buying Meredith Corp. in an approximately $2.4 billion cash-and-stock deal. The combined company, called Meredith Media General, will have 88 television stations in 54 markets and media brands including Better Homes and Gardens, Parents and ShapeMedia General Meredith, Des Moines, USA

Meredith Corp.’s president and chief executive officer Tom Harty warned that the advertising downturn has been “swifter and more severe” than during the trough of the Great Recession as he delivered worse-than-expected third quarter financial results.

The publisher of People magazine and InStyle said national media digital advertising revenues are down 40 percent so far in the middle of the company’s fourth quarter, compared with a drop of 24 percent during the 2008-09 recession. Print advertising revenues have tumbled 30 percent, while they were down 18 percent during the worst period of the recession.

“Our advertising and marketing partners are facing tremendous challenges and that means challenges for us as advertising accounts for approximately half our revenue,” he told investors on a call, during which he broke down Meredith’s third quarter.

Revenues were $702 million in the three months ended March 31, a decline of 6 percent from a year ago, and lower than the general consensus among analysts of $720.8 million.

The loss in revenues was twofold, the Des Moines, Iowa-based publisher explained. Previously revealed magazine portfolio adjustments to improve profitability, such as the closure of Family Circle and Money Magazine, reduced advertising and consumer-related revenues by $40 million, while COVID-19-related advertising cancellations and delays shrunk revenues by $17 million.

At the same time, Meredith reported a net loss of $284.4 million, compared with a $23.7 million profit the previous year, primarily down to non-cash impairments of goodwill and intangible assets of $296 million. Diluted earnings per share were 49 cents, below analysts’ estimate of $1.10.

“Our performance for the fiscal 2020 third quarter was largely in-line with our expectations until mid-March when the outbreak of COVID-19 created an extremely challenging advertising environment,” said Harty. “In response, we took a series of proactive steps to strengthen our liquidity and enhance our financial flexibility in the near term to effectively navigate the current environment.”

Earlier this month, it cut salaries for 60 percent of its 5,000 staffers. Around 45 percent of those impacted received a 15 percent pay reduction, while the remaining 15 percent, made up of Meredith’s highest-paid employees, took pay cuts of between 20 and 40 percent through Sept. 4. Employees receiving pay reductions will have one day of unpaid leave a week during the same period and Meredith has also implemented a wage, salary and hiring freeze.

At the same time, the group has paused its dividend, which the company raised around three months ago. Meredith will look to resume payments once advertising market conditions improve.

Like many of Meredith’s competitors, falling advertising came despite increased engagement in the third quarter. Traffic to Meredith’s national media group sites grew 6 percent, including strong growth at Allrecipes.com, InStyle.com and EW.com.

Harty also revealed that the company has seen “incredible demand” for print magazines in the last six weeks and when its competitors are looking at lowering rate bases and changing frequency, it has “been leaning in.”

Traffic to Meredith’s local media group sites, meanwhile, grew more than 75 percent, while viewership rose across its portfolio of broadcast television stations.

“In these unprecedented times, we are seeing several encouraging trends reinforcing the enduring value of Meredith’s powerful brands, including robust traffic to our digital properties, strong upticks in our e-commerce activities, increased viewership to our local newscasts, and solid subscription metrics,” Harty added. “We remain confident in the strength and resilience of the diversified business model we have built.”

This was not enough to convince investors, though, with Meredith’s share price down 12.4 percent to $10.77 during lunchtime trading.

For more, see:

People Magazine Owner Meredith Unveils Cost-Cutting Measures

Media People: Dan Wakeford of People Magazine

How People Editor in Chief Produces the U.S.’ Biggest Weekly Magazine From His New York Home