Shareholders have paved the way for Meredith Corp., the publisher of People, InStyle and Entertainment Weekly, to split its assets into two if need be — although the publishing company stressed that there are no imminent plans to do so.
At the Des Moines, Iowa-based publishing company’s annual meeting Wednesday, both the Meredith family shareholders and the common stock holders voted in favor of an amendment to its charter that would increase options for a “tax-efficient separation” of the national group, which includes its magazine business, and the local media group comprising many regional broadcast channels, including CBS affiliates in Atlanta, St. Louis and Phoenix and Fox affiliates in Las Vegas and Portland, Ore. The amendment preserves the current shareholding structure if there is a separation.
In a statement following the meeting, Meredith only confirmed that the amendment had been approved, but in a September statement it said that the company “has made no determination to pursue or effect a separation or any specific transaction” and that senior management and the board believe “the timing is right to resolve this technical issue.”
“The proposed amendment is not in response to any specific conversations or events. Instead, the company believes it is a prudent step to increase the number of options available. There is no timeline for nor assurance of a potential transaction resulting from this proposed charter amendment,” it added at the time.
If such a move does happen, analysts believe the hope is that it will improve shareholder value. Meredith’s share price is down almost 50 percent since the beginning of the year.
Like most of the media industry, the company has been hit by a pandemic-induced dive in advertising, although it picked up a little in its fiscal first quarter thanks to an increase in political spot advertising. Still, Meredith estimated that the pandemic wiped between $45 million and $65 million off total first-quarter revenues across both the national and local media groups. It also has much debt from its acquisition of Time Inc. three years ago.
As a result of the pandemic, the company has implemented a number of cost-cutting measures, most recently laying off 180 staffers — 50 at its national media group and 130 at its local media group. It had previously cut pay for 60 percent of staff, but that has since been reinstated, and also paused its dividend, which Meredith will look to resume paying once advertising market conditions improve.
Also at the meeting, Tom Harty was elected chairman, in addition to his role as president and chief executive officer. He succeeds Stephen M. Lacy, who is retiring from Meredith’s board after 16 years as a director.
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