Digital publisher Dotdash’s merger last year with magazine company Meredith may have made a lot of business sense. But Dotdash, which has no print experience, is now part of over a century of US magazine history.
Now almost seven months on from the completion of the acquisition, how are the print titles settling in and what could be their long-term future at the digital-focused company?
Inheriting a print legacy
The last century has been dominated by print magazine publishers like Time Inc, who launched titles like Fortune, Sports Illustrated, Entertainment Weekly and Time itself.
- Time Inc had revenues throughout the 1990s of over $4 billion. But it suffered huge subscriber losses and advertising revenue in the early 2000’s, with attempts to reduce operating costs coming too slowly.
- Meredith’s magazine portfolio grew more modestly, but it still had a solid stable of subscription magazines like Better Homes & Garden, Shape and Parents.
- By 2017, the two companies had matching profits of $400 million each. But Meredith had half the headcount of Time Inc. That year, Meredith agreed to acquire Time Inc for $2.8 billion.
People and Better Homes & Gardens, Meredith’s two largest magazines, most likely accounted for at least two-thirds of the publisher’s profit.
Worth noting is that Meredith’s licensing agreements with retailers, manufacturers and service providers around the world had helped shore up against instability from other revenue streams. Meredith-licensed products now account for $30 billion of retail sales – a figure which has doubled over the past five years.
Yes but: optimistic forecasts from Meredith’s acquisition of Time Inc didn’t last long.
- Post-acquisition profits didn’t reach even half the 2016 forecasted EBITDA profit of $800 million from revenue of $4.8 billion.
- Meredith originally didn’t want many of Time Inc’s weekly titles, and these took longer to sell.
- Cultural differences and revenue disappointments combined to eventually give a Meredith total market value of less than it had been pre-Time Inc.
A complex relationship with print
Meredith’s titles aren’t Dotdash’s first brush with print. They acquired 85-year-old wedding and bridal title Brides from Condé Nast in May 2019, but closed the print edition as part of the deal.
“Beyond the simple fact that the Meredith portfolio was, reassuringly, “worth” more than the $2.7bn paid for it, the obvious question is whether Dotdash’s enviable growth path as a digital publisher (revenue doubled in four years) will have been accelerated or obstructed by having thousands of employees (more than 50% of its 4,000 headcount) engaged in the production of print magazines,” noted Flashes & Flames’ Colin Morrison.
He identified two pressing concerns for Dotdash Meredith’s print magazines:
- An unconvincing rationale for print: Switching to better-quality print editions and more revenue from readers may not work out even for just the six largest magazines it has chosen.
- Awkward People: Dotdash has historically focused on specialist and practical information. People magazine is pure mass-market. There are concerns it could be up for the chop after Dotdash Meredith cut its circulation by almost a million by letting low-cost and free subscriptions lapse.
“Guys, let’s take a look at this thing,” CEO Neil Vogel said in 2020, when asked about acquiring Meredith. “It’s obviously heavy in print. But, if you look very closely, this is a digital business masquerading as a print business.”
- The company decided earlier this year to close seven print editions; InStyle, Martha Stewart Living, Eating Well, Entertainment Weekly, Parents, Health, and People en Español.
- Vogel has since sought to reassure staff this isn’t the start of a larger process to cut magazines. The shuttered editions just didn’t have enough subscribers to offset declining ad revenue.
- “Print remains core to Dotdash Meredith,” he said. “What’s more, new investments will be made in the remaining print magazines, including enhanced paper quality and trim sizes.”
The last word: Plenty of brands with a print magazine are profitable and growing, and some are even contributing to digital growth.
Dotdash Meredith in numbers
- The company has more than 40 brands and says they reach 200 million people – 90% of all women and 76% of all adults in the US.
- They expect next year to have EBITDA of $450 million. 70% of this will be from digital revenues.
The data and analysis in this story is used here with kind permission from the Flashes & Flames story: Does Dotdash really want magazines? Subscribe to read more detail about the history of Dotdash Meredith and its complicated relationship with print. Flashes & Flames provides exclusive weekly analysis and insights for media executives and entrepreneurs. Learn more and subscribe at flashesandflames.com
