Trowel power: Meredith, the US’s biggest magazine publisher, keeps a low profile
After buying Time Inc for $2.8 billion, Meredith Corp is the largest magazine publisher in the United States, but it’s not about to change its unassuming style, writes Sydney Ember of The New York Times
S teveLacy greeted me in his office as if we were old friends.
A top executive at the Meredith Corp, he was a main driver of the company’s $2.8 billion acquisition of Time Inc in November. With that deal, the 116-year-old Meredith became the largest magazine publisher in America.
When he spoke, it was clear Lacy took pride in Meredith’s unassuming corporate culture, so far removed from the New York magazine scene.
“In Des Moines, Iowa, we don’t have to prove anything to anybody about the Meredith Corp,” Lacy said. “We don’t have drivers. We’d look silly, and it would be not in keeping with who we are.”
He added, “I presume you know that if I want a black car, I can get one.”
Lacy, 63, is a trim man, born and raised in Kansas, with neat white hair. He steered me to a table by a large framed photograph of a bald eagle. Not far from his office on the 14-acre Meredith campus, a 24-foot sculpture of a trowel sticks out of the earth at an angle, as if tossed by a gardening giant.
He managed to keep the company thriving when his competitors were shutting down magazines. And now that the New York approach to the magazine business may have run its course, it seems that Meredith has tortoised the hare.
“You have to realise that the vast majority of all media companies’ consumers have a life beyond the Hudson River,” Lacy said. “The consumer we sell our product to has a very different life than what goes on on Manhattan Island.” Meredith’s restraint appears to have been prescient. Before taking on Time Inc, the company owned some of the most-read magazines in the country, including Better Homes and Gardens, with its circulation of 7.6 million. In buying the House of Luce, the company gained People, which fits nicely into its portfolio of lifestyle publications, along with Olympian titles like Time, Sports Illustrated and Fortune, which do not match the company’s traditional areas of expertise.
Meredith has said it may not hang on to all of the Time Inc magazines. Company executives expect to complete their review of the titles this spring. Among the options under consideration are selling off Time and Sports Illustrated, or changing how frequently they are published. Time, for instance, could become a biweekly or monthly.
For now, Meredith owns 40 magazines to go with its 17 television stations and 50 websites. The Time Inc deal gave new life to Meredith’s digital and video operations, increasing the number of unique monthly visitors to its websites from 80 million to 170 million. And Meredith officials say the company will generate $700 million in annual digital advertising revenue.
AGRARIAN ROOTS
Edwin T. Meredith founded Meredith in 1902 with the introduction of Successful Farming, a magazine that is still going strong, with a circulation of about 400,000. His office lay a mile from Meredith’s current headquarters, which houses roughly 1,000 employees.
In 1922, after serving as the secretary of agriculture under President Woodrow Wilson, Meredith introduced Fruit, Garden and Home, later renamed Better Homes and Gardens.
After his death, the company went public, moved into the television business and expanded its magazine portfolio with titles including Country Home, Wood and Midwest Living. It has since added Family Circle, Parents, Shape, Allrecipes, Martha Stewart Living and Magnolia Journal, among other publications.
The Meredith family remains the company’s biggest individual shareholder, with Mell Meredith Frazier, the founder’s great-granddaughter, serving as the board’s vice chairwoman.
To make up for the decline in print advertising that has afflicted the industry, Meredith has turned to other sources of revenue, including a retail partnership with Walmart Inc and a Better Homes and Gardens real estate agency. But with a focus on evergreen subjects, it has proved better able to weather the downturn than media companies that chase after the latest news-break or trend.
More than 60% of Meredith’s $1.7 billion in revenue comes from its magazine business. The company has also been able to keep costs low in a way executives at the New York-based Condé Nast Inc and Hearst Communications Inc can only envy.
“The Midwestern aspect of it — the base of it and the headquarters of it being in Des Moines — I think does infuse the whole company with a kind of Midwestern practicality,” Stephen Orr, editor-in-chief of Better Homes and Gardens, said.
(Meredith does have a New York office for some sales, marketing and editorial employees. To facilitate travel it owns two nine-seater corporate jets.)
The company has also avoided the upheaval that has affected other magazine publishers: Whereas Time Inc went through five chief executives in the past eight years — “a real problem,” Lacy said — Meredith is on its fifth since 1971.
And so, as many magazine publishers were cutting costs, the company found itself in a position to go big — and elevate its position in the media-industry hierarchy.
ENTER THE KOCHS
The acquisition of Time Inc would not have come about without an infusion of $650 million from Koch Equity Development
In Des Moines, Iowa, we don’t have to prove anything to anybody about the Meredith Corp. STEVE LACY EXECUTIVE CHAIRMAN, MEREDITH CORP
LLC, the private equity arm of the billionaire brothers Charles G. and David H. Koch.
The Koch cash fueled what was Meredith’s third attempt to buy Time Inc. In 2013, a proposed deal collapsed because of Meredith’s lack of interest in Time, Fortune and Sports
Illustrated. A second go-round fizzled early in 2017. Lacy said he kept at it because he saw a chance to broaden Meredith’s digital audience and add balance to a roster heavy on lifestyle titles.
“I couldn’t think or come up with another deal that I thought mattered as much to the future of the Meredith Corp,” he said.
The deal was something of a last hurrah for Lacy: In January, he ceded his position as chief executive to the company’s president and chief operating officer, Tom Harty, 55.
In his new role as executive chairman, Lacy said he would communicate more with shareholders, but will also help Harty with the process of integrating Time Inc. “I’m very involved,” Lacy said.
For much of the 20th century, Time Inc was at the pinnacle of American media. It had correspondents all over the globe, and its generously compensated editors gazed out over Rockefeller Center from the Time-Life building.
When the web’s drumbeat rendered its news-heavy titles all but irrelevant, the company left its namesake building for less opulent headquarters in Lower Manhattan. But it wasn’t enough to stop the bleeding.
The Meredith-Time deal closed on Jan 31. That night workers covered the Time Inc sign on the building’s glass facade with a Meredith banner. The next morning Lacy and Harty shook hands with their new employees, who received Meredith-branded canvas gift bags. The slogan: “Be Bold. Together.”
“We’re in it together — that’s what we’re saying,” Harty said. “We came up with a little tag line. And what we were showing was that we were visible.”
In mid-February, a software update scrubbed the default Time Inc logo from the computers of the roughly 7,000 people who had become Meredith employees. And at the end of February, Meredith announced it had sold Time Inc UK — which comprises some 50 brands, including the design magazine Wallpaper — for an undisclosed sum to the British private equity firm Epiris Managers LLP. It has also begun phasing out Time Inc’s customer service centre in Tampa, Florida.
Many analysts and executives in the industry also expect Meredith to sell some of Time Inc’s news heavy titles, including Time, Sports Illustrated and Fortune.
“Meredith has had its sights on Time Inc for a number of years,” said Reed Phillips, a managing partner at the investment bank Oaklins DeSilva & Phillips. “And it has consistently taken the position that it is not interested in weeklies or men’s magazines.”
Harty said he has yet to decide the fate of the Time Inc magazines.
“No preconceived ideas that we’re going to sell anything,” he said. “But at the same time, as I like to say, everything is for sale at the right price.”
On April 24, Meredith will put aside — for one night, at least — its distaste for showiness by entering the realm of New York hype and glamour when it hosts the annual Time 100 Gala at Lincoln Center.
The company had a brush with being at the red-hot centre of media attention last year, when reporters scrutinised it for having accepted financial assistance from the Kochs. The coverage came as a surprise to a company accustomed to going about its business quietly.
“We weren’t ready for that, and we had to be,” Harty said. Meredith executives have insisted that the billionaire brothers — known for using their vast wealth and political connections to advance a libertarian brand of conservatism — will have no influence on editorial operations.
Most Meredith employees I encountered seemed reluctant to discuss the Time Inc deal, preferring to extol the company’s “collaborative” culture and the splendours of working more than 1,000 miles west of New York.
“Des Moines is so much more cultured and so much more to-do than most any New Yorker would ever imagine,” said Orr, who was the executive editor of Condé Nast Traveler before taking over Better Homes and Gardens in 2015. On the day of my visit, a Wood magazine editor was building a cabinet in the woodworking shop, and the scent of the banana oat muffins wafted out of a company kitchen. Nearby was a test garden filled with crab apple trees and native plants like the Pulsatilla and the Baptisia.
Nestled against a bend in the Raccoon River, the Meredith headquarters includes two buildings connected by a skybridge. The older structure, built in 1912, has a tower that once pumped water to cool the printing presses in the basement.
If this is the future of the media industry, it looked strangely like the agrarian past.
Lacy said he hoped Des Moines would become “a place where the best and brightest talent in the industry prefer to spend their career.” For now, the melding of Time Inc into the company means long hours ahead.
“There’s a lot of heads-down work to be done for 18 to 24 months,” Lacy said. “But when you’ve been at this for 116 years, 18 to 24 months isn’t very scary.”