Meredith, Version 2.0

Q&A: CEO Lacy Is Revitalizing a Symbol of Old Media by Shuttering Stagnant Titles and Investing in Interactive

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NEW YORK (AdAge.com) -- The march of new media has forced everyone from Time Inc. to Hearst Corp. to Conde Nast Publications to re-examine priorities and the path ahead, but the future is especially unintuitive for a company like Meredith Corp. in Des Moines, Iowa. Its properties -- including storied magazines such as Ladies' Home Journal and more than a dozen network-TV affiliates -- all but define traditional media.
Stephen Lacy, president-CEO, Meredith
Stephen Lacy, president-CEO, Meredith

Since Stephen M. Lacy became president-CEO a year ago, however, he has expanded Meredith's capabilities and reimagined its priorities. So far he has overseen the acquisition of three interactive ad agencies and, just in June, the health search engine Healia. The company bought one magazine, the hip do-it-yourself book ReadyMade, then closed another one, long-struggling Child.

With these and other moves completed in his first 12 months, Advertising Age met Mr. Lacy in New York to talk over the outlook.

MediaWorks: Why was buying Healia important for Meredith, which has great traditional-media assets like Ladies' Home Journal?

Stephen Lacy: If you go back, [we were] really very heavily focused on the shelter category. The next thing, we decided strategically and we went about, was the whole parenthood space, between American Baby and the titles from Gruner & Jahr. Now where we're really focused, if you think of it as a third major area of content expertise, is pulling together and adding to what we do in the area of what we're now calling women's health and well-being. And that's where Healia fits. ... Along with some other things that we would like to acquire and put together, this gives us a start at pulling women's health content together for our consumers. And we're going to put this inside of all of our online brands and also run it as a separate stand-alone entity.

MediaWorks: Why was it important to close Child and what do you make of the future of the print-magazine business?

Mr. Lacy: It depends a great deal on the business that you're referring to, and I'm going to contrast the wide range of the spectrum -- Better Homes and Gardens to Child.

In the case of Better Homes and Gardens, we've been very successful at maintaining a 7.6 million rate and the readership is always in each measure really close to 40 million readers each and every month. But more importantly, we have successfully been able to move that brand from the big magazine to a major activity in vertical special-interest media, to brand licensing at retail, to a very large web property in BHG.com and to now a whole series of international editions in developing countries that have a growing middle class.

In the case of Child, as an example, we were the fourth owner. It'd been in existence about 25 years. It had a very narrow audience. One of the most beautiful magazines you'll ever see. But it had difficulty scaling up from a consumer point of view, and it was always the fourth or fifth book in a four- or five-book field, which when you move into a more difficult advertising environment, is the first to be cut. And from a practical point of view it's very, very difficult to look for long-term success and assume that we, as Meredith, are going to be more brilliant than the other three owners that have run the business for quite a long period of time. ...

The future of the print space has a great deal to do with the brand position of the brand supported in print. I think some of the really, really great brands -- whether you're in the newspaper space or you're in the magazine space -- that have successfully made themselves a bigger and bigger part of the day-to-day lives of the consumers they access will have a fine future.

There are a lot of marginal players that have improperly supported a rate base that was really based on an advertising sale. And over a period of time we'll see some of those players either move to a different platform or go away. That's probably, in all sincerity, good for the health of the business taken as a whole.

MediaWorks: What about the smaller niche titles? I'm thinking of ReadyMade in this case -- does it have the scale and resources to keep expanding its print audience?

Mr. Lacy: There are a couple key reasons that we were so interested in ReadyMade. Although very much in early developmental stage, we believe that it has the opportunity to become the Better Homes and Gardens for Gen X and the older end of Gen Y.

MediaWorks: At the same circulation level of Better Homes and Gardens?

Mr. Lacy: No...

MediaWorks: Or are those days gone in general?

Mr. Lacy: I don't believe that there will be 7 million-circulation anythings developed as we look down the future. But you can make a very, very profitable business if you get the right targeted audience and you get the circulation somewhere to between a million and a million and a half. Get to 10 times a year, deliver a thousand ad pages, you can have a very, very successful business. ... We also think ReadyMade is a good incubator to help our creative people understand about the right voice and the right way to reach out to what I like to say are the daughters of the baby-boom women that we've served for so many years.

MediaWorks: What's working best for you -- and what's proved trickiest?

Mr. Lacy: What is working best for us at this point in time are the operations of the web-based products based on our traditional brands. And we've been through, since I started on this in 1999, a lot of evolutions. The first thing we did was take those assets and move them away from the print brands and put them together in a unit. We're now seeing a much better collaboration among the creative resources to present a common face to the consumer. The growth in traffic and the 40% increase in revenue to those businesses prove that point from a monetary point of view. ...

In the middle of that, and I'm going to kind of stick with the online piece, is what we're doing at our local TV stations. Because for a period of time there was really very little revenue available. That business has had actually had a little bit over a 100% increase in revenue and traffic because it's really starting to catch on. ...

What I think is still the most challenging is executing against what we described and announced almost a year ago, which is Meredith 360. Meredith 360 is really the ability to sell across all of our assets and make them available to one of our marketing partners or our clients. And in the customer space, there is a lot of discussion about that but not as many executions as I would like to see. We've got a series of successes that we could talk about, but there are not as many of those programs as I would like because that is of course much easier for us to execute 10 huge programs than 50 smaller programs. ...

Inside the large corporate clients, where we're used to executing big print buys or big TV buys, it's more difficult to bring those parties together and really execute against the vision. I think we're going to move in that direction -- I don't think there'll be as many multiple agencies down the road, but today, it's a lot easier for us to organize ourselves than it is to really move that from a corporate point of view.
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