Steve Lacy, the executive chairman of Meredith Corp., 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.
DES MOINES, Iowa — Steve Lacy greeted me in his office as if we were old friends.
The executive chairman of 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.
Steve Lacy, executive chairman
Career: Joined Meredith in 1998 as chief financial officer and was named president and CEO in 2006. Previously was president of CPA firm Deloitte Haskins & Sells.
Education: Earned both a Bachelor’s and Master’s degree in Accounting from Kansas State University
Compensation: $5.0 million for fiscal 2017
Source: NYT, S&P Global IQ
“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.”
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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 Meredith has tortoised the hare.
“You have to realize 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. It acquired Seattle-based Allrecipes.com in 2012 for $175 million.
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.
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 magazine, 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 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 percent 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 and Hearst 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.
The acquisition of Time Inc. would not have come about without an infusion of $650 million from Koch Equity Development, 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 will communicate more with shareholders, but will also help Harty with the process of integrating Time Inc.
“I’m very involved.”
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. U.K. — which comprises some 50 brands, including the design magazine Wallpaper — for an undisclosed sum to the British private equity firm Epiris.
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.”