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Meredith Corp (MDP) Q2 2019 Earnings Conference Call Transcript

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Meredith Corp (NYSE: MDP)
Q2 2019 Earnings Conference Call
Feb. 11, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, my name is Leandra and I will be your conference operator today. At this time, I would like to welcome everyone to Meredith's Fiscal 2019 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Mr. Mike Lovell, Investor Relations Director, you may begin your conference.

Mike Lovell -- Investor Relations

Good morning and thanks everyone for joining us. Our call today will begin with comments from President and Chief Executive Officer, Tom Harty, followed by Chief Financial Officer, Joe Ceryanec. Then we'll turn the call over to your questions. Also on the line with us today are National Media Group President, Jon Werther; and Local Media Group President, Patrick McCreery. An archive of the call will be available on our website later this afternoon. Remarks this morning will include forward-looking statements and actual results may differ from our forecasts. Some of the reasons are described at the end of our news release that was issued earlier this morning and in some of our SEC filings.

Certain financial measures that we're discussing on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of special items. Reconciliations of these non-GAAP measures are included in our earnings release which is available on the Investor Relations section of our website. With that, Tom will begin.

Thomas Harty -- President, Chief Executive Officer, Director

Thank you very much, Mike, and good morning , everyone. I hope you've had the opportunity to see our news release that was issued earlier this morning. I'll begin with a quick review of our fiscal 2019 first half accomplishments and early second half revenue outlook. Then I'll update you on the integration of Time, Inc. and the strategies that we're pursuing to maximize our new and exciting national media portfolio. CFO, Joe Ceryanec will then provide detail on our very robust Local Media Group operations, discuss our fiscal 2019 second quarter and first half results, and provide a financial outlook for both our third quarter and full year ending June 30th, 2019.

Before I begin, I want to acknowledge the many contributions made by Steve Lacy on behalf of the Meredith Corporation during his 21 years of service. As many of you know, Steve will retire as Executive Chairman on March 31st, but continue to serve as Chairman of the Board. Steve was a great steward of our shareholders' investment, doubling revenue and tripling profit during his tenure at Meredith. On behalf of all of us, I want to say thank you. On a lighter note, Steve participated in 84 of these quarterly conference calls and I'm sure he appreciates someone else doing it for a change.

As we turn the corner into early calendar 2019, we are particularly excited about calendar 2019 advertising trends, where we see significant improvement in both our national and local media groups. In our National Media Group, we see total comparable advertising revenue pacing down in the mid-single digits. This is a significant improvement compared to what we experienced in calendar 2018 as we work to integrate the Time, Inc. titles. It's also in line with Meredith's historical and expected long-term performance.

In our Local Media Group, non-political advertising revenue is pacing up in the mid-single digits, driven by the professional services, media and furnishing categories. These categories represent more than 30% of non-political advertising revenues and are all up in the double digits, offsetting declines in automotive that are driven by lower spending for manufacturers.

Turning to our performance in the first half of fiscal 2019, we are pleased to deliver stronger than expected revenue, profit and related margin performance. Of note, National Media Group margins significantly improved, reflecting our enhanced brand portfolio and ongoing work to drive efficiencies.

Local Media Group margins improved as well, reflecting the record $102 million of political advertising revenues we generated. Additionally, we generated $638 million of consumer-related revenue accounting for 40% of Meredith's total revenues. This revenue is contractual in nature, highly stable and recurring. We also negotiated several key agreements to position Meredith for future growth and as a result have strengthened our balance sheet.

Of note, our Local Media Group entered into multi-year agreements with Comcast and Cox Communications to continue carrying our broadcast in the markets we share. At the same time, we renewed all five of our FOX affiliations, securing carriage in these markets in the fiscal year 2023.

We are pleased with the terms and conditions of all of these agreements. We renewed our robust brand licensing program at Walmart through our fiscal year 2021. We closed on the sale of the Time and FORTUNE media brands for a combined $340 million in cash. We used those proceeds along with cash generated from our operations to repay $700 million of our debt. We are well on our way to delivering our $1 billion debt reduction goal this year.

Finally, we continue to grow the amount of cash returned to our shareholders by raising the regular dividend by 5.5% to $2.30 on an annualized basis. We now paid dividends for 72 consecutive years and raised them for 26 straight years. Importantly, since launching our total shareholder return strategy in 2011, we've moved -- we've more than doubled our dividend and delivered a 15% average annual return for our shareholders.

Now let's turn to review of our Group operating performance, beginning with our National Media Group. Fiscal 2019 second quarter National Media Group operating profit was $45 million. Excluding special items, operating profit was $69 million and adjusted EBITDA grew to $131 million. Revenues rose by 140% to $591 million, these results exclude discontinued operations.

Fiscal 2019 first half National Media Group operating profit was $63 million. Excluding special items, operating profit was $100 million and adjusted EBITDA grew to $218 million. Revenues rose by more than 130% to $1.1 billion. It was just over one year ago when we closed on the acquisition of Time, Inc., since then, we've made significant progress on the five key strategic initiatives that we put in place to integrate and maximize our new portfolio.

To start, we said we would improve the advertising performance of the acquired Time, Inc. properties to Meredith's historical levels over time. To accomplish this, we executed three key initiatives. First, we reorganized the way these brands went to market and implemented Meredith's sales and operating strategies, standards and disciplines across the portfolio. Second, we invested in sales and marketing resources and activities. Third, we aggressively marketed the new portfolio resulting in increased access to new advertising and marketing budgets even though most clients had already allocated the bulk of their calendar 2018 advertising budgets.

As calendar 2018 progressed, we kept at it, securing victories, large and small along the way. These moves earned our brand several agency preferred partnerships and access to calendar 2019 advertising campaigns. As a result, as we look into early calendar 2019 advertising performance, we see comparable print advertising revenue performance down in the mid-single digits. This is true with brands in both the legacy Meredith and legacy Time, Inc. portfolios.

Next, we said we would raise the profit margins of the acquired Time,Inc. digital properties to Meredith's high levels. I'm pleased to say that we are accomplishing our goal in a challenging digital advertising environment. Our new digital platform combines premium content from the most trusted brands in media and deep engagement with our audience of 140 million unique visitors per month which rich insights that help our advertising partners drive a strong return on their investment.

We are well positioned to benefit from fast growing advertising platforms including native, video, shopper marketing, programmatic and social. Our digital activities today operate at margins similar to the National Media Group as a whole and we expect revenue and margin growth in fiscal 2019, compared to the prior year. Third, we committed to growing our high margin consumer related revenue by leveraging our expanded brand portfolio. We are executing this plan on a number of fronts. For example, we are cross promoting titles to increase revenue and lower subscription acquisition cost, leveraging affinity marketer synapse including expanding beyond traditional magazine subscriptions and growing our brand licensing business, which is ranked as the world's second largest.

This includes having recently renewed our industry-leading licensing agreement for the Better Homes and Gardens line of products with Walmart. We are also seeing enhanced digital first opportunities, including e-commerce and affiliate content marketing, where we generate revenues from lead generation and paid products such as membership programs, built around our brands. As a result, during the second quarter of fiscal 2019, consumer related revenue accounted for 44% of total National Media Group revenue.

Fourth, we announced a comprehensive review of our media portfolio and began a process to divest brands and businesses not core to our business. Since then we've realized proceeds of $340 million through the sales of the Time and FORTUNE media brands and we've used the proceeds from the debt reduction I mentioned earlier. Let me add that these were very attractive prices. We anticipate agreements to sell the Sports Illustrated and MONEY brands, along with our 60% equity investment in Viant to be finalized in fiscal 2019.

Finally, we've identified at least $550 million of annual cost synergies, we expect to realize by the end of our first two years of combined operations and we began the work to harvest those savings. For example, during calendar 2018, we put in place and executed against most aspects of the integration. For example, we fully integrated our HR, finance, legal and IT functions. From an operation standpoint, we've transitioned all advertising production, magazine subscription and consumer marketing functions to Meredith's footprint.

We expect approximately half of the identified savings to come from already announced reductions in headcount, with the remainder of the savings coming from vendor contracts, real estate and other non-headcount-related activities. With that review of our National Media Group performance, I'll turn it over to CFO, Joe Ceryanec, to update our Local Media Group performance, summarize our fiscal 2019 second quarter and first half results and update our financial outlook.

Joe Ceryanec -- Chief Financial Officer

Thanks, Tom, and good morning, everybody. Fiscal 2019 second quarter Local Media Group operating profit was $107 million, adjusted EBITDA was $116 million and revenues grew to $262 million. All of these metrics were records for a Fiscal Second Quarter. Fiscal 2019 first half, Local Media Group operating profit was $174 million, adjusted EBITDA was $194 million and revenues grew to $477 million, also all records.

Our second quarter performance was led by political advertising revenues of $66 million. That was 65% higher than what we delivered during the last political cycle in the second quarter of our fiscal 2017. Political spending was particularly robust in the Phoenix, Las Vegas, St. Louis and Kansas City markets, primarily due to very competitive races at the federal, state and local levels.

Non-political ad revenues grew 16% to $120 million, including the addition of MNI Targeted Media, which delivered revenue growth of 18%. We're excited about the opportunity that MNI brings to our Local Media Group. MNI was a subsidiary within Time, Inc. and is a media planning and buying company with 50 years of experience in targeted marketing at the local, regional and national levels. We're in the process of expanding its scale and improving its margins. Consumer-related revenues at our Local Media Group increased 18% to $74 million, due to growth in fees from cable and satellite television operators. These increases were partially offset by higher payments to affiliated networks.

Our consumer connection remains very strong. The number of pay-TV subscribers across our markets grew in the second quarter of 2018, compared to the year ago period, driven by growth in OTT subscribers. Additionally, our stations delivered strong financial performance during the November ratings period, which stations in 8 of our 12 markets ranking number one or number two in morning or late news.

As Tom mentioned, we renewed retransmission agreements with Comcast and Cox, representing 35% of our subscriber base and extended our FOX affiliation agreements into fiscal 2023. We expect to renew another 60% of our MVPD contracts in fiscal 2020, while our CBS and NBC affiliation agreements are in place until mid calendar 2020. As a result, we expect to see an increase in net retransmission process profit contribution through fiscal 2020.

With that, I'll review -- with that review of our Local Media Group performance, I'll summarize our fiscal 2019 second quarter financial performance.

Total company revenues from continuing operations more than doubled to $854 million, total advertising revenues, doubled to $489 million, and consumer-related revenues also doubled to $337 million. Earnings from continuing operations, including special items in both periods, were $87 million, compared to $159 million last year.

As you may recall, the prior year reflected a benefit of $133 million from tax reform. We recorded $5 million of net special items after tax in the second quarter of fiscal 2019 and earnings per share from continuing operations were 1.43. Excluding special items in both periods, earnings from continuing operations increased to $92 million in the second quarter of fiscal '19, compared to $52 million in the prior-year. Earnings per share increased to $1.53, compared to $1.14. And adjusted EBITDA more than doubled to $231 million, compared to $85 million. And adjusted earnings per share increased to $2.55, compared to $1.34.

As detailed in our press release issued this morning, we've repaid a total of $700 million of our debt since closing on the Time, Inc. acquisition. This includes $573 million of our Term Loan B and $127 million of our bonds. This brings us to 70% of the way toward our goal of paying down 1 billion of debt during our current fiscal year. Our net debt stood at 2.4 billion at January 31, 2019.

And finally, just last week, we raised Meredith's regular dividend by 5.5% to $2.30 on an annualized basis. This marks our 26th straight year of dividend increases for Meredith and the company has paid an annual dividend for 72 consecutive years, and we're proud to be a dividend Aristocrat. Since launching our total shareholder return strategy in October of 2011, we've increased our dividend of more than 125% and delivered an average annual return of 15%.

Now turning to our outlook. For the full year fiscal 2019, we expect the total company revenues will range from 3 billion to 3.2 billion, which is unchanged from our original guidance communicated on August 10, 2018. Earnings from continuing operations to range from $187 million to $207 million and from $2.40 to $2.82 on a per share basis. This includes a net after tax charge for the first half special items of $18 million.

Our actual results for the full fiscal year may include additional special items that have not yet occurred and are difficult to predict with reasonable certainty. Excluding special items,, we continue to expect earnings from continuing operations to range from $205 million to $225 million or $2.78 to $3.20 on a per share basis. This is also unchanged from our original guidance we communicated in August.

Finally, we expect adjusted EBITDA to range from $720 million to $750 million, which again is unchanged from our original guidance. And adjusted earnings per share to range from $6.89 to $7.31.

Now looking at the third quarter of fiscal 2019, we expect total company revenues will range from $715 million to $735 million. That includes National Media Group revenues to range from $530 million to$540 million, and Local Media Group revenues to range from $185 million to $195 million.

Earnings from continuing operations to range from $29 million to $36 million and from $0.21 to $0.36 on a per share basis. Again, these ranges do not include special items and actual results may include special items that have not occurred and again are difficult to predict. And finally, we expect adjusted EBITDA to range from $145 million to $155 million, and adjusted earnings per share to range from $1.25 to $1.41.

Now, I will turn it back to Tom to conclude our comments and lead the Q&A.

Thomas Harty -- President, Chief Executive Officer, Director

Thank you very much, Joe. Let me close our formal comments this morning with what we continue to believe is a compelling investment thesis for the new Meredith Corporation. The diverse set of businesses and brands that we now own and operate produce consistently strong cash flows and is driven by trusted national brands with an unrivaled reach to American women, particularly millennials and attractive group of television stations in large and fast growing markets. A highly profitable and growing digital business now of meaningful scale, high margin consumer revenue activities that are based on both our strong national and local brands, and a strong and proven management team with a very successful record of integrating acquisitions, a history of generating strong cash flows and growing shareholder value over time.

Without a doubt, calendar 2018 will go down as a transformational and perhaps the busiest year in the history of the Meredith Corporation. I couldn't be prouder of the effort turned in by our operating groups and our corporate functions. I know I speak for our Board, Steve and our senior management team in thanking and congratulating everyone for the long hours and hard work. While there is still more to be accomplished, we are very proud to be delivering on our plan. This includes the stronger trends we are seeing an advertising performance, in both our national and local media groups along with the progress we're making toward our debt reduction goals.

Now, we'd be happy to answer any questions you might have this morning.

Questions and Answers:

Operator

(Operator Instructions)

Your first question comes from the line of Dan Kurnos with Benchmark. Your line is open.

Thomas Harty -- President, Chief Executive Officer, Director

Good morning, Dan.

Dan Kurnos -- Benchmark -- Analyst

Good morning, there we go, just like Steve. So just a couple of questions here. The tough since we don't have real clean comps yet, but can you just clarify in the quarter itself, how national print and digital did and then on the Q1 guide. Just again to be clear, Tom, you talked about improving digital trends and you said you were pacing, I guess in this quarter down mid-single digits in line with historical Meredith. So I'm just trying to line up exactly if that foots and then maybe what the sub trends were in the other segments to get to your numbers?

Thomas Harty -- President, Chief Executive Officer, Director

Yes, I'll have Joe dig out the breakdown for print going backwards. But overall, I have the numbers right here, Dan, if you looked at the National Media Group, combined print and digital performance in Q1. And we've talked about this before, we were talking about sequential quarter-over-quarter improvement. So in Q1, combined, we were down 12%. In Q2, we were down 10% and that includes both portfolios combined. And now we're giving guidance, that will be down about mid-single digits. So, significant improvement and positive outlook for Q3. And I don't know Joe, if you have any...

Joe Ceryanec -- Chief Financial Officer

Yeah. Well -- and if we just break our print, Dan, in Q1 -- fiscal Q1 and fiscal Q2, the print combined was down kind of in the mid-teens. As Tom said, Q2 was a little better than Q1. And now in Q3, we're looking at print down in kind of the mid to high teens. So -- I'm sorry mid to high single digit.

Thomas Harty -- President, Chief Executive Officer, Director

So we're looking for about 800 basis point improvement in Q3 versus Q2.

Joe Ceryanec -- Chief Financial Officer

And the Time portfolio and the Meredith portfolio both kind of in line with as we've talked about historical Meredith trend. So a real significant improvement as we moved into Q3 on the Time portfolio, especially. And you had a question to follow up on the sub counts?

Dan Kurnos -- Benchmark -- Analyst

Yeah, just on the national side, I'm just trying to parse out the consumer related. So I'm just curious if you have any incremental color on how subscription and newsstand did in the quarter and how they're kind of pacing going forward?

Thomas Harty -- President, Chief Executive Officer, Director

Joe can dig out there if we have the numbers particularly, but the sub counts are rock solid and consistently about the same. We have about 42 million print subscribers and that's been consistent year-over-year when you combine the two portfolios. Newsstand has been a little weaker, and this is really that we're bucking some industry trends with shopping visits and grocery stores down, so we're seeing a little bit more headwinds in the newsstand, but it represents a very small percentage of our total consumer revenue.

Joe Ceryanec -- Chief Financial Officer

Yeah, I would say, Dan, what we're seeing and again the numbers are not comparable in Q2. Those start becoming more comparable into Q3 obviously, but we're seeing subscription revenue fairly flattish, maybe up just a titch, and we're seeing, as Tom said, newsstand is down a few percent.

Dan Kurnos -- Benchmark -- Analyst

Got it. And just last one from me if I could. Just on your local pacings, I was just a little bit confused, is that -- I'm assuming the up mid single, is that with consumer related? Is that with retrans or is that actually (inaudible) is that just pure core?

Joe Ceryanec -- Chief Financial Officer

That's pure core advertising. And that'll be... (Multiple Speakers)

Dan Kurnos -- Benchmark -- Analyst

And is that including? Is that organic or is that including the Time stuff that you acquired?

Joe Ceryanec -- Chief Financial Officer

That's organic, Dan. We do benefit this quarter from the Super Bowl being heavy CBS. So we're pacing probably ahead of our comp set, but we -- even it's never exact, but trying to remove the effect of the Super Bowl, we would still be pacing up probably low single-digits organically.

Dan Kurnos -- Benchmark -- Analyst

Perfect. (inaudible)

Thomas Harty -- President, Chief Executive Officer, Director

And our guidance is up mid single.

Dan Kurnos -- Benchmark -- Analyst

Got it. All right, thanks guys. I appreciate it.

Operator

Your next question comes from the line of Kyle Evans with Stephens. Your line is open.

Thomas Harty -- President, Chief Executive Officer, Director

Good morning, Kyle.

Kyle Evans -- Stephens -- Analyst

Hey, how are you? A quick follow-up on that last question. I just want to make sure that MNI, I think you said was up 18% in 2Q. And I want to make sure that when we're talking about core in LMG that we're not including that?

Joe Ceryanec -- Chief Financial Officer

MNI is going to run through the consumer line. No, third-party sales. Okay?

Thomas Harty -- President, Chief Executive Officer, Director

MNI is up 18% in Q2.

Kyle Evans -- Stephens -- Analyst

Yeah, I don't have third-party sales broken out, because I don't have a Q.

Joe Ceryanec -- Chief Financial Officer

Well, you will have it later today, Kyle.

Kyle Evans -- Stephens -- Analyst

Awesome.

Thomas Harty -- President, Chief Executive Officer, Director

Q is coming out, yeah.

Kyle Evans -- Stephens -- Analyst

Okay. But just to be clear, that's...

Joe Ceryanec -- Chief Financial Officer

Yeah, the -- just to be clear, back to Dan's question, the local non-political ad pacing up mid single digits is truly organic. It does not include MNI.

Kyle Evans -- Stephens -- Analyst

Okay, great. You guys -- the corporate expenses were down pretty significantly quarter-over-quarter. Is that all synergy, is there some seasonality there and kind of what's the outlook for the second half of the year on that line and maybe even -- look forward into fiscal '20?

Joe Ceryanec -- Chief Financial Officer

It is synergies coming in Kyle, in corporate, a lot of our facilities, a lot of the -- what I'll call shared service functions, IT, accounting finance run through there. And that's a good chunk of it. And I think for the next two quarters, we'll probably see similar to maybe slightly reduced corporate expenses. Now, if you're looking at the -- without special items, you had a lot of transaction costs in there, but we pull those out for special items.

Kyle Evans -- Stephens -- Analyst

And you gave us those in the tables back too.

Joe Ceryanec -- Chief Financial Officer

Yeah, they're in the tables.

Kyle Evans -- Stephens -- Analyst

The -- you mentioned that you have 60% renewing on retrans in fiscal '20.

Joe Ceryanec -- Chief Financial Officer

Yeah.

Kyle Evans -- Stephens -- Analyst

Could you give us the cadence across the year there, so we know when to kind of look for percent per month increases?

Thomas Harty -- President, Chief Executive Officer, Director

Joe's digging it out.

Joe Ceryanec -- Chief Financial Officer

Hold on.

Kyle Evans -- Stephens -- Analyst

And maybe just while you're shuffling papers there, also just kind of a long-term net retrans growth comment.

Thomas Harty -- President, Chief Executive Officer, Director

Yes, we -- longer term, we believe that net retrans will grow kind of that mid-single digits, mid-to-single high digits longer term, that's our stated hypothesis going forward.

Kyle Evans -- Stephens -- Analyst

And the Fox renewal didn't caused that to change one way or the other.

Thomas Harty -- President, Chief Executive Officer, Director

No, we were very pleased with the Fox renewal.

Joe Ceryanec -- Chief Financial Officer

Yeah, so Kyle, as I'm looking at the MVPDs that renew, we've got about 14 -- 28% of renewing in the first half of the calendar year. So, not quite half and that's going to include dish needing a new charter. And then later in the year, the biggest MVPD, which is AT&T DirecTV, which is almost the other half is in May. So almost toward the end of fiscal '20. So about half of the 60% in the first half of the year and the other half toward the end of the fiscal year.

Kyle Evans -- Stephens -- Analyst

Great. Lastly, I know we're not going to talk about legacy, you warned me off that last quarter. But maybe just some very high level commentary on how people is performing. I think maybe even some of us that follow Time as a stand-alone company may have underestimated the importance of that title. And that's my last question. Thanks.

Thomas Harty -- President, Chief Executive Officer, Director

Yeah, people is improving across the portfolio. So we're seeing the same improvement that we're seeing. I talked about 800 basis point improvement. Quarter-over-quarter, we're seeing the same kind of improvement in people also. So this is -- we've got some titles now on the Time legacy side that are actually up year-over-year, which we're excited about. But when you take it and blend it all together, as I said before, the whole portfolio is kind of performing about the same. When you look back at the -- when they had a really poor performance, when they went through the reorganization a couple of years ago, you could point at the portfolio and see the brand is performing the same. So we're seeing that recovery come back the same way.

Kyle Evans -- Stephens -- Analyst

Thank you.

Operator

Your next question comes from the line of Craig Huber with Huber Research Partners. Your line is open.

Thomas Harty -- President, Chief Executive Officer, Director

Good morning, Craig.

Craig Huber -- Huber Research Partners -- Analyst

Yes. Good morning. Hey, good morning. Thank you very much. Just a few questions if I could. Maybe we could start out with digital. These past three quarters -- the past two quarters, plus the current quarter we're in right now, digital ad revenue percent change year-over-year, if you could just give us that, you gave us the point. Thank you for that.

Thomas Harty -- President, Chief Executive Officer, Director

The last two quarters, I know, that our digital performance is basically flat from a digital perspective advertising on a comparable basis, I don't have the prior quarter...

Joe Ceryanec -- Chief Financial Officer

Yeah, Q1 was up just a titch, Q2 was flat and right now, we're flattish in Q3 as well.

Thomas Harty -- President, Chief Executive Officer, Director

Yeah. And when we look at the performance, when we benchmark ourselves against our competitors, which we would call premium publishers in the digital space, we believe we're outperforming that we believe, a lot of our competitors are down double-digits in that space.

Craig Huber -- Huber Research Partners -- Analyst

And then also your long-term guidance I guess for next year, the bit $1 billion EBITDA target. What are you thinking for that year embedded in that target for magazine advertising percent change year-over-year and also the circulation piece of it. What's your sort of outlook there that's embedded in that $1 billion number? So I assume those are the two big variables here in order to get to that number. I assume you're pretty darn comfortable with your $550 million cost save...

Thomas Harty -- President, Chief Executive Officer, Director

Yeah. Craig, I'd just like to first correct you that we haven't given the guidance number yet for next fiscal year. But the $1 billion is stated goal of ours. And as we move now into our budgeting process, we're going to take a look at and we'll obviously be giving guidance at the end of this fiscal year. We're always weighing short term goals against our long-term strategy of investing in the business for sustained growth. And as we look out, we believe that we're going to hit that $1 billion goal, no matter what, worst case by fiscal 2021. But our hypothesis hasn't changed on where we believe print advertising is now is we're seeing the Time portfolio start to perform similar to the Meredith portfolio. We believe that print will decline in that kind of mid-single digit range. Digital will be up in that mid-single digit range, and overall, consumer revenue will continue to grow.

Craig Huber -- Huber Research Partners -- Analyst

And then also if I could just ask, what's your current thoughts on your appetite for TV station acquisitions in terms of how much capacity do you feel you have on the debt side. So I think in the most recent, I think you've said you have maybe $200 million or so capacity on that front. Thank you.

Thomas Harty -- President, Chief Executive Officer, Director

Well, I'll let Joe pile on here. But we look at every single broadcast deal that comes about. And we believe we have a lot of dry powder to be looking at acquisitions. We have before we -- a year ago, when we announced the Time, Inc. deal, we feel we had borrowing capacity, especially in the broadcast area. And that's one of the reasons why we've been so aggressively paying down debt to get more dry powder to take a look at new opportunities that come up.

Joe Ceryanec -- Chief Financial Officer

Yeah, I'd say the same thing Tom said. I mean, our focus is getting that leverage down to 2 times to give us more flexibility to whether it's on the broadcast side or the digital side, but just to start looking again at M&A.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thank you, guys.

Joe Ceryanec -- Chief Financial Officer

Thanks, Greg.

Thomas Harty -- President, Chief Executive Officer, Director

Thanks, Greg.

Operator

Your next question comes from the line of Jason Bazinet with Citi. Your line is open.

Thomas Harty -- President, Chief Executive Officer, Director

Good morning, Jason.

Jason Bazinet -- Citi -- Analyst

Good morning. I just had two broad questions. In terms of hitting the $1 billion of debt reduction by the end of the fiscal year, what -- is the number on the balance sheet and assets held for sale a reasonable proxy for what sort of proceeds you need from SI and money and the 60% stake in volume. And my second question is, has anything changed -- I think the buy side is very nervous about a slowing macroeconomy. And is there anything that you're seeing sort of in the broader ad ecosystem or the behavior of your clients? That sort of suggests that's a reasonable concern to have. Thanks.

Thomas Harty -- President, Chief Executive Officer, Director

I'll give Joe the first one related to the asset sales, and what's on the balance sheet.

Joe Ceryanec -- Chief Financial Officer

So I just did some quick math, Jason, that if you take the net assets plus liabilities, it's $170 million. I would say, we feel like we could get to our $1 billion goal. We would need some of that, maybe not all of it.

Jason Bazinet -- Citi -- Analyst

Okay.

Joe Ceryanec -- Chief Financial Officer

As Tom said, it's really SI, there's also website within SI that's fansided. So there's really two assets there, you've got money and you've got volume. So we continue to believe we're going to get those assets sold, we continue to believe the value on our balance sheet is reasonable, but I would say we need some of that, but maybe not all of it to get to our $1 billion. As you heard us say, we are at -- we were at 700 through the end of January. So about 300 to go.

Thomas Harty -- President, Chief Executive Officer, Director

Yeah. And on your broader question about the advertising trends, we are cautiously optimistic about calendar year 2019, especially if you just heard the guidance that we gave for our Q3, both sides of the business, the local and national, we're very optimistic right now. But obviously, advertising expenditures are totally correlated to the broader economy, but so far, we aren't seeing any of our advertisers signaling anything related to pulling back, but obviously we watch it as we go along.

Joe Ceryanec -- Chief Financial Officer

And I guess the one thing, Jason. When we compare the business today versus where we were 10 years ago. And one of the reasons we are stressing the consumer revenue, I mean, 44% of the revenue now on the National Media Group is coming through 10s of millions of individual transactions. We also now have the retrans and I don't have the percent in front of me, but a significant percentage of the local which 10 years ago we did not have. So to Tom's point, it still would be a hit to the advertising, no doubt, but we feel a lot better about the other sources of what revenue and being stickier and less cyclical in the event of a downturn.

Thomas Harty -- President, Chief Executive Officer, Director

Yeah. And you've been following us for a long period of time. And if you go back for the great recession and you looked at the National Media Group, the consumer side of the business, it was rock solid. We had -- we offer a lot of value to consumers at a very reasonable subscription price and we saw no fall-off in one of the worst economic times to pile on Joe's point.

Jason Bazinet -- Citi -- Analyst

Understood. Thank you very much.

Joe Ceryanec -- Chief Financial Officer

Thanks, Jason.

Operator

Your next question comes from the line of Marci Ryvicker with Wolfe Research. Your line is open.

Marci Ryvicker -- Wolfe Research -- Analyst

Thanks.

Thomas Harty -- President, Chief Executive Officer, Director

Good morning.

Marci Ryvicker -- Wolfe Research -- Analyst

A couple of questions on Local and then on National. First is on the Local segment. Can you talk about net retrans margins going forward now that you've signed FOX and Cox and Comcast. Are they relatively similar or are you expecting them to trend down over time?

Joe Ceryanec -- Chief Financial Officer

Marci, I'm looking at where we're at today and where we expect to be out kind of a year, and I think we're pretty stable. And what we're renewing is in line with where we're at and we're kind of in that net -- mid to high 40% that we're keeping.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. And are most of your reverse agreements the percent of retrans or a program (inaudible) or is it a combination?

Joe Ceryanec -- Chief Financial Officer

It's a combination. It's moving more toward a -- I'll call it an annual programming fee and getting away from a per sub rate.

Marci Ryvicker -- Wolfe Research -- Analyst

Got it. And then can you give some color on the auto category for the current year? I know there's a lot of noise in the Super Bowl and last year's Olympics, but any visibility on this category, either for the current quarter or even for the rest of the year?

Thomas Harty -- President, Chief Executive Officer, Director

Patrick, maybe I'll bring you in here to give some color on the automotive category as you see it.

Patrick McCreery -- President-Local Media Group

Yes, look, what we saw in the recent quarter was that auto was -- domestic was down less than 4 and dealer spending was up slightly though during the quarter. So I think what we're seeing is again cyclical, not systemic, mostly off by the manufacturing piece.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. And then just generally speaking, when you provide guidance for the current quarter, how much of your business is booked, both for national and for local?

Thomas Harty -- President, Chief Executive Officer, Director

On the national side, our business has changed a little bit because we've got weekly, as specifically people, which represents a large share of the advertising revenue. So usually, we're about two weeks out -- two to three weeks out with people. So it's changed fairly drastically when we used to look at the -- at the net of -- the legacy Meredith's perspective. So we've closed when the issues that we have involved with our fiscal third quarter, our February, March and April issues, our monthlies, our February and March issues are closed, and we're currently right in the mix of working in closing on our April issues. So we do have a -- we got a ways to go on people.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay.

Thomas Harty -- President, Chief Executive Officer, Director

On the Local Media Group side...

Marci Ryvicker -- Wolfe Research -- Analyst

And what about in Local?

Thomas Harty -- President, Chief Executive Officer, Director

Yeah, Local Media Group side, I would say about...

Joe Ceryanec -- Chief Financial Officer

I'm trying to remember our pacing...

Thomas Harty -- President, Chief Executive Officer, Director

I was going to say, Patrick, do you have a number on the pacing? Is is about 60%(ph), 70%(ph)?

Patrick McCreery -- President-Local Media Group

Yeah, that's about right, that's right.

Thomas Harty -- President, Chief Executive Officer, Director

And on digital, which is not an insignificant amount of advertising now, in the National Media Group, digital represents over $400 million. We're booking -- we book ads within two days. So we've still got a ways to go from a digital perspective also.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. Just want to make for Local, did you say 70% or 60%?

Joe Ceryanec -- Chief Financial Officer

Hang on Marci, we're pulling that. We get our pacing every Friday, we're pulling up the Friday email. We're 85% booked through last Friday for our third quarter.

Marci Ryvicker -- Wolfe Research -- Analyst

Got it. Thank you so much.

Thomas Harty -- President, Chief Executive Officer, Director

Thank you. And your next question comes from the line of Craig Huber with Huber Research Partners. Your line is open.

Patrick McCreery -- President-Local Media Group

Yeah, hi, I have a Follow-up question. On the -- on your cost savings target of the 550, can you give us what that annualized number was please at the end of December, if you could? Do you know what it is going to be at the end of March and end of June? What's the sort of cadence?

Joe Ceryanec -- Chief Financial Officer

I don't have it by quarter, Craig. I think as we've talked about before, because broadly, we had about $50 million that hit in fiscal '18 this year by the end of the year, we think we'll be at a run rate of -- have another 350 and that would carry about 150 into our fiscal '19. I don't have it broken down by quarter.

Craig Huber -- Huber Research Partners -- Analyst

Okay. And then also, I know you said it's preliminary here, and you had that long term aspirational target of $1 billion guidance for the whole company for EBITDA for fiscal 2020? But just to be clear here, obviously...

Thomas Harty -- President, Chief Executive Officer, Director

As I stated, Craig, we...

Craig Huber -- Huber Research Partners -- Analyst

I'm just curious, to be the -- one you hit here of course is extra invest -- potential investment spending and trying to bring in Time, Inc. that's obviously -- but big unknown here, I just want to be clear on that point, right?

Thomas Harty -- President, Chief Executive Officer, Director

Yes, as we're going -- investment spending is a question for next year. We're just entering our budget cycle as we kind of entered the end of our fiscal year and we're going to go to our Board and decide what we're going to set for next year as we look at our business. But longer term, our stated goal of $1 billion of EBITDA will be in sight in the next 18 to 24 months, if not sooner. And we're always balancing short term goals against longer-term targets of growing our business, and investing for sustainable growth.

Joe Ceryanec -- Chief Financial Officer

Yes, I guess I'd just pile on, Craig. As we look, we're just now entering, all our groups are coming in, and we're doing strategic plans, we go to our Board in May a budget and our three-year plan. And to Tom's point, it's a balance of ringing every last dollar of cost versus investing in the business. And the question we're going to be getting in six months is how you're going to grow the top line? And that's really what the focus is now is how do we get back to organic revenue growth. So that won't be a balance and again, we're not -- that's still our goal, but we'll guide at the end of the calendar year, where we think fiscal 2020 will be.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thanks for the...

Thomas Harty -- President, Chief Executive Officer, Director

Thanks, Craig.

Craig Huber -- Huber Research Partners -- Analyst

Clarification. Bye, bye.

Mike Lovell -- Investor Relations

So that concludes our call this morning, we appreciate everyone's time and we look forward to speaking to you again in roughly three months. Thank you very much.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 47 minutes

Call participants:

Mike Lovell -- Investor Relations

Thomas Harty -- President, Chief Executive Officer, Director

Joe Ceryanec -- Chief Financial Officer

Dan Kurnos -- Benchmark -- Analyst

Kyle Evans -- Stephens -- Analyst

Craig Huber -- Huber Research Partners -- Analyst

Jason Bazinet -- Citi -- Analyst

Marci Ryvicker -- Wolfe Research -- Analyst

Patrick McCreery -- President-Local Media Group

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