Few companies adapt so well to the challenges and the opportunities of a changing world.
As we see Reader’s Digest Association seek Chapter 11 protection for the second time in three and a half years, one of the beneficiaries of its gradual decline has become something of a poster child for controlled and focussed strategic evolution. In the Wall Street Journal, Meredith, the company in question, that bought two of Reader’s Digests’ publications in recent years, was even hailed “The New King of Magazines” as it stands poised to merge with most of one of its swanky rivals, Time Inc. Some accolade, eh? So how did they achieve it?
Meredith Corp publishes, amongst many other titles, Better Homes & Gardens, one of the US’s most widely read magazines and the idea is to merge Meredith’s 18 titles with Time’s stable of “B List” publications: Time Magazine, Sports Illustrated and Fortune are not included in the deal. To put itself in this position Meredith (unlike Reader’s Digest that seems to me to have been rather overtaken by events, like so many businesses are) has evolved into a diversified publisher with fingers in traditional magazines, online publishing and licensing too. Evolving like this, and changing with the technological times, shows clarity of strategic thought and more than competent leadership and management; it is famed for its inclusive and aligning culture, for me a prerequisite of such clever corporate and market footwork.
Apart from recognising that it needed to grow, as there are strong benefits of scale in this business, Meredith also chose to focus on a customer group. That may seem such an obvious thing to do, but sadly that doesn’t mean that people do it much. It is always a smart decision to focus on a clear segment with demonstrable and stable demand and stick to it. Meredith chose to organise itself around adult women, who just happen to have a lot of disposable income. Interestingly, it’s the same segment who buy most novels too: women just seem to read more.
Meredith grew by acquisition: it bought American Baby group in 2002 and then, in 2005, it snapped up another four titles, including Family Circle and Parents. In 2006 it built Meredith Xcelerated Marketing around the acquisition of several marketing services businesses. After that, in what seems a rather well organised brand extension strategy, it licensed a range of home products, branded Better Homes, after one of its publications, for sale exclusively in Walmart. Since then they have continued to pick up bargains from Readers Digest, and others, who were not quite so prepared for such a rapidly changing world.
Meredith is a wonderful example of a business not only adapting to change, but using change as a means to overtake the competition. A bit like a F1 car passing through the rest of the field around a difficult bend. It isn’t easy to do; it requires some good positioning before getting to the bend, a great driver, and a very well organised pit crew. It seems that Meredith have them all. I am most impressed with the leadership that seemed to see all this coming, took action early, and was brave enough to start the acquisition process, in itself something that is fraught with problems, just look at Premier Foods.
If this deal with Time goes ahead the significant benefits of scale, both on the cost and revenue side, are likely to give Meredith even more market momentum, if that is possible: I’m expecting to see it continue to grow, and to dominate this market space, for some years to come.
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