Meredith Corp (MDP) Q4 2021 Earnings Call Transcript

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Meredith Corp (MDP)
Q4 2021 Earnings Call
Aug 12, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Meredith Fiscal 2021 Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mike Lovell, Investor Relations.

Mike Lovell -- Investor Relations Director

Good morning, everyone, and thanks for joining the call. I hope you've had the opportunity to access the press release and presentation posted to Meredith's website. We'll use the presentation to structure our remarks this morning. We will begin with comments from Chairman and Chief Executive Officer, Tom Harty; followed by Chief Financial Officer, Jason Frierott. 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 slide presentation, which is available in the Investor Relations section of meredith.com.

I also want to remind you that we will be discussing forward-looking information today and of our Safe Harbor disclaimer on Slide 2. Also as noted on Slide 3, we will be filing relevant materials with the Securities and Exchange Commission, including a proxy statement in connection with the announced sale of our Local Media Group to Gray Television. We encourage you to read these materials because they will contain important information about the company and proposed transaction. Finally, please note all figures refer to fiscal 2021 fourth quarter or full year and the comparable prior year period unless otherwise noted.

And now I will turn the call over to Tom, who will begin our prepared remarks, starting on Slide 4.

Tom Harty -- Chairman and Chief Executive Officer

Thank you, Mike, and good morning. Since last reporting quarterly results on April 29th, we are pleased to deliver strong progress on the strategy we've described in recent calls, net debt reduction, growth in digital advertising, advancement of our consumer focused capabilities, including performance marketing and paid products.

First, as it relates to net debt reduction, we announced the sale of our Local Media Group to Gray Television in May and accepted an offer of $2.825 billion in June. We believe that the sale will unlock meaningful shareholder value and accelerates all of our top financial priorities, including materially reducing our debt. This will free up capital to invest in future high potential digital opportunities, while also enabling capital returns to shareholders.

Second, as it relates to advancing our digital advertising and consumer focus capabilities. Digital advertising revenues were fourth quarter record and surpassed magazine advertising for the third consecutive quarter. On the consumer side, licensing and digital consumer revenues continued to deliver record results and the newsstand channel grew as well. In total, our business remains well balanced with half our revenues based on advertising and half from consumers.

With that introduction, let's dive deeper into the fourth quarter highlights. Starting with digital advertising. Our team delivered strong performance driven in part by strong pricing, partially offset by slight declines in traffic. We're seeing market and consumer trends beginning to normalize, particularly compared to the year-ago period, which was heavily impacted by the onset of COVID-19 pandemic. Our licensing and digital consumer-driven revenues also delivered double-digit growth and record fourth quarter results. Driving our digital performance is our trusted brands and large audience reach to 150 million consumers who visit our sites each month, our strong commercial partnerships and our proprietary technology platform.

As we've discussed on prior calls, our platform brings together all of our content, our unique taxonomy and first-party data. It provides a comprehensive view of the consumer and how they interact with our branded content and products, providing valuable insights and predictive trends. This holistic view and our analytic capabilities provide us with deep insights into user behavior we used to drive advertising and performance marketing dollars as well as our own content and product development strategy. For example, our performance marketing teams drove a nearly threefold increase in partner retail sales for the week during Amazon's June Prime Day through solid execution of custom content and promotion across our sites. We performed similarly for Walmart and Target, who also hosted digital sales events during our fiscal fourth quarter.

The combination of our influential brands focused on women, audience reach, commercial partnerships and proprietary platforms are differentiators in the market, which drive our growing and diversified digital revenue. Our magazine business is another differentiating factor. It's the largest in the United States and drive strong awareness for our brands across platforms. PEOPLE and Allrecipes are the industry's number one and number two brands and Better Homes & Gardens is number six. On an average, we sell one magazine via subscription and one via newsstand every second.

While advertising performance remained soft as the uncertain economic environment caused clients to be focused on bottom of the funnel spending, we continue to see strong consumer engagement and demand for our magazines, as evidenced by 7% growth in circulation revenues driven primarily by newsstand performance. Obviously, we have an easier comp as newsstand was impacted by the pandemic. However, I also want to highlight key points that make our newsstand specials, particularly attractive to consumers.

We react quickly to provide relevant in debt coverage of topics and trends that matter to our customers. We use high quality paper and we limit advertising pages. As a result, we were able to charge a premium price typically in excess of $10 per copy. In addition, consumer response rates to our subscription offers continue to be strong and we have been investing in channels that drive high lifetime value to capitalize on the opportunity. For example, we've more than doubled our direct mail offers in the fourth quarter and saw new subscription orders more than double as well. In total, our renewals were up 4% in the fourth quarter across all retention channels.

Looking more closely at our broadcasting portfolio, we delivered 50% growth in nonpolitical spot advertising revenues compared to the prior year period, driven by the professional services, automotive and gaming categories. We also benefited from continued growth in retransmission revenue. Finally, from a consolidated company standpoint, we delivered margin expansion. This was driven by topline growth, particularly from our digital and television businesses which have relatively higher fixed cost and thus drove positive cost leverage. Consistent with our financial priorities, we continue to make progress reducing net debt and our net leverage ratio, and grew our cash position sequentially from the third quarter.

With that fourth quarter summary, I want to step back and share some thoughts on our full year performance on Slide 5. It was equally remarkable and challenging, beginning under deep pressure due to COVID-19 and ending with the second highest adjusted EBITDA in Meredith's history, approximately $20 million shy of our all-time high. It was also a transformational year shaped by several significant strategic events. First, we crossed an important milestone with digital advertising revenue surpassing magazine for the first time in Meredith's history. Second, the agreement to sell our Local Media Group, as I mentioned earlier, for $2.825 billion, representing a 10 times valuation. The combination of these two events sets the stage for post-transaction Meredith to be positioned as a digital-first media company with low leverage and the capacity to invest in future organic and inorganic growth.

We delivered many operational milestones during the year as well. Our digital businesses delivered record revenues across the board, driven by our launch of the Meredith data studio, which brings together our valuable first-party data and predictive insights to help customers improve returns on their advertising investments. Both Meredith data [Phonetic] studio and our new digital platform have been key factors and large client expansion with Walmart and Kroger, among others.

Strong performance from our licensing relationships with Apple News Plus and Walmart and we retained our position as the world's second largest licensor for the sixth straight year according to the licensing global. Additionally, I'm pleased to announce that our multiyear partnership with Clorox, which includes our data and insights has recently been expanded to licensing with the launch of the Real Simple home cleaning collection available at the Container Store. Expanding performance marketing activities in fiscal 2021, in particular our relationship with Amazon, along with key retail partners, with Walmart, Target, and Nike. In total, our performance marketing efforts drove $1 billion in retail sales for our partners during the year.

While our magazine business endured COVID-19 all year, we gained more than 4 percentage points of magazine advertising market share, bringing our total of 36%. In addition, we sold nearly 20 million copies of our newsstands specials, 1 million more copies than the prior year. This is a substantial accomplishment considering many newsstands were closed or operated at reduced capacity due to COVID-19. Our Local Media Group also delivered record results, driven by record political advertising revenues and continued growth in retransmission consent revenues.

Finally, we delivered record free cash flow in fiscal 2021. That performance along with year-over-year growth in adjusted EBITDA enabled a greater than one turn reduction in our net debt ratio during the year to 3.7 times at June 30, 2021. In addition to the many performance metrics highlighted this morning, I'm pleased to share several recent social and environmental accomplishments. For example, we made Sustainability Accounting Standards Board disclosures available publicly for the first time and completed the Carbon Disclosure Projects Forest and Climate questionnaire for the second year. We earned gender fair certification for achieving standards in leadership and opportunity, employees policies, advertising communications, diversity reporting and social impact related to women impairment. We've been recognized by the 50/50 Women on Boards as having a gender balanced board. We create a business diversity and social responsibility program to facilitate alignment with suppliers that share our values.

We launched our good impressions program that brings Meredith's media and marketing, consultation services to bear for minority owned small businesses in the communities we serve. In summary, fiscal 2021 set the stage for a bright future. We have a large audience deeply engaged with our trusted brands, our digital businesses are delivering record performance, and the pending Local Media Group transaction will enhance our ability to invest in future growth and return capital to shareholders. We are tremendously excited about the opportunities that lie ahead.

With that, I'll turn it over to Jason.

Jason Frierott -- Vice President and Chief Financial Officer

Thanks, Tom. Starting on Slide 6. Looking at the fourth quarter '21 [Indecipherable] As Tom said, digital advertising was our strongest growth platform followed by nonpolitical spot advertising. While magazine advertising revenues declined 6%, that performance represented a sequential improvement compared to the third quarter.

Consumer related revenues were $355 million or 7%. Growth was driven by newsstand, licensing Local Media retransmission revenues, and digital consumer, which includes performance marketing, e-commerce and lead generation. These gains were partially offset by declines in affinity marketing revenues. Other revenue was $25 million, up 24%. This was primarily the result of gains related to custom publishing relationships, partially offset by project related declines. On a consolidated level, adjusted EBITDA grew 55% to $124 million. Stronger adjusted EBITDA performance reflects growing digital non-political advertising and consumer revenues, partially offset by lower magazine advertising revenues.

Fiscal '21 fourth quarter free cash flow was $51 million. Our prior year period comparison was a tough one, because collection significantly outpaced revenue in the COVID period. That said, our current quarter performance represents strong cash conversion driven by EBITDA improvement. Looking at the full year fiscal '21 consolidated performance, advertising related revenues grew 9%, driven by strong digital and political demand, partially offset by magazine advertising. Adjusting for magazine portfolio changes announced over the last year, total advertising revenues would have been up 11%.

Consumer-related revenues grew 2%, as retransmission, licensing and digital consumer-driven revenues increased. This growth was partially offset by magazine subscription results that were impacted by portfolio changes and our ongoing strategy to shift from agent sources toward more profitable direct to publisher subscribers. Adjusting for magazine portfolio changes announced over the last year, total consumer revenues would have been up 3%. Other revenue was $81 million, down 20%. This was primarily the result of sunsetting service agreements for sold brands and non-repeating project work. On a consolidated level, adjusted EBITDA grew 25% to $683 million. Stronger adjusted EBITDA performance reflects growing digital nonpolitical spot advertising and consumer revenues along with positive cost leverage, partially offset by lower magazine advertising revenues. One thing [Phonetic] is the churn positive cost leverage, I mean that revenues grew faster than expenses. Fiscal '21 full year free cash flow was a record $363 million, $112 million higher than the prior year period and in line with revenue and adjusted EBITDA growth.

Turning to Page 7. National Media Group revenues were $515 million, up 16%. Advertising-related revenues were $236 million, up 26%. Digital advertising grew 80% magazine advertising for the third straight quarter. Magazine advertising revenue performance was down 6%, represents a sequential improvement from the third quarter. As Tom mentioned, we saw a stronger fourth quarter spending in the prescription drug, travel and retail categories.

National Media Group consumer-related revenues grew 8%. Subscription revenues were [Technical Issues] our licensing and digital consumer-driven revenues, which include performance [Technical Issues] COVID- related disruptions across retail. Adjusted EBITDA was $93 million, up 95%, reflecting growing digital and consumer revenues along with positive cost leverage, partially offset by lower magazine advertising revenues.

Let me walk you through our regular digital KPIs on the right side of the page. Digital session declined 4% as we begin lapping the strong consumer numbers we saw last year at the start of COVID-19. This was particularly true of our food and home oriented sites. We delivered strong year-over-year growth across entertainment, travel and fashion sites. PEOPLE.com delivered the strongest year-over-year traffic growth as it continues to benefit from strong interest in celebrity and human interest stories. For context, fourth quarter sessions results were 15% higher in the fourth quarter of fiscal 2019.

From a revenue mix standpoint, the majority of digital advertising continues to be sold directly by our sales team. We view this as a key differentiator, highlighting advertiser demand for full suite of our offerings, including our powerful brands, premium content and first-party data, along with the flexibility that our digital platform offers. Looking at the bottom right of the page, our licensing and digital consumer revenue activities continue to gain traction, led by relationships, including those with Apple, Walmart and Amazon. To summarize, the national media performance, our digital platforms continue to perform strongly and combined with consumer-related performance drove adjusted EBITDA growth both for the fourth quarter and the year.

Turning to Slide 8 in Local Media Group results. Local Media Group revenues were $204 million, up 22%. Revenue growth was led by nonpolitical spot advertising and retransmission revenues, which were up 50% and 5%, respectively. Looking more closely at non-political spot advertising performance, we delivered revenue growth in all 25 nonpolitical spot categories we track. Of particular note, in the fourth quarter, we saw the strongest growth from the professional services, automotive and gaming categories, which were up 57% collectively.

Digital third-party and other revenues, which includes MNI Targeted Media grew 57%, driven by development of new categories including vaccine awareness and higher education. Adjusted EBITDA grew 44% to $55 billion, primarily driven by higher non-political spot advertising. Finally, as it relates to the announced sale of our Local Media Group to Gray Television, we made good progress toward obtaining regulatory approvals. This includes Gray announcing the sale of its Flint Michigan station last month. This is the only market overlap with Meredith's portfolio. Additionally, and not related to our Local Media Group sale, Gray announced last week it completed the acquisition of Quincy Media. We remain on track to close our transaction in the fourth quarter of calendar 2021 as expected.

Turning to Slide 9. Fourth quarter '21 free cash flow was $51 million, reflecting earnings growth, partially offset by professional fees incurred related to the Local Media Group transaction. We continue to make progress improving our net debt leverage ratio, which was 3.7 times as of June 30, 2021 compared to 5.3 times last year. Our revolving credit facility balance was 0 at June 30th, the fifth straight quarter it has remained unused.

We ended fiscal 2021 with $240 million of cash, an increase from March 31, 2021. These results include positive free cash flow generation. Additionally, during the quarter, we redeemed $67 million of warrants issued to our former preferred equity partners in conjunction with the Time, Inc. acquisition. We also incurred professional fees related to our proposed Local Media Group transaction.

Turning to Slide 10. When we announced the Local Media Group sale on May 3rd, we also discussed our intention to expand the financial reporting to three segments, starting in the first quarter of fiscal 2002, consistent with the way we began managing our business on July 1st of this year. These segments are Digital, Magazine, and the Local Media Group. The bar chart on the slide shows revenue for fiscal '21 as reported with two segments and on a pro forma basis with these new segments, with magazine accounting for approximately 65% of National Media Group revenues and digital accounting for approximately 35%. Looking at adjusted EBITDA directionally in fiscal '21, digital delivered roughly two thirds of the National Media Group's $392 million of adjusted EBITDA.

The table at the bottom right gives direction where revenue line items will be included. Our effort has focused on isolating our magazine business, while grouping our faster growing digital licensing and performance marketing businesses into our new Digital segment. We're excited about our future digital growth, the differentiated position we continue to develop and Meredith's continued transformation to a digital first company.

Now, I'll turn it back to Tom for closing thoughts, on Slide 11.

Tom Harty -- Chairman and Chief Executive Officer

Thanks, Jason. Our consumers today continue to focus on celebrity and entertainment news, house and home, food, style, health, fitness and parenting, as well as news and information about their local communities. These fundamental lifestyle categories are Meredith's cornerstone and even more relevant in today's market.

In closing, I want to leave you with four key thoughts. First, our digital advertising and consumer-related activities continue to deliver revenue growth, driven by our trusted in powerful brands focused on women, proprietary technology platform, strong commercial partnerships and our large audience reach. These assets are unique in the marketplace and form the basis for our differentiation.

Second, consumer demand for our magazines in the fourth quarter was stable even as advertising performance is uncertain. In addition to showcasing our beautiful photography and long-form storytelling, the magazine platform plays an important consumer awareness and marketing role for our powerful brands, including PEOPLE, Allrecipes, Better Homes & Gardens and Southern Living. Consider our presence in the home with 36 million active subscriptions and our position at retail with 2 million newsstand pockets nationwide, while advertising demand is variable and uncertain, our connection to the individual consumer remained stable and durable.

Third, we are on track to close the Local Media Group transaction in the fourth quarter of calendar 2021 as expected. We believe the sale will accelerate all of our top financial priorities, including materially reducing debt and freeing capital we invest in future high potential digital opportunities, while also enabling capital returns to shareholders.

Fourth, from an expense standpoint, we've seen evidence of inflation over the last six months consistent with others in our industry and across the broader economy, particularly paper, postage and employee-related expenses. Additionally, we anticipate incremental spending on strategic investments focused on fueling continued digital and consumer growth initiatives. As you know, we have a well-established track record of careful expense management and we will bring that discipline to bear to the extent possible. As we look into our fiscal 2022 first quarter compared to the prior year period, assuming no changes in trajectory due to COVID or other macro factors, we expect digital advertising revenues up in the 20% range, magazine advertising revenues down in the mid-teens, and Local Media Group nonpolitical spot advertising revenues to be up in the mid-teens.

As I said in my opening comments, fiscal 2021 was remarkable and challenging. I'm proud of the way we responded to the challenges and capitalized on opportunities to deliver the second highest adjusted EBITDA in the company's history. Our progress in fiscal 2021 set the stage for a bright future. We possess a large and deeply engaged audience across multiple media platform. Our proprietary digital and data analytics capabilities are delivering record performance and our pending Local Media Group transaction will enhance our ability to invest in future growth and return capital to shareholders.

In closing, I want to take a moment to sincerely thank our talented and creative employees who made our fiscal 2021 results possible. This includes our sales and marketing professionals, support groups, and editorial teams who earned more than 200 accolades and awards in fiscal 2021, including parents and food and wine were named National Magazine Award finalist by the American Society of magazine editor's. PEOPLE, Allrecipes and InStyle remains Adweek's hot list. And our stations in Kansas City, Saint Louis and Atlanta earned prestigious Edward R. Murrow Award with WGCL winning overall Excellence Award.

With that, we'll open up the remaining time for your questions. Operator, please begin with our first question.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of John Janedis with Wolfe Research.

John Janedis -- Wolfe Research -- Analyst

Thanks. Good morning, Tom.

Tom Harty -- Chairman and Chief Executive Officer

Good morning.

John Janedis -- Wolfe Research -- Analyst

You talked about the funnel. So can you give more color on the magazine business, it's going up against easier and easier comps and it looks like you're expecting some weakness still here. So what are you hearing from advertisers in key verticals? Is there any line of sight for the advertising bucket to improve to flattish or even possibly grow at some point or does the growth really come from the mix shift to digital? And then maybe big picture, when you talked about M&A and digital opportunities, can you give us more color on the types of things you find interesting and do they need to be accretive in the short-term?

Tom Harty -- Chairman and Chief Executive Officer

Yeah, great, John. Good morning. What we're -- obviously, there's always a lot of things that go into performance. But what we're hearing from clients on the print side, print is a great format for branding and longer-term brand building and with the uncertainty in the pandemic and looking for quicker results, there's been a shift -- a significant shift to digital, which is more bottom of the funnel, transactional in nature and that's why you're seeing a lot of growth in our performance marketing and it's happening across the industry. So we're cautiously optimistic that print is going to be recovering. We are seeing in certain categories in our travel, in our luxury, we're seeing signs of growth year-over-year coming up. But there are other areas where we hear -- we still hear supply chain issues, commodity price increases from some of our bigger packaged good client. So it is a little slower than we expected on the recovery, but we do expect a print recovery because we're down or down so far. But the digital performance has been outstanding. We continue to believe and bullish on our portfolio of digital brands and the growth that we see there. I think we're looking at is -- on the digital side, I'm going to ask Catherine to make some comments.

When we look at acquisitions and growth, we are really focused -- laser-focused on the consumer side of our digital business and looking to grow consumer revenue on our digital space. So I think that we're kind of focused on both, both internally and looking for acquisitions in that area. Catherine might make some comments on that.

Catherine Levene -- President of National Media

Hi. Yeah, Tom said it. So a balancing of our revenue streams in the digital side of the business, so that would be anything that has consumer revenue associated with it that could be subscription-based, it could be performance, marketing-based, so in that area. Video, we're growing our video nicely right now but we could accelerate that through acquisitions in that area. And the third area may be around different categories or audiences. So those are really the three areas that we look at. And from that perspective anything that we would add, that it's -- that it's around audiences would fit right into our strategic flywheel.

John Janedis -- Wolfe Research -- Analyst

Great. All right, thank you very much.

Tom Harty -- Chairman and Chief Executive Officer

Thanks, John.

Operator

Your next question comes from the line of Dan Kurnos with The Benchmark Company.

Daniel Kurnos -- he Benchmark Company -- Analyst

Great, thanks. Good morning. Let me press a little bit on the digital side here. You're September guidance actually relative to the backdrop and what we heard from other digital publishers is actually pretty impressive. A lot of other guys including one of our favorites that we like to talk to you about guided down sequentially from the June to September quarter given, obviously, increased mobility and the change in some of the trends. So can you just talk about, obviously, people had a tremendous quarter, continues to be strong. Can you just talk about what you're seeing and how we should think about digital relative to some of the COVID tailwinds starting to come out? Do you feel comfortable that this is a good base even as we see increased mobility from here?

Tom Harty -- Chairman and Chief Executive Officer

Yeah, I'm going to ask Catherine to dig a little deeper. But, Dan, to your point, I think obviously, our fourth quarter performance in digital 80% growth was off a lower base related to COVID. But when you start looking at our Q1, we were up last year. I think we were in the high '20s last year and now we're predicting again, so strong year-over-year growth. Catherine, do you want to make some comments.

Catherine Levene -- President of National Media

Yeah, I mean, it's a combination of our brands and a flight to quality from that perspective. Pricing, so we are still seeing significant increase in pricing year-over-year across the board between all of our products, and then of course, our data and platform is really driving a lot of significant scale in results right now. So we're able with our diverse ad products portfolio to deliver a variety of different solutions for advertisers.

Tom Harty -- Chairman and Chief Executive Officer

And while we look at our guide on advertising while print is a little softer, the strength of digital, we will be -- we will be up in overall advertising year-over-year.

Daniel Kurnos -- he Benchmark Company -- Analyst

Great. And then maybe just one for Jason or Tom you want to pitch in too, just on the margin about some of the cost inflation commentary. Obviously, some of the COVID costs coming back in as well. You had a really good June quarter 18% in NMG, I want to focus on NMG, obviously. Directionally, how do we think about kind of margins over the balance of this year relative to kind of how you finished off 2021, understanding obviously that there is going to be seasonality issue?

Jason Frierott -- Vice President and Chief Financial Officer

Yeah, I think, Dan, on the flip side you said there is some distant some lumpiness in there in terms of some of the costs comments that Tom made. I'd say that we have investments in kind of strategic digital investments. It will probably most likely sit there in terms of -- we're roughly half the cost. In terms of the print inflation, obviously, the U.S. Postal Service inflation rates, those types of things. But we're working to kind of offset that. So I wouldn't expect that to have a material change in terms of rate. And then broadly across everybody, this past year we had specific cost actions that we took that were temporary, that both were in the magazine business and the digital business. So I'd say that would kind of hit both businesses. But again with topline growth in the advertising side, we should be able to kind of hold that, obviously we're not giving guidance in terms of margin rates on the go forward, but those will be the common search [Phonetic] here.

Tom Harty -- Chairman and Chief Executive Officer

Yeah, I think, Dan, as you look at -- we're excited to come out when we report our first quarter with our new segments and to Jason's commentary in the script around the digital side of the business now approximately representing two-thirds of the National Media Group EBITDA for the prior year. You can start thinking about the margins related to that. You're probably thinking in the range of television margins related to our new digital segment as you go forward.

Daniel Kurnos -- he Benchmark Company -- Analyst

Awesome. Thanks for all the color, guys this quarter [Indecipherable]

Jason Frierott -- Vice President and Chief Financial Officer

Thanks.

Operator

[Operator Instructions] Your next question comes from the line of Jason Bazinet with Citi.

Jason Bazinet -- Citigroup -- Analyst

Thanks, good morning. I just had one question. At least relative to our estimates, the ads were about in line, but it's really the consumer side on the National segment that really did very well. Do you think that stimulus played a role in the quarterly strength in terms of some of that, probably licensing the newsstand and some of the other things you highlighted will be difficult to replicate? Or is your sense that stimulus is really a non event?

Tom Harty -- Chairman and Chief Executive Officer

I'm sure stimulus obviously is helping the broader economy, but I think this has been a long-term strategy of ours to build up, specifically our performance, marketing and e-commerce activities on our digital side of the business. I think our comments kind of speak for themselves where you start thinking about that we generated a $1 billion in retail sales from our activity associated with that and now getting a piece of that action. So we're bullish on that side of the house. And then even on the magazine side, we've talked about in the prior year the strength of the consumer demand for magazine. So in our premium publishing area for the year, we were up 10% in revenue in our premium publishing where we sell on the newsstand and sell close to 20 million copies, up 1 million copies. That was strong performance in the fourth quarter.

And then when you start thinking about -- we're looking to get more direct-to-publisher. We've been investing lifetime value subscriptions on the magazine side. The highest value is our direct to publisher where we have the direct relationship. And when we look at our fourth quarter direct-to-publisher, renewals were up about 5% and then direct-to-publisher new was up about 47%. So that really bodes well for magazine subscriptions at longer-term. The issues we've been having is related to advertising, but the consumer demand for both on our digital side and on our magazine side are really kind of outstanding.

Jason Bazinet -- Citigroup -- Analyst

That's great. Thank you.

Operator

And your next question comes from the line of Kyle Evans with Stephens.

Kyle Evans -- Stephens -- Analyst

Hi, thanks. Congrats on a very strong digital ad quarter. I think we're all sitting here trying to figure out where it's going to settle out with the 80% quarter going to a 20% guidance. Catherine, I know I'm not going to be able to just trick into guiding us on at bit. Maybe if you could just talk at a high level about where you think sessions will go over the next 12 months? Where pricing will go over the next 12 months? Where ad mix will go over the next 12 months? And then I've got a follow-up question. Thanks.

Catherine Levene -- President of National Media

Sure. I mean, I think sessions will sort of hover around likelihood in the flat to slightly up range to be slight down because I sort of focus in the flat because we had such a strong quarter over year last year. Pricing, it is up significantly for us. I think, and that's across the board in all of our ad businesses, so that goes from our direct business to our premium programmatic business, to our open programmatic business and that is again because of a lot of the investments we made over the years in data and our proprietary platform that is able to deliver real specific audiences against real context with trusted content. So I think there is pricing opportunities. I also think our performance marketing business has got a lot of growth left in it. We're making investments this year that return quite quickly for us. So I'd say those two big areas are the ones that I would look at. And finally, its our direct relationships with our clients that allow for a more multi-year, multi-million dollar really integrated partnership with large, large clients from the ones that Tom has mentioned on the phone today to others that are utilizing these new integrated products that we have. Hope that's helpful.

Kyle Evans -- Stephens -- Analyst

It is. Thank you. And I guess you're not going to get a whole lot of TV questions going forward. But I think I'll sneak one more in before it goes away. Just a quick update on your retrend sub counts, please? Thank you.

Tom Harty -- Chairman and Chief Executive Officer

Great, Patrick?

Patrick McCreery -- President of Local Media Group

Yeah, we're seeing the sub counts continue. We lose more cable and satellite and pick up more OTT on a regular basis. And I think, Jason, on the year -- for the year, what were we at for subs, flat to down one.

Jason Frierott -- Vice President and Chief Financial Officer

Yeah, I think its down one is the right ballpark.

Patrick McCreery -- President of Local Media Group

Yeah. And as a reminder, on our cadence, we have two major deals coming up at the end of the year.

Kyle Evans -- Stephens -- Analyst

While I've got you, do you have an OTT contribution for overall return subs.

Patrick McCreery -- President of Local Media Group

I don't have that breakout in front of me, but we can get that to you in the follow-ups.

Kyle Evans -- Stephens -- Analyst

Great, thank you.

Patrick McCreery -- President of Local Media Group

Sure.

Operator

There are no great question at this time.

Tom Harty -- Chairman and Chief Executive Officer

Great. Again, I want to thank everyone for your time today and your continued support. We look forward to talking to everyone again soon, the next quarter. Thank you.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Mike Lovell -- Investor Relations Director

Tom Harty -- Chairman and Chief Executive Officer

Jason Frierott -- Vice President and Chief Financial Officer

Catherine Levene -- President of National Media

Patrick McCreery -- President of Local Media Group

John Janedis -- Wolfe Research -- Analyst

Daniel Kurnos -- he Benchmark Company -- Analyst

Jason Bazinet -- Citigroup -- Analyst

Kyle Evans -- Stephens -- Analyst

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