Discontinued Operations and Dispositions

9 Months Ended

Mar. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Dispositions

3. Discontinued Operations and Dispositions

Discontinued Operations

Shortly after the Company’s acquisition of Time Inc. in fiscal 2018, it announced the planned sale of certain brands and investments. Several of these brands and investments were held during fiscal 2020, and all sales were completed by the end of the third quarter of fiscal 2020. The revenues and expenses of these businesses were included in the gain (loss) from discontinued operations, net of income taxes line on the Condensed Consolidated Statements of Earnings (Loss) for the periods prior to their sales. The second step of the two-step transaction to sell the Sports Illustrated brand and the sale of Viant were completed in October 2019. There was a gain of $3.0 million recognized on these sales in the second quarter of fiscal 2020. Based on the selling price of Sports Illustrated, an impairment of goodwill for the Sports Illustrated brand of $4.2 million was recorded in the first quarter of fiscal 2020. FanSided was sold in January 2020 to an unrelated third party for $16.4 million, and the investment in Xumo

was sold to an unrelated third party in February 2020 for $37.4 million. There was a gain of $8.6 million recognized on these sales in the third quarter of fiscal 2020. Based on the selling price of FanSided, an impairment of goodwill for the FanSided brand of $11.8 million was recorded in the second quarter of fiscal 2020. All discontinued operations related to the national media segment.

Amounts applicable to discontinued operations on the Condensed Consolidated Statements of Earnings (Loss) were as follows:

Periods ended March 31, 2020	Three Months		Nine Months
(In millions except per share data)
Revenues	$	1.3	$	112.1
Costs and expenses	(1.0)		(108.6)
Impairment of goodwill	—		(16.0)
Interest expense	(0.1)		(2.1)
Gain on disposal	9.3		12.3
Earnings (loss) before income taxes	9.5		(2.3)
Income tax expense	(4.5)		(23.0)
Gain (loss) from discontinued operations, net of income taxes	$	5.0	$	(25.3)
Gain (loss) per share from discontinued operations
Basic	$	0.11	$	(0.56)
Diluted	0.11		(0.56)

The Company did not allocate interest to discontinued operations unless the interest was directly attributable to the discontinued operations or was interest on debt that was required to be repaid as a result of the disposal transaction. Interest expense included in discontinued operations reflected an estimate of interest expense related to the debt that was repaid with the proceeds from the sales of the businesses.

The discontinued operations did not have depreciation, amortization, or significant non-cash investing items for the nine months ended March 31, 2020. Share-based compensation expense related to discontinued operations was a benefit of $0.8 million for the nine months ended March 31, 2020, due to the forfeiture of stock compensation upon sale, and is included in the calculation of net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

Dispositions

In January 2021, Meredith sold the Travel + Leisure trademark and other related assets, including the Travel + Leisure travel clubs, to an unrelated third party for $100.0 million, which included $35.0 million of cash at closing and a non-interest bearing note receivable of $65.0 million. Payments on the note receivable are due annually starting on June 30, 2021, and will be completed by June 30, 2024. The $65.0 million note receivable was discounted by $3.7 million utilizing an interest rate reflecting the borrower’s specific credit risk. The sale resulted in a gain of $97.6 million, which was recorded in the acquisition, disposition, and restructuring related activities line on the Condensed Consolidated Statements of Earnings (Loss). Meredith entered into a 30-year royalty-free licensing relationship to license back the Travel + Leisure brand and continues to publish the magazine and operate the Travel + Leisure media platforms. Refer to Note 4 for additional information related to the intangible assets associated with this sale.

In October 2019, Meredith sold the Money brand to an unrelated third party for $24.9 million, which resulted in a gain on sale of $8.3 million. This gain was recorded in the acquisition, disposition, and restructuring related activities line on the Condensed Consolidated Statements of Earnings (Loss).

Meredith continued to provide accounting, finance, human resources, information technology, and certain support services for a short period of time under Transition Services Agreements (TSAs) with certain buyers. In addition, Meredith continues to provide consumer marketing, information technology, subscription fulfillment, paper purchasing, printing, and other services under Outsourcing Agreements (OAs) with certain buyers. The remaining OAs have terms of up to approximately three years, subject to renewal. Income of $0.4 million and $1.4 million for the three months ended, and $1.9 million and $7.4 million for the nine months ended March 31, 2021 and 2020, respectively, earned from performing services under the OAs was recorded in the other revenue line on the Condensed Consolidated Statements of Earnings (Loss). Income of less than $0.1 million and $1.8 million for the three months ended, and $0.1 million and $10.8 million for the nine months ended March 31, 2021 and 2020, respectively, earned from performing services under the TSAs was recorded as a reduction to the selling, general, and administrative expense line on the Condensed Consolidated Statements of Earnings (Loss).