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#<UNK>, <UNK> will take out the numbers and answer the question.
But maybe you would give a little color on our auto renewal program from a digital perspective and the prospects we have for that as we go forward.
And I think that is probably the part of circ that I am the most excited about as we look ahead.
Sure.
Yes, I think overall the great news on the circulation side of the business is that the consumer demand for our magazines in the print form continues to be very, very strong.
Response rates both in traditional direct mail and digital are performing very, very well.
And the strategies, as <UNK> mentioned, we're kind of working on two things.
We do bundle our products and we have this tremendous database with a lot of data.
So when you add in a new product like Shape or Martha Stewart, we are able to bundle those with our other titles and brands and offer them to consumers at very, very favorable rates.
And then <UNK> mentioned, we have talked about this before on other calls, our CRT program or our consumer revenue transformation, which is a three- to five-year program where we are really focusing in on auto renewal where consumers are giving us their credit card information and, like other products in the marketplace like Netflix, we are able to auto renew them.
And the early ---+ it takes a little bit of time because you have to run out how long the subscriptions are.
But it is very, very favorable and the lifetime value of a auto renewal subscription compared to a traditional check payment is very substantial.
So we are right in the middle of that and all of our efforts are growing very, very strong.
We could dig out the exact percentage, but we are scaling it ---+ again, we offer on a term perspective, we have done a lot of testing in the last 12 to 18 months.
I think we will be approaching somewhere close to 10% when we get done with this fiscal year from an auto renew perspective.
We have given two numbers in the past, about a third of our circulation transactions now are digital.
And as <UNK> said, the auto renewal part of that now has grown to be about 10% of the file.
And that is in all sincerity the greatest financial opportunity in circulation that I have seen in all the years that I have been here at Meredith.
It just eliminates the decision and causes a consumer to take a proactive step to turn it off.
And it is worth a lot of hard work and investment to grow that part as we go forward because, as <UNK> said, our readership and all of that is very, very strong.
So keeping them on the file and making more money from that part of the business is really a great future opportunity.
Bill, to give you some numbers kind of how we look at it in the P&L, from a GAAP reporting standpoint I think we were up 12%.
We said that was Martha and Shape coming in because we didn't have those last year and that really was the growth.
When you look at the organic you really have to break it into both the subscription and the newsstand.
And subscription for us has been quite flattish.
There we really manage though to the margin.
So if we can get rid of agent subscriptions and bring them online, the impact is probably lower revenue because you are getting less per copy, but you are getting a lot more profit because we are taking that to the bottom line and not paying agent commissions.
So I think of circ ---+ or subscription as flattish, but we are really ---+ we are seeing the decline.
Luckily it is not a big part of our business.
But that is on the newsstand, that continues to be very difficult.
And so when you blend the newsstand with the subscription down a few percent is what we are seeing on an organic basis.
But I would really chalk that up to the newsstand being very challenged.
And frankly, that is where we were at in Q2 and kind of our expectations as we look through the second half of the fiscal.
Okay.
Thank you.
Yes.
Well, I will let <UNK> speak to it because he lives it every day.
But I think at a high level ---+ and <UNK> mentioned this on the call ---+ we saw a lot of accounts going out for renewal with the agencies.
And we think that probably had a dampening effect on Q1.
That came back and we saw flattish in Q2 which is better than kind of our long-term thesis.
So I think a large part of it was really timing between Q1 and Q2, but I will let <UNK> share his thoughts.
Yes, I think to <UNK>'s point, we mentioned that in the last call that over the summer and the beginning of the year there were a lot of accounts that were up for review with agencies.
So we were waiting for the agencies to be selected, which did transpire.
And we saw our two biggest categories, our biggest advertising category is food.
And the second one is pharma, and they were both up from the quarter.
And pharma has really been driving in the last 12 months, we have been getting a lot of pharma business.
And also when we look at the calendar year period, which most of our advertisers are working on, we continue to take share.
We finished calendar 2015 in our core print business up 3 basis points when you compare that to the other magazines that we compete against.
And our food, which is our largest category, and pharma are both at record share heights for calendar 2015.
And we chop that up a lot to what we've mentioned before too is our print sales guarantee that we're out where we are guaranteeing sales lift.
And we think that that is driving our share gains in the marketplace.
Well, <UNK>my, I will answer that.
Basically we have ---+ as part of the settlement agreement we have an exclusivity period, we are not going to get into the detail on what properties.
As we mentioned, it is looking at a few broadcast stations.
As I am sure you are aware, there are some overlap markets that Media General and Nextstar has.
And so it gives us an opportunity to look at those properties and see if we can reach a deal as well as some of the digital properties as well.
And basically it is a fair market value, if you will, negotiation.
So, while we have a first look, obviously there is no pre-determined economics, so it is a deal ---+ if there is a deal it would have to be good for both Meredith and something that Media General and ultimately Nextstar feel is in their best interest as well.
But we are looking to undertake that pretty quickly over the next 30 to 60 days.
Well, <UNK>, I haven't (laughter), I'm not really looking forward to this, but started accumulating what we would have spent so far in January.
Obviously you can look at what we called out in the first quarter and the second quarter.
And I think combined it is probably close to $16 million in those two quarters.
We will have some more in January, but it is really going to be just legal fees, which I don't think will be that much.
So hopefully we have now capped that around call it maybe $17 million if there is another $1 million this quarter.
Again, I haven't ---+ we haven't asked the attorneys for their final bills yet.
The $60 million will be taxable, so I would just assume what our effective rate is will come off of that.
And then if you take the fees out of it, although a lot of those have already been paid in cash.
In the first quarter with the signing of the contract we had some banker fees that were payable, we had the fairness opinion that was delivered that was payable.
So a lot of that cash has actually already been paid.
But to answer your question, if you want to try and net the $60 million down, take the tax effect and then say $16 million or $17 million of expenses, many of which have been paid, but would be netted against that amount.
Does that help, <UNK>.
<UNK>, one last question because I got this on a call earlier and I just wanted to clarify.
I think you guys would realize this, but the $60 million we will book in our third-quarter, it will be below the line, we will call it out, obviously it is non-operating.
But the question I got was, did you take the bottom end of your guidance up because of that $60 million.
And the answer is absolutely not.
I mean, we will exclude that from the guidance, it is really the ongoing business that allowed us to take that guidance up.
So let me take kind of a kind cut at that, <UNK>, and then certainly would ask <UNK> to add color.
First of all, you are right about the ongoing growth of the digital business.
And we are not a long ways away from that growth exceeding the print declines, if you sort of kept it in kind of the mid-single-digit range, which it has been for either four or five years in a row now.
And obviously that is a big part of why we have been building out these multi-platform businesses.
And then the other two major drivers, one of them we already talked about was the auto renewal, the circulation business, that helps us get less dependent on agents and direct mail sources.
It also helps us get younger because they are digital.
And then the other part of it is the continued growth of our licensing, which you know is very, very high margin business.
So all that comes together and I think gives us a lot of confidence about the National Media business as we go forward.
And <UNK>, whatever you would like to add to that ---+ I mean we are not, <UNK>, yet in a position to give fiscal 2017 guidance or anything like that.
But obviously <UNK> wouldn't have tightened the range and pulled up the guidance without confidence really about both of the major businesses that we operate at this point.
So, <UNK>, anything else you want to add to that.
I would just add that we are balancing ---+ we are always balancing investments in our digital business also.
We just went through a re-platforming of our Allrecipes website, which was not insignificant to really gear that up for the changes in consumer habits really going mobile.
And we are starting to see those results where they had ---+ the month of December Allrecipes had an all-time high in traffic and actually had an all-time high for any food site on the Internet.
And that took significant investment for us to re-platform that brand on the website.
So I just would add that we are always balancing organic investment in our brands from a digital perspective.
Anything else, <UNK>.
Well, we have kept all of you for nearly a full hour, so we are going to wrap the call at this point in time.
And appreciate everyone's interest and continued support.
And as always, <UNK> and I are available for follow-on calls.
And otherwise we are all going to get back to work.
So have a great day and thank you for participating.
