Joe Ceryanec
Thursday, October 18, 2018
By Rebekah Tilley

When you think “Big Four” you’re probably thinking the four major accounting firms. In Joe Ceryanec’s world, the Big Four are the major U.S. magazine publishers: Conde Nast, Hearst, Time Inc. and Meredith. When Meredith acquired Time Inc. early in 2018, Ceryanec was CFO for Meredith Corporation headquartered in Des Moines. We sat down with him in July to ask him about the tangled accounting issues at play in the acquisition, how to navigate a successful merger, and what part of the job keeps him up at night.

Q: The acquisition of Time Inc. by Meredith was completed on January 31 but the digesting can take a while. Given your new role, you’ve been neck deep in it all. What has the last year been like for you?

A: It’s been a whirlwind. We’re dealing with a lot of new accounting issues that we at Meredith have never dealt with. When we acquired them, Time Inc. was almost two times the size of Meredith whether you measure it in revenues or employees. We called it a minnow swallowing a whale. We knew that Time Inc. was going through a challenging period. Its revenue trends were well below ours and well below the industry. So, our strategic imperatives were to change the trajectory of their revenues while working to get cost out of the business. Naturally when you bring two businesses together, you’re going to have duplication whether it’s the accounting department, IT, HR or other administrative functions. But not only was it running the organizations more efficiently, it was also getting those functions out of New York that don’t need to be in New York. We’re going to wind up adding 200 to 300 full-time people here in Des Moines and moving those functions out of New York.

Q: Are those 200-300 people transferring from New York into Des Moines?

A: In most cases the answer is no. These positions end up being net new jobs for Iowa. The market in Des Moines is strong, and it’s not easy finding people. Historically, we’ve looked for people with some experience, but now we’re looking to hire more directly out of college.

Q: Meredith is publicly shopping four Time Inc. brands: TIME, Fortune, Sports Illustrated, and Money. Are you directly involved with the sale of those magazines?

A: To a large degree. I’m not the primary person overseeing it. We have a business development group who is front line on buying and selling assets, but I’m very involved as we’re going through the process including narrowing down the number of bidders, locking in the price, and negotiating the purchase agreements. This has been just another piece of the complication of this acquisition. It’s already complicated simply integrating all the systems, payroll, and people while you’re relocating and eliminating positions. And then we’re carving off and selling four brands, and there is the impact on the people that go with those brands – especially the people who know they are going to lose their jobs. Normally acquiring a company and integrating it is complicated – especially when it’s a much bigger company. But when you throw in relocating and eliminating functions, selling assets, new revenue recognition rules, and a new tax law – those just make it that much more complicated.

Q: Consolidation is a theme in the media landscape and Meredith is a prime example of that. What are some lessons you've learned to make for a successful transition?

A: One of the key lessons is getting both sides involved in a project or process right off the bat rather than taking a top-down approach. It’s a lot easier and, frankly, a lot more effective if you can get the acquired organization to buy in to what you’re trying to accomplish. Sometimes that’s difficult because they know they aren’t long for the organization, but even in those situations, most people want to do a good job and leave on good terms.

One of the things we did very, very early on was figure out what our needs were going to be from a personnel standpoint. Before the end of March, we announced that we were going to eliminate well over 1,000 positions. Some of those positions were eliminated right then. Others we sat down with and told them we needed them in their job during a transition period, but that their job would end on a certain future date. We just wanted to be open and honest with people.

Q: Meredith took on a good bit of debt to finance the purchase of Time Inc. As CFO, does that keep you up at night?

A: It is one of many things that keeps me up at night. [laughs] The good news is our goal by the end of our fiscal year 2019 is to have paid down a billion of that debt. Between the cash we have on hand plus the proceeds of the brands were selling, we feel good about getting $1 billion paid down fairly quickly. In our world, we talk about a leverage profile, which is your debt balance compared to your cash flow or EBITDA. Our goal is to get that leverage ratio below two times as quick as we can. And we’re on the right track.

Q: The executive director of Meredith and former CEO – Stephen Lacy – is an accountant. You’re an accountant. What is it about that training that translates to business success?

A: I believe having an accounting or finance background is critical to running businesses now that there is such a focus on results – especially with public companies. People with experience in accounting or finance tend to understand what is driving a business, and they know how to run the business as efficiently and effectively as possible. Having that analytical background is an important prerequisite for a CEO or CFO.

Q: It’s more than just the analytics though. Like you mentioned earlier, it’s also the people involved.

A: As one rises through the ranks, being able to manage and motivate people to get things done is what allows you to continue growing in your career. There are a lot of really smart people, but they may not ever get to the c-suite because they don’t have some of those softer skills. Communication skills are a big deal – being able to speak both publicly from the podium about your company or speak internally to the team – can separate whether someone is going to continue moving up in the ranks. 

This article first appeared in the 2018 edition of The Iowa Ledger, a magazine for alumni and friends of the UI Department of Accounting.