Media Briefing: Publishers’ Q3 earnings show a return to owned and operated

This Media Briefing covers the latest in media trends for Digiday+ members and is distributed over email every Thursday at 10 a.m. ET. More from the series →

This week’s media briefing takes a look at the top trends from publishers’ latest earnings.

  • Publishers look inward in Q3
  • Karlie Kloss buys i-D, Jezebel is no longer and more

Publishers look inward in Q3

Losses were prominent among publishers’ Q3 earnings reports, but they weren’t quite as bad as last quarter

While total quarterly revenue, digital advertising revenue and print revenue (for those still attempting to operate a successful business in that category) were by and large down year over year, there were some bright spots to be found and even some milestones that were met.

But what really stood out from publishers’ earnings calls was the fact that owned and operated businesses, from subscriptions to apps, are the primary go-forward strategies now that referral traffic is declining from search and social platforms. And if those things can be monetized correctly, there is some hope that the end of 2023 and next year will be in good standing.

By the numbers: 

  • BuzzFeed’s total Q3 revenues were $73.3 million, down 29% year over year.
  • Dow Jones, a subsidiary of News Corp, reported a year-over-year increase of 4% in total revenue this most recent quarter to $537 million. 
  • Dotdash Meredith’s total revenue was down 11% year over year to $417.5 million.
  • Gannett’s total revenue for Q3 2023 was $652.9 million, down 8.4% year over year.
  • The Arena Group’s total revenue for Q3 2023 was $63.4 million, up 10.7% year over year. Compared to the pro forma revenue of $66.7 million from Q3 2022, which accounts for the closure of Parade’s print business, revenue this most recent quarter was down 4.9% year over year. 
  • The New York Times reached $598.3 million in total revenue this most recent quarter, representing an increase of 9.3% year over year.

Digital advertising on the mend? 

The New York Times’ digital advertising revenue “came in towards the high end of our expectations” for the third quarter, according to evp and CFO William Bardeen, growing 6.7% year over year to a total of $75 million. 

Gannett’s digital advertising and marketing services revenues (which are reported in tandem) were pretty much flat year over year, growing by 0.1% to $202.7 million. That’s an accomplishment when considering the fact that this business was down 11.4% year over year in Q2, though that business took a big hit last year with Q3 2022 digital ad revenue down 24.8% year over year. What’s more, the company’s CFO Doug Horne announced that digital advertising revenues returned to growth in September this year for the first time in over a year. 

Overall, Gannett’s digital revenues grew 2.7% to $263.6 million, making up 40% of the company’s total revenue. Horne said this growth in digital advertising in particular was due primarily to the increased ad inventory tied to growing page views. 

At Dotdash Meredith, digital advertising revenue fell 12% year over year to $131.2 million because of “lower premium sold advertising” and “lower programmatic advertising revenue due to lower traffic, particularly on Entertainment and certain partner sites,” per the company’s Q3 earnings report. And yet, compared to Q2’s 16% year-over-year decline in digital ad revenue, this quarter’s decline is moderately better.

“As we began to experience some softness in Q3 traffic in our entertainment sites, we really started to see that in August, driven by the strike and just the lack of activity in Hollywood. That pulled down Q3 results a bit,” said Christopher Halpin, CFO and COO of IAC.

Dow Jones’ total revenue was up 4% year over year to $537 million, despite advertising revenue falling 3% to $91 million. Digital advertising, in particular, was down 2% in the quarter, per the company’s earnings. 

This redemption arc stops with BuzzFeed, however. The company reported advertising revenue (all digital for this digital-only publisher) was down 35% year over year, bringing in $32.6 million. Content revenue, meaning branded content and other high-touch direct sold products, was down 32% year over year, totaling $26.2 million.

These losses are steeper than the company’s Q2 earnings as well, showing a further trend down for the company, which is reportedly considering the sale of its most desirable asset amongst media buyers: Complex. BuzzFeed has not confirmed nor denied these reports either to Digiday or in its earnings calls.

Subscription sanctuary 

The New York Times surpassed 10 million in total subscribers in the third quarter, with 9.4 million of them being digital-only subscribers. CEO Meredith Kopit Levien reiterated the company’s next milestone of 15 million subscribers, which it wants to achieve by the end of 2027, and added that “we expect at least half of our subscribers over the next few years to be on the bundle,” during the company’s earnings call. 

The Times added 210,000 net new digital-only subscribers and increased that revenue stream by 16% year over year to $282 million. Quarter over quarter, the company’s net new digital-only subscribers grew by 16.6% from 180,000 new additions in Q2. 

The bundle business is also seeing positive adoption year over year, with three times as many bundle and multi-product subscribers joining the times as the same period last year. Bundle subscribers now make up 38% of the Times’ total base.

Dow Jones’ total number of digital subscriptions grew by 12% year over year to 4.6 million digital subscribers, partially attributed to cross-brand bundling to try and generate more revenue from professional consumers. The revenue generated from Dow Jones’ total subscriptions and circulations was $436 million for the quarter, up 5% year over year. 

The Wall Street Journal specifically saw a 10% increase in digital-only subscriptions, totaling just under 3.5 million. This is a moderate increase of 1.8% compared to the prior quarter, however.

Gannett’s total digital-only subscriptions also grew moderately between the second and third quarters of the year, increasing from 1.95 million to 1.96 million. Its average revenue per user (ARPU) for its digital-only subscriptions business saw more substantial growth of 7.4% quarter over quarter, and 14% year over year, achieving $6.82 in Q3 — a record high for the company.

Mike Reed, CEO of Gannett, caveated this positive growth during the company’s Q3 earnings call however: “We believe there are signs that consumers are beginning to feel the cumulative impact of higher interest rates and continued inflation which has led to an overall reduction in consumer confidence.”

Back to owned and operated 

A prevalent theme among the publishers’ latest earnings calls was that getting audiences to their owned and operated platforms — be it dotcoms, apps or newsletters — will be increasingly important as referral traffic from social media and search engines continues to decline. 

“With these changes [to referral traffic] in place, we continue to be laser-focused on driving traffic directly to our owned and operated websites and apps in order to reduce our dependence on the major tech platforms for audience traffic, improved monetization, and pivot our business to adjust to the new realities of an altered digital media landscape,” said Jonah Peretti, CEO and founder of BuzzFeed during the company’s Q3 earnings call.

Peretti continued that in the coming quarters, more gaming content will be added to BuzzFeed’s mobile app to try and increase engagement on that platform. What’s more, in the third quarter, HuffPost saw record audience traffic on its homepage and web app since it was acquired by BuzzFeed in 2021. 

Gannett’s chief content officer Kristin Roberts, who joined the company in March, has been tasked with revamping the editorial output, which is meant to increase both pageviews as well as ad inventory. The company announced the hires of a Taylor Swift reporter and a Beyoncé reporter at USA Today who are meant to turn the respective fan bases into readers. Earlier this year, Gannett also started experimenting with using generative AI to produce content, though not without its public blunders.

In the third quarter, Gannett’s organic audience increased by 7% year over year, Reed added, and deals with mobile lottery company Jackpocket and affiliate marketing company Red Ventures will hopefully further monetize that audience on Gannett’s O&O platforms, he said.

Looking ahead 

Hesitant optimism is a fair way to characterize how some of the publisher execs spoke about the end of 2023 and full year 2024 in their earnings calls. 

“If we have a decent ad market through the rest of the year and into next year, I think we’re in great shape,” said Joey Levin, CEO of IAC during the company’s Q3 earnings call. “Trends have been better so far in November, but it’s still an uncertain environment. So, we’re expecting a holiday season that’s only mildly better from a macro perspective on advertising.”

Levin continued that so far in Q4 premium ad deals are soft, but thinks the company is outperforming in the open programmatic market from a CPM perspective. “Hopefully digital advertising revenue is flattish, and then performance marketing is a source of strong growth in Q4 and continuing into next year,” he said.

The New York Times’ Bardeen estimated that overall advertising revenues for the fourth quarter will “range from a decrease of low-single digits to an increase of mid-single digits, while digital advertising revenues are expected to increase low to high-single digits.” 

As for subscriptions, Bardeen said that revenue is expected to grow between 8-11% year over year in Q4, with digital-only subscription revenue increasing between 13-16% year over year.

Between softness in the ad market and the persistent decreases in traffic, BuzzFeed’s outgoing CFO Felicia DellaFortuna said, “We expect the ongoing uncertainty in the macro environment to put pressure on advertiser demand. As a result, we do expect year-on-year revenue trends [for Q4 to be] similar to what we saw in Q3.” This translates to overall revenue being down between 18-27% year over year in Q4, which would be a moderate improvement from the past two quarters. 

What we’ve heard

“Google just continually makes all of our lives more challenging.”

A digital publisher talking about the search engine’s recent core algorithm update, which has reduced referral traffic from the platform.

Numbers to know

$33 million: The amount of money that The Guardian expects to make from digital reader revenue in the U.S. for fiscal year 2023/2024. 

23: The number of staffers laid off by G/O Media in the latest round of cutbacks, which includes the entire Jezebel team after it was announced the feminist media site would be shut down.  

$70 million: The amount of money that crypto media company The Block was valued at, after selling a majority stake to Singapore-based venture capital firm Foresight Ventures. 

<100: The number of employees laid off from Vice Media, which also announced the end of several news shows. 

$4.5 million: The amount of money Defector earned in its third year, which ended on Aug. 23. 

What we’ve covered

Publishers double down on events heading into 2024: 

  • Facing declining referral traffic from search and social platforms, steeper competition for scale-focused campaign budgets and a myriad of other woes impacting ad revenue, several digital publishers are focusing on events in the new year.
  • The strategies for doubling down on events vary, but the goal remains the same for publishers: to keep revenue flowing.

Learn more about how publishers are investing in their events businesses here.

Two execs are out at Betches Media after LBG Media acquisition: 

  • Less than a month after being acquired by LADbible owner LBG Media, Betches’ CRO and an HR exec are out. 
  • A Betches Media spokesperson declined to say on-the-record whether this was part of a broader restructuring.

Read more about the recent leadership changes at Betches here

Media companies announce more layoffs to cut costs, blaming a relentlessly challenging ad market: 

  • The seemingly endless cycle of media industry layoffs over the past year hit another crescendo this month.
  • But these cycles of staff cuts may be the new normal, as long as the ad market remains under pressure.

Read more about the latest rounds of layoffs here.

Why BuzzFeed might as well sell Complex: 

  • While BuzzFeed leadership has not confirmed nor denied the reports that Complex is for sale, the case for offloading its most valuable asset is very convincing. 
  • In conversations with Digiday, current and former employees agree that BuzzFeed has had a rough go of it and Complex needs new owners for both parties to survive.

Hear why current and former BuzzFeed staffers and media industry observers this this is the best move here.

Publishers and brands go all-in on AI compared with Q2:

  • New Digiday+ Research asked over 200 publisher, agency and brand professionals how their use of AI has progressed over the course of 2023. 
  • In Q3, a whopping 91% of publisher pros said that AI will be the technology that has the biggest impact on their businesses in the next few years.

Learn more about the state of AI use and adoption here.

What we’re reading

Karlie Kloss buys i-D Magazine from Vice Media: 

Entrepreneur and model Karlie Kloss is expanding her media portfolio with the acquisition of i-D Magazine, Business of Fashion reported. Once the deal is closed, Kloss will step into the chief executive role, as well as serve as chairperson of Bedford Media, her newly founded company. In 2020, Kloss led the team of investors that rescued W Magazine, alongside BDG as the magazine’s publisher. 

Insider goes back to its ‘Business’ roots and taps a new CEO: 

Business Insider’s co-founder Henry Blodget is stepping down from his post as CEO and will be succeeded by Barbara Peng, who previously served as the publisher’s president, according to The Wall Street Journal. In addition to the leadership change, Insider is going back to its old name, Business Insider.

A new publisher is named at BuzzFeed:

Longtime BuzzFeed publisher Dao Nguyen stepped down from her role after 11 years, Adweek reported. Jessica Probus, the company’s evp of BuzzFeed editorial, was tapped to succeed Nguyen.   

Google started paying local publishers to test AI in their newsrooms: 

According to Axios, a number of small, local publishers have entered into an agreement with Google to test new AI tools that are meant to help journalists write stories and newsletters. The amount of money the pubs stand to earn has not been disclosed. 

Using ChatGPT will be treated the same as plagiarism at The Telegraph: 

The Telegraph issued a new policy that if journalists are caught using generative AI to produce any published text, they will face the same sanctions as in cases of plagiarism, the Press Gazette reported. Only in limited circumstances will copy produced by generative AI be accepted, but it will require the sign-off of top Telegraph editors and the company’s legal department.

https://digiday.com/?p=525964

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