Media Briefing: What publishers’ latest earnings reports say about the state of the media business

The state of the media market

The key hits:

• Digital subscriptions are no longer in a slump for some news publishers. 
• However, digital ad revenues are starting to sag, especially on the programmatic end.
• Commerce businesses are also taking a hit as audiences change shopping habits from online to in-person.

After the first quarter of 2022, publishers have a lot to consider when it comes to maintaining the health of their businesses. 

From the earnings reports of BuzzFeed, Future, Gannett, IAC’s Dotdash Meredith, NewsCorp’s Dow Jones and The New York Times, it’s clear that the advertising economy is already starting to slow, be it from an impending recession or major world events like the Russian-Ukrainian war. And with audiences changing everything from reading behaviors to shopping behaviors, commerce isn’t as lucrative a business as it once might have been.

Overall, revenue was up in the latest earning reports:

• BuzzFeed’s total revenue increased by 26% to $91.6 million in Q1 2022 compared to the first quarter of 2021.
• Future’s total revenue increased by 48% to £404.3 million ($508.4 million) in H1 2022 from £272.6m ($342.8 million) in H1 2021. 
• Gannett’s total revenue decreased 3.7% to $748.1 million in Q1 2022 compared to the first quarter of 2021.
• Dotdash Meredith’s total revenue reached $500.5 million in the first quarter of 2022, compared to $65.4 million in Q1 2021, a 765% increase due primarily to the acquisition of Meredith. 
• Dow Jones’ total revenue grew by 16% in the third quarter of its 2022 fiscal year from the same quarter in 2021, increasing from $421 million to $487 million. 
• The New York Times’ total revenue increased by 14% year over year to $537.4 million in Q1 2022.

But by the looks of it, publishing executives are bracing themselves to just get through 2022, with hopes that these slight dips and slow downs in revenue are only temporary adjustments to a pseudo post-COVID world. 

“We remain more focused on 2023 and beyond and will continue to make the changes and take the charges necessary to set up a cleaner and clearer future for the business,” wrote Joey Levin, CEO of Dotdash Meredith parent IAC in the holding company’s Q1 2022 shareholder letter from May 9. – Kayleigh Barber

Digital advertising revenue hits a rough patch

The New York Times’ first quarter earnings revealed the possibility of a less than desirable digital advertising landscape emerging. The company’s digital advertising business fell “below our expectations,” according to CEO Meredith Kopit Levien, despite digital advertising revenue increasing 13% year over year to $67 million, according to its Q1 2022 earnings release published on May 4. 

The Times, however, was not the only publisher to be slightly displeased with the digital advertising results of the first quarter.

“In 2021, there was the seasonal uplift that everybody saw in terms of advertising CPMs across the market. And so we are seeing a softening of those CPMs across the programmatic space,” BuzzFeed CFO Felicia DellaFortuna said during the company’s first quarter earnings call.

Still, BuzzFeed, too, saw an increase in advertising revenue from the first quarter 2021 to the first quarter of 2022. Its earnings report stated the advertising business grew 26% year over year to $48.7 million, though much of BuzzFeed Inc.’s growth was attributed to the acquisition of Complex Networks, which closed in December 2021. Meanwhile, ad revenue earned on third-party platforms was lower year over year, due to audiences preferring other platforms in recent months that do not share ad revenue with publishers, such as TikTok over Facebook, DellaFortuna said during the call.

IAC’s Dotdash Meredith actually did see a decline year–over-year in digital advertising revenue when looking at the pro forma revenue figures that adjusts Dotdash’s revenue from the first quarter of 2021 to reflect if the Meredith acquisition had been in effect during that time.

Digital advertising pro forma revenue — i.e. when including Meredith’s pre-acquisition revenue for an apples-to-apples comparison with the post-acquisition amount — saw a 3% decrease from $222.2 million in first quarter 2021 to $216.2 million in first quarter 2022. This was attributed to “lower traffic to our sites compared to prior year COVID traffic highs, impacting both display advertising and performance marketing revenue” as well as “multiple macro headwinds (e.g., Omicron, supply chain, Ukraine) impacting the display advertising environment and rolling out the Dotdash playbook on the Meredith properties including content remediation and reduced monetization,” according to the company’s earnings report.

Commerce isn’t what it used to be

Aside from advertising, commerce is a culprit for why publishers experienced a soft first quarter of 2022.

BuzzFeed is one of the few public publishers that reports out commerce as a singular revenue stream in its earnings reports. From the first quarter of 2021 to 2022, commerce revenues declined 27% year over year to $10.6 million, which the company’s CFO Felicia DellaFortuna said was an “expected” drop compared to how robust e-commerce was during the height of the pandemic.

IAC’s CEO Joey Levin also put some blame for the first quarter’s less-than-desirable digital revenue performance on reader’s migration away from online shopping. “The digital revenue decline in Q1 2022 was driven by a combination of the prior year’s unusual COVID-related behavior (many people spent Q1 2021 at home with their devices shopping online) and the changes we’ve made to the business that reduce short-term revenue,” he said.

But BuzzFeed is also claiming that where audiences do spend their time online has changed, impacting the largest pipeline that puts commerce content in front of readers — Facebook.

“The majority of audience traffic to our commerce content is generated through Facebook [and] as a result, our commerce revenues were also impacted by the shift in audience consumption patterns,” DellaFortuna said, adding that time spent on BuzzFeed Inc.’s content has declined 4% year over year during the first quarter due to declines on third-party platforms because audiences “continue to favor short-form vertical video formats such as TikTok and Reels.” 

Meanwhile, Future, which owns several brands focused on deals, product comparisons and reviews like Tom’s Guide and Thrifter, reported a 10% decrease in organic year over year affiliate revenue from H1 2021 to H1 2022, according to the company’s H1 2022 earnings report. As a company that was also very active in the M&A space, the organic growth measurement excludes acquisitions and disposals made during the reported period to show a clearer year-to-year comparison of performance. 

With the addition of the new acquisitions, this business increased by 63% from £85.2 million ($107.1 million) to £138.8 million ($174.5 million) year over year, making it the largest portion of revenue at Future, according to the report. 

Like BuzzFeed and Dotdash Meredith, Future’s report attributed the decrease in organic affiliate revenue to a natural slowdown from the bump in online shopping that occurred earlier in the pandemic. What’s particularly interesting about the organic decrease is that H1 of Future’s fiscal year included Q4 2021, typically the strongest period for commerce.

Creators are a golden ticket for dealing with platforms 

Noting audiences are continually favoring short-form and vertical video platforms, like TikTok and Reels, BuzzFeed Inc. has restructured its creators program to encompass both BuzzFeed and Complex Networks. 

Called Catalyst, the new creator program is one of three strategic focuses that CEO and founder Jonah Peretti said during the company’s earnings call was responsible for increasing the company’s revenue year over year by 26% in the first quarter to $91.6 million.

Catalyst also ties into the company’s other initiative, UpShots, which produces vertical video for advertisers to use on third-party platforms that can feature one of the program’s more than 100 creators.

Subscriptions are a news publisher’s best friend

Advertising and commerce are struggling, but news publishers like the Times, Gannett and News Corp.’s Dow Jones saw digital subscriber bases increase by double digit percentages year over year.

Dow Jones’ circulation and subscription revenues increased by 15%, or $48 million, from the publisher’s third quarter of fiscal year 2021 to the same period 2022, which runs Jan. 1 through March 31. The Wall Street Journal’s total subscriptions grew by 10% compared to the prior year, to more than 3.7 million average subscriptions in the quarter, and digital-only subscriptions to the news site grew 16% to more than 3 million average subscriptions in the quarter, representing 82% of total Wall Street Journal subscriptions, according to NewsCorp.’s earnings report. 

Gannett’s digital-only circulation revenues increased by almost 30% compared to the same quarter a year prior ending March with 1.75 million digital-only subscribers, a 44% increase in total subscriptions from the first quarter of 2021. This growth comes less than a year after the publisher launched the paywall for its largest brand, USA Today.

And finally, the Times’ acquisition of The Athletic historically helped the publisher complete its 2025 goal three years early of having 10 million subscriptions, but the first quarter of 2022 is already seeing additional growth in this business, including doubling its subscriber conversion rates year over year. Digital-only subscription revenue was up 26% year over year to $226.8 million, with total digital-only paid subscribers to the Times reaching 8.3 million, up from 6.8 million in Q4 2021, according to its earnings report.

What we’ve heard

“You need more personalities to pull people in these days. You look at the site today and you’ll see there are headshots of the columnists — that’s new.”

— Bloomberg News senior executive editor David Merritt

Numbers to know

15%: Percentage share of Outside Inc.’s employees that the publisher plans to lay off as it eliminates some titles and reduces the printing of others.

~$150 million: How much money SiriusXM will pay to acquire Conan O’Brien’s podcast company Team Coco.

33.5%: Percentage share of Google’s U.S. employees who are women.

10%: Percentage share of The Atlantic’s total revenue this year that will come from its special projects unit Atlantic Ventures, which has a remit that spans editorial projects to physical events to book publishing.

7 million: Number of registered users that Telegraph Media has, nearing its goal of 10 million by the end of 2023.

What we’ve covered

Inside Bloomberg Media’s regional expansion plan into an economically uncertain U.K.:

• Bloomberg is broadening its efforts to reach British audiences interested in business and finance.
• The publisher has hired several high-profile senior journalists to bolster its output for U.K. readers.

Read more about Bloomberg Media’s U.K. expansion here.

Future plc’s Jason Webby says U.K. publisher wants to be a dominant player in the U.S.:

• Future has acquired eight companies since Webby joined as CRO for North America two years ago.
• The acquisitions have helped to diversify the publisher’s advertiser base, opened cross-selling opportunities and expanded its first-party database.

Listen to the latest Digiday Podcast episode here.

Podcasters are pitching longer, more lucrative ads, but ad buyers prefer shorter, cheaper spots:

• Pod Digital Media, Slate and Vox Media are selling branded segments that exceed 60 seconds in length.
• Ad buyers see the longer ads as less cost-effective than traditional podcast ad slots.

Read more about podcast ad pitches here.

How Vox Media’s branded content studio is working to integrate its podcast ad capabilities post-merger:

• Vox Media’s and Group Nine’s respective branded content studios had little overlap among key advertisers.
• The Group Nine Brand Shop was heavily focused on social, whereas Vox Creative specialized in premium storytelling and utility-driven content.

Read more about Vox Creative here.

What we’re reading

BuzzFeed’s news dump:
Now-public BuzzFeed’s pressure on BuzzFeed News to turn a profit has resulted in the disbanding of the news org’s investigative unit, which ended with a run of solid stories this year, according to Vanity Fair.

Media’s diverse leaders:
The media industry is still addressing its historical lack of diversity, but major publishers and TV news organizations have diversified their highest ranks in recent years, which is having a trickle-down effect, according to The Hollywood Reporter.

Campbell Brown’s new role:
Meta’s vp of news partnerships Campbell Brown has been tapped to expand her purview by adding oversight of the company’s work with TV networks, streaming services, digital publishers, film studios and sports leagues in addition to news outlets, according to Axios.

Congress’s duopoly divvy-up:
A mix of Democrat and Republican senators have introduced a bill that would require Google and Meta to spin off parts of their respective advertising businesses, according to The Wall Street Journal.

Publishers’ 4-week subscriptions:
Of the 50 biggest U.S. publishers, only 20% bill subscriptions on a four-week basis versus a calendar-month basis, according to Toolkits. The four-week billing cycle would be more lucrative for publishers because it adds up to one extra payment per year versus the monthly cycle, but the extra payment risks subscribers reconsidering whether a publication is worth the added price.