A Look at Three Public Media Company Financials

Over the last week and a half, three of the larger public media companies announced their quarterly results. While technically, Dotdash Meredith and Dow Jones are part of IAC and News Corp, respectively, both parent companies break out relatively clean financials, allowing us to dig in and understand how the business is doing. And, as always, The New York Times remains the most significant player in the proverbial digital room.

And so, let’s dig in and see how the three businesses are doing and where they are finding their opportunities to shine. We went in alphabetical order.

Dotdash Meredith (DDM)

Despite an unbelievably rough year for many other media companies, DDM finished the year off strong. Although revenue technically dropped by $1.7 million, it is nothing for a business with $475.9 million in total revenue. And things look much brighter once we dig into where that revenue drop comes from.

And on an adjusted EBITDA basis, things are looking very strong, with DDM reporting $123.5 million compared to $73.3 million the year prior. Caveat: it reported an $18.1 million operating loss, up from $8.8 million in 2022. If you care about the delta in adjusted EBITDA and operating income, read the financial report; you don’t read A Media Operator for my accounting knowledge.

DDM is an interesting business in that it derives the bulk of its revenue from digital, which continues to grow, while it carefully manages its print business. For example, digital revenue was up 9% year-over-year to $283.6 million, while print revenue dropped by 12% to $198.4 million.

Digital adjusted EBITDA was up 49% to $115.9 million; however, you’d expect to see that if revenue was also up. It should be noted that the digital business is operating at a nearly 41% margin on an adjusted basis, which is unbelievable. So much for mass-scale digital media being dead.

The Print adjusted EBITDA is interesting because it was up 32% year-over-year; however, a big reason is the $7.6 million cost for restructuring charges and transaction-related expenses in 2022. So, let’s compare the adjusted EBITDA margins for both quarters when that lumpy expense is excluded. It’s close: 8.1% in Q4 2023 and 8.7% in Q4 2022. DDM is managing this print business and doing a pretty good job of sustaining the margin.

Returning to the digital business, DDM’s revenue was up, thanks to a couple of things. It saw performance marketing revenue increase by 31%, which is a big jump. Advertising revenue was also up by 4%. This growth is thanks to a few key points.

First, DDM reported that its core session traffic was up 10%. This is a weird metric. DDM defines core sessions as traffic to its most important sites by total investment. It calls out PEOPLE, Allrecipes, Investopedia, Verywell Health, and The Spruce, but doesn’t exclude others. Like I said, it’s a weird metric. If we look at all sessions, traffic was down from 2,847 to 2,789 sessions (they don’t define the multiple). IAC CEO Joey Levin said on the earnings call:

You can see that core sessions, which is over 80% of traffic grew 10% and continued to accelerate. I mean, that’s a really nice trend to see.

Second, it is seeing a solid lift in its premium ad revenue, especially in the beauty, travel, and technology categories. A big driver of this is its D/Cipher product, which I wrote about back in May. It’s a contextual ad product using behavioral 1st-party data. According to Adweek:

The media company Dotdash Meredith is now using its contextual solution, D/Cipher, in more than 30% of its direct ad buys less than one year after launching the product, according to CEO Neil Vogel.

For those advertisers not yet willing to quit third-party cookies, Dotdash Meredith lets the advertiser see it outperform other solutions.

The publisher asks an advertiser to set aside 15% to 20% of a given campaign to run using D/Cipher, and if it fails to outperform the benchmark, the media company will rerun the campaign. So far, it has not had to make good on any guarantees, according to Vogel.

In one case study involving a skincare brand, D/Cipher drove 3.8 times more lift and four times the incremental sales of the parallel cookie-targeted campaign, according to the publisher. 

This product is clearly working, and I expect to see ad revenue continue growing for Dotdash Meredith—at least year-over-year—as it can move more ad spending away from 3rd-party cookies and toward this contextual targeting.

While other parts of media are certainly struggling, Dotdash Meredith didn’t get the memo. It’s not only profitable but very profitable.

Dow Jones

Dow Jones performed strongly, growing revenue by 4% to $584 million, with EBITDA up 17% to $163 million—an EBITDA margin of ~28%. There were two major themes for the subsidiary. First, it continues to massively transition more revenue to digital, with 78% of total revenue online, up from 76% a year ago. Second, its B2B business is a significant driver of growth.

Let’s start there… Risk & Compliance revenue was up 16% to $72 million, and Dow Jones Energy grew by 15% to $62 million. This is a significant growth area for Dow Jones. Back in 2021, it acquired OPIS for $1.1 billion. It then acquired Base Chemicals in mid-2022 for $295 million. In the OPIS announcement, it said:

OPIS has a revenue base that is nearly 100% digital, 95% recurring and operates at approximately 50+% Adjusted EBITDA margins, with modest Capex requirements.

Now, compare this to the consumer business. Dow Jones added 607,000 net digital subscribers to its WSJ and Barron’s Group portfolio. However, this was offset by a loss of 123,000 print subscribers. Further, consumer subscription revenue was flat year-over-year. In many respects, this makes sense since print subscriptions cost more than digital ones.

According to WSJ, a print subscription costs $16.25 per week or $845. A digital subscription costs $9.75 per week or $507. And so, for every three print subscribers that cancel, the WSJ needs to add five digital subscribers. And that’s at full price versus the discounts that often occur ($1 per week for digital WSJ right now). So, as WSJ gets rid of print subscribers, it’s losing full-paying subs for low-price digital subs that need to be nurtured into higher prices. It’ll just take time.

At the same time, advertising revenue dropped by $5 million year-over-year due to an 11% decline in print advertising revenues. Digital revenue couldn’t offset this with its 1% growth. But digital advertising continues to grow in market share, reaching 62% from 59% a year ago.

Dow Jones is an interesting business because it’s really a tale of two cities. On one hand, it has this unbelievably profitable B2B business that continues to drive growth. On the other hand, it’s carefully managing that decline of print while retaining its digital business. The question for me is when print will become minuscule enough, coupled with a maturation in its consumer digital subscription prices, for this business to grow faster.

The New York Times

Revenue grew to $676 million from $668 million a year prior, which is incremental at best. But despite this anemic top-line growth, its adjusted operating profit improved 8.5% year-over-year to $154 million. And I suspect if you asked NYT’s management team, they’re not too upset about the revenue growth being so slow right now.

The big theme for this quarter was rapid growth in its bundle and multiproduct subscribers. While most of us think about NYT as a news business, it has many other products, including Cooking, Games, Wirecutter, and The Athletic. And so, it has been heavily prioritizing moving subscribers from getting only a single product to multiple. This is a significant priority for NYT because it helps with long-term revenue and retention.

And so, NYT added 300,000 digital-only net new subscribers, but its bundle and multiproduct subscriber number grew by 430,000. Many of those net new subscribers went straight to the bundle, and it accomplished its goal of moving 100k+ of its single product subs to a bundle. We can see how important this is for NYT because it sacrifices short-term revenue for longer-term growth.

For example, news-only average revenue per user (ARPU) was $10.38 in Q4 2023, up from $8.49 a year prior. That’s over a 22% increase in ARPU in only one year, which is impressive. On the other hand, bundle & multiproduct ARPU dropped from $15.20 in Q4 2022 to $12.13 in Q4 2023—a 20.2% drop.

The reality is that it focuses more on acquiring net new subscribers directly to the bundle. Will Bardeen, CFO, explicitly talked about this on the earnings call:

In Q4, we had the largest number to date of bundled subscribers transitioning to higher prices and benefited from the impact of our digital price increase on tenured single product subscribers. While it is still relatively early, we continue to be encouraged that bundle subscribers are retaining and monetizing better than news-only subscribers through these step-ups.

He went on to explain that sales & marketing costs were up 9% because:

We saw high return paid marketing opportunities in the quarter as the bundle continued to enable better marketing efficiency.

In other words, the bundle offer was compelling enough to keep plowing investment into it; however, as we saw with Dow Jones also, introductory rates are always lower. NYT sacrifices short-term revenue to acquire subscribers and then incrementally increases its prices.

It boils down to this… NYT continues to add subscribers, and it is seeing most of its growth in multiproduct bundles. In the short term, it is sacrificing ARPU to have a larger pie to work with. It’s interesting because most research suggests that offering low prices and increasing the price on people hurts subscription businesses, which is why the “$1 for a year” offers are so detrimental. NYT has shown they know how to be very intentional with their price increases.

On the digital ad side, revenue dropped 3.7% year-over-year to $108 million. The team blamed this on five fewer days in Q4 and a decline in revenue for podcasts and creative services. NYT is the only one of the three that saw a drop in ad revenue.

Wrapping up…

Each business is figuring out its way to manage the decline in print (which will hopefully one day become a topic not worth discussing). For Dotdash Meredith, the only discussion worth having is how ad revenue continues to rise rapidly, and its traffic is not cratering, a theme, not many other media companies can say. For Dow Jones, it has a great B2B business and an evolving consumer subscription business. And finally, NYT is getting its bundle figured out, moving users from single products to multi for long-term retention. In all three cases, business is doing well.

Thanks for reading today’s piece. If you have thoughts, hit reply or join the AMO Slack to discuss further. I hope you have a great weekend.