What I’m Looking For in Q4 2024 Earnings

It’s that glorious time of the year where the handful of publicly traded media companies report their earnings, and we’re covering them all here on A Media Operator.

There are three things I am looking to hear more about this quarter, some of which could have implications for the broader industry. So, let’s dig in…

Informa TechTarget and the macro

For a number of quarters, TechTarget often spoke about customers being cautious about their budgets. In its Q3 shareholder letter, management wrote, “In the near-term, enterprise technology companies’ marketing investments remain subdued – driven primarily by macro factors such as higher interest rates and geopolitical tension.” It referred to similar factors in the Q2 and Q1 2024 shareholder letters as well.

Interest rates have started to come down, though the Fed announced last week it was putting further cuts on hold. On the other hand, the stock market is up a couple of points YTD, which tends to give tech companies confidence in their spending. But there’s also a possible trade war between the United States and its two bordering neighbors, not to mention China. 

So, what we want clarity on is whether Informa TechTarget is seeing the macro truly changing. In its Q3 letter, it said, “Coupled with signs of an improving interest rate environment and the uncertainty of the U.S. election behind us, there are reasons to believe the economic backdrop may start to become more supportive.” But is that enough? It reported year-on-year revenue growth in that quarter of 2%, so if the macro is improving, its Q4 financials should be stronger.

This matters because, to some extent, advertising and marketing services sales for firms of this size are reflective of the market. Yes, operators still need to execute their playbooks, but it’s hard to overcome marketers being told to spend less by their CFOs. If Informa TechTarget announces a better than expected Q4, it could be a good sign for the broader B2B media industry—especially those dependent on software marketing budgets.

Another thing is that it closed the Informa & TechTarget merger in late Q4 2024, so we should start to see indications of how that integration is going. We shouldn’t expect too much chatter and whatever plans they have, it’ll inevitably take longer. However, if this integration works, it gives the business much more heft.

What’s up with Lee?

Starting last year, David Hoffmann, a Florida-based entrepreneur, bought large blocks of stock in Lee Enterprises, which operates a network of local newspapers. As of December 12, 2024, he, through a trust, owns nearly 10% of the company.

What’s the plan? In October, Hoffmann spoke to The New York Times and said:

Though Mr. Hoffmann has plans to buy additional shares of Lee Enterprises, he said he was not a hostile activist and planned to talk to the company’s management team this week.

“We want it to be friendly,” Mr. Hoffmann said. “They have called us, as you would expect, and said, ‘What are you guys doing?’ And we’re going to sit down with them and tell them our story.”

Management hasn’t said anything. Can we start to get some clarity on what “our story” is?

More holistically, Lee has a lot of work ahead of it. As of September 2024, it has $446 million in debt with a fixed annual interest rate of 9% from Berkshire Hathaway. The terms are friendly, but it’s a big reason why the company trades at such a depressed valuation.

Its 2024 operating revenue was $611 million. While digital revenue grew 11% year-over-year to $299 million, print revenue dropped 21% to $312 million. Operating expenses dropped 7% year-over-year to $611 million. It needs to show that it can keep digital revenue growing quickly enough to offset these losses.

So, the question stands: what’s up with Lee? Hopefully, we’ll find out.

Zero-click content?

As more people get information from various chat-based AI platforms—ChatGPT, Perplexity, Google’s in-search results and others—there could be an impact on clickthrough rates to publisher websites. This is known as zero-click content because the user never has to leave the platform. If this really is becoming a bigger part of a user’s behavior, we should see some publishers start to talk about it.

Take Dotdash Meredith. For the last couple of years, it has grown its core sessions year-over-year. If its growth rate in Q4 2024 is similar to the prior year—nearly 10%—we should see core sessions come close to ~2.48 billion. It’s obviously harder to grow a bigger number, but if the number comes in relatively flat year-over-year, we could start seeing signs of downward pressure on the publisher.

There’s a similar story for Gannett, which also talks about traffic in its earnings releases. Last quarter, it said that it had 203 million average monthly unique visitors across its portfolio, an increase of 7.4%. Will that trend continue or will it also see downward pressure?

None of this is existential in the short-term. DDM has been diversifying its traffic to other sources while Gannett has been leaning into its subscription business, which suggests a slow pullback from a focus on traffic as the top line number. Nevertheless, if this starts to become a bigger issue, it’s likely the canary in the coal mine for the broader media industry.