The Rebooting Show

Rich Routman is a veteran of the sports media industry. He recalls how if an advertiser discussed a cost-per-action deal with a major sports media company as recently as five years ago, the media executives would "run out of the room." That all changed with the legalization of sports gambling in 33 states and the District of Columbia. A giant industry would need customers, and sports media was there to help. That's led the Sporting News, which Rich joined as CEO last year, to raise a $15 million Series A a mere 137 years after its founding. Rich and I discuss how TSN is generating 40% of its revenue from affiliate and revenue-sharing deals from sportsbooks and other subscription services.

Bustle was founded a decade ago in a far different media environment, as big digital media companies, flush with VC cash, scrambled to acquire the biggest audiences possible. The supposition that those with the biggest uniques would be handsomely rewarded didn't turn out to be a durable model. Now, Bustle is looking like a different entity, as its CRO says typical ad campaigns are now just 15% of the company's revenue Instead, it is focused on using its stable of brands for bigger efforts more akin to what ad agencies provide. In this formula, traffic is far less important than brand affinity, client relationships and the ability to execute.

Puck launched two years ago, heralded as Vanity Fair for the Substack era. A big part of the pitch was a subscription model. But like others, such as Punchbowl, Puck has found that its subscription business, with its direct connections, and vertical focus lends itself well to a strong direct-sold ad business.

Other topics we cover:

CJ Gustafson is one of the rare people who is both immersed in his field but does not suffer from the tyranny of knowledge. CJ uses memes and a conversational style with Mostly Metrics to address what those outside corporate finance would consider dry topics. But most importantly, he completely understands the challenges of being a CFO because he’s a CFO. In this episode, we discuss how he built Mostly Metrics, as well as getting into the weeds of why media is often a terrible business and what are the drivers of a sustainable media business.

Literally Media -- home to Cracked, I Know Your Meme and Cheezburger -- isn't going to fight creators. Instead, it's partnering with them to do everything from launch channels on new platforms, get access to brand partnerships and be part of live events. Literally Media CEO Oren Katzeff explains the approach, along with Literally's emphasis on IP-based video franchises and more.

This week, I spoke to Parquor’s Andrew Rosen, a former Vicom exec turned media analyst, to unpack Hollywood’s weird summer of transition. The challenge for media companies is moving from a wholesale model to a retail model. Andrew sees a group of leaders without a clear understanding of how to make that leap.

Bloomberg Media CEO Scott Havens sees AI as both challenge and opportunity for publishers, who at this point are used to rapid changes to how their content is distributed. The challenge is how AI is poised to have the biggest impact on search since Google's rise to be the dominant distributor of internet traffic. The opportunity is to use the AI tools to create better experiences and more resilient business models. "There's no use in crying over spilled milk," Scott advises.

On this week’s episode of The Rebooting Show, I was joined by Hearst’s David Carey to discuss the resilience of so-called legacy media businesses. David returned to Hearst in 2019 as svp of public affairs and communications after a stint at Harvard, picking up on an eight-year run as president of Hearst Magazines from 2010 to 2018. He was group president at Condé Nast for many years, as well as the founding publisher of Smart Money.

Some highlights from our discussion:

The broad view of content: Hearst used its media assets to diversify into information services. Fitch Ratings is its largest business, and in 2016 it spent $2 billion on Camp Systems, a software provider for the airline maintenance business. “The company's had a very broad view of what content is, and, boy, is that to the benefit of everyone who works here.”

The end of the shiny object era: “There was a lot of chasing whatever the latest thing was, but those businesses turned out not to be sustainable, or they turned out to be gimmicks, or they turned out to be easily replicated by others. It’s chaos in all directions for all media forms. It very much favors companies with real strategies, deep roots.” 

Media’s always been hard: “Media is much harder to operate than it looks from the outside. That's always been true. It's easy to make a splash and make some noise, but even the latest upstarts are finding it's really hard to build a sustainable business that engages people on a regular basis.”

Media businesses need a bigger price curve: “Whenever I meet a [Wall Street] Journal executive, I tell them, you should come up with a $1,000 a year subscription, because I would pay that. It's that important. to how I operate in the world as an executive. Every brand has these concentric circles of diehard fans and next diehard fans and so on. The problem is there hasn't been effective price discrimination.” 

Print is like a couture fashion show: “What they send down the runway is important but not their biggest business. What happens at Chanel at a couture show, that business is relatively small, but it sets the stage for everything below that. It's the eyewear, the handbags, the accessories. Ultimately they make their money from selling beauty products at Bloomingdale's and in Saks Fifth Avenue. You're starting to see that happen with magazines. They have an opportunity to become multi-tiered businesses. The print piece becomes the standard bearer [to more lucrative businesses like events and data].”

At Dotdash Meredith, CEO Neil Vogel remembers sitting around with his management team, after $2 million in “incremental” ad revenue appeared, and wondering, “Have we hit peak Dotdash?”

“We had a really great formula: make incredible content, make really great sites and experiences, and have fewer ads that work better,” Neil said.

Which brings me back to late 2021, because that’s when IAC plunked down $2.7 billion to buy the storied Meredith brands: People, Entertainment Weekly, Better Homes & Gardens, InStyle. It was something of a minnow swallowing the whale, and indicative of the prevailing winds of publishing that were moving against glossy brands and toward performance workhorses. 

“We had this incredible ability to serve users and to make advertisers happy because we had lots of intent,” Neil said. “What we were lacking was brands.”

Of course, soon after the deal took place, Jerome Powell decided he’d seen enough with the normalization of $7 coffee and started hiking interest rates. The repricing of markets isn’t fun. And the now re-re-re-rechristened Dotdash Meredith has been no different. As it has integrated the Meredith properties, it has also dealt with a soft ad market it can do little to mitigate. You are not going to sell as many mortgages when interest rates are high. In the first quarter, Dotdash Meredith revenue declined 23% year over year, including 15% in digital advertising.

“We bought at the frothiest point in the market,” Neil allowed. “The market is going to go up, the market is going to go down. If you look out at a long time horizon, it doesn’t matter.”

Neil and I discussed the deal (“I would do it again in a heartbeat”), the demise of the third-party cookie (“We don’t need cookies to deliver scale and performance”), and WTF AI (the whole market is going to change). 

Last week, at The New Attention Economy in Cannes, I discussed the notion of “influencer journalism” with Semafor co-founder and editor-in-chief Ben Smith and Puck co-founder and COO Liz Gough. Some highlights from the session: