The Rebooting Show

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:The creator economy is a long term shift: “Every other media industry, starting with Hollywood 80 years ago, made this transition to a connection with individuals. Journalism, because it is the worst of the media businesses, is the last one to get there.” – BenThe legacy brand challenge: “Any new brand coming into existence, with Puck, Semafor or The Ankler, the balance to the individual needs to be more present. The legacy brands are struggling to figure this out.” – LizNo influencers, please, we’re journalists: “When you’re recruiting a star reporter at The Wall Street Journal, the last thing you want to tell her is you want her to be an influencer.” – BenThe journalist entrepreneur: “We are actively recruiting entrepreneurial journalists. They want to be commercial partners to my team. We spend a lot of time sitting down with our writers talking about commercial strategy, how we grow their subscriber base, how we do events, and how we do more advertising, who we’re going to call on. Our journalists are business partners.” - LizThe Riviera is filled with Dylan Byers doppelgangers: “One in three men here look like Dylan.” – Ben

Christine Cook joined Bloomberg Media in March as global chief revenue officer. We spoke about reasons for media optimism, how AI is an opportunity (and a threat), and how Bloomberg is approaching programmatic as the data landscape changes.

At The New Attention Economy’s final day in Cannes, we turned the spotlight on AI with a closing session featuring Rei Inamoto, CEO of I&Co, and Myra Nussbaum, chief creative officer and president of Havas, assessed the impact AI will have on creativity. Both aren’t quite ready to proclaim a revolution just yet.

For Hearst global chief revenue officer Lisa Howard, the shift to focus mostly on subscriptions at many publishers obscures the reality that advertising will continue to be the dominant monetization form for most media, including Hearst. Lisa discussed the power of ads and the resilience of legacy media during a live podcast recording at The New Attention Economy on Tuesday.

In a live recording of The Rebooting Show from Cannes, Kirk McDonald, CEO of GroupM North America, seemed to wonder whether we’ve all talked ourselves into a downturn that wasn’t, "For the first half of this year, we saw behavior that anticipated a crash,” he said, even if we’ve had a “pretty smooth landing.”“The thing we were worried about didn’t happen,” he added. “But I don’t think we’re seeing the kind of fulsome growth [we’ve seen in the past]”

Anna Palmer is a journalist turned startup CEO. Along with Jake Sherman and John Bresnahan, she founded Punchbowl News in January 2021, just in time for the assault on the Capitol. Punchbowl’s obsessive focus on the Capitol, and business model that combines subscriptions with high-value issue advocacy ads led it to sprint out of the gates with a $10 million first year. Anna is more reticent about its current pace – I tried – but by all measures what Punchbowl is doing is working in a media environment that's shifted to favor narrower brands focused on high-value audience segments, backed by direct connections and diversified business models. “I've been in Washington journalism for almost 20 years, and I always laugh when everyone talks about Substack and the rise of newsletters,” Anna said. “It's the new hot thing. I mean, I've literally been doing newsletters for that entire time.”Some things that stand out to me about Punchbowl:It is reporter focused. I believe journalists who start media businesses create different products. Punchbowl is journalism-driven, relying on the daily grind of uncovering new information vs playing SEO or social traffic games.It has a rich niche. Issues advocacy ads are a lucrative ad category, and one where you not only mostly don’t compete with Google and Facebook, but they’re also your biggest clients. If only more media was like this.It has stayed lean. Punchbowl started with funding from Liontree, and it has grown quickly, but it has also resisted the temptation to expand quickly by, say, springing up operations in state capitols around the country or joining the fray at the White House. Instead it has focused on high-value areas like its expansion in financial services vertical with The Vault.It has managed to be a publication about politics without being a political publication. Many aspire to non-partisan news. Easier said than done. See the Chris Licht experiment at CNN for evidence. Punchbowl has managed to thread the needle for the most part with not being pulled into the inevitable political Rorschach test, mostly because they’re obsessed with the legislative process vs the posturing of politics.

This episode is sponsored by Kerv, which uses artificial intelligence to identify objects within video and match them to databases, enabling for, among other uses, the creation of interactive “shoppable video” that embeds commerce in entertainment Kerv CEO Gary Mittman sees AI leading a sea change to the creative process, allowing for a movie franchise, for instance, to create sequels to the original without starting from scratch. For advertising, the changes are poised to be broader, with AI detecting ads that are not performing and automatically "fixing" them without much in the way of human involvement. “This is another revolution, and we're at a precipice of the creation of something new,” he said. Other highlights:Subscription fatigue. The land rush phase of the streaming wars is over. The pendulum is shifting from subscriptions to advertising. “People are not going to pay for 100 different channels at $5-$10 a month,” Gary said. “ It's just not going to happen.”The “Jennifer Aniston’s sweater” moment. In ancient days – think 2005 – a staple of what were then called internet conferences was the idea that you’d be able to watch “Friends” and tap to buy a Jennifer Anniston sweater set. Much of the tech wasn’t ready, much less the consumer behavior, but that’s changing. “There's a long road of dead bodies to get here,” Gary said.QR codes are changing behaviors. Of all the changes of the pandemic, the comeback of QR codes was among the least likely. Now, it’s the norm to see QR on TV ads, shifting consumer behavior. “The capability of having a one-click transaction off of television with your remote is where we're heading,” Gary said.