And so to look at a historical analogy, when TV was a new medium, the first thing that a lot of media companies did is they put radio shows or prerecorded plays on television because that is the mistake that people tend to make when a medium is new. They look at an older medium, and they say, okay, we can use this to sort of distribute something that we’re all familiar with it. Turns out watching a play or a radio show on TV isn’t the best use of TV, and quickly, the smart media companies figured out how to change the way they made content for television, where there was close up some people’s faces, quick cut, seeing changes, all the things that we know from about television programming today, were invented during that period. I think the similar thing is starting to happen right now with AI-powered content where our teams are starting to create content that feels more alive, that has intelligence embedded in it, that can interact with people, that can personalize the experience for different people.
And all of that is the very beginning of what I think is a new medium and for content companies, particularly digital media content companies like BuzzFeed, that is going to be a huge driver of future growth as that new medium starts to emerge, and as we start to see the benefit of things that just were never possible previously.
Amita Tomkoria: Great. Thank you. Matt, the next question is for you, on the topic of profitability. So you mentioned in your remarks, BuzzFeed becoming a more profitable business on the other side of the Complex transaction and just how should we think about that relative to your Q1 guidance, which is forecasting adjusted EBITDA losses? Can you just kind of step us through that?
Matt Omer: Yes. I mean, so you can see the immediate profitability impact by just looking at our full year 2023 results. So gross margin for continuing operations was 44% as compared to 40% for the consolidated business when you include Complex. So a difference of 400 basis points. And in terms of Q1 guidance, at the midpoint, adjusted EBITDA is expected to be $7 million better year-over-year. This is despite lower year-over-year revenues, which reflects the cumulative impact of last year’s cost saving initiatives, but only a partial impact of our most recent restructuring. Again, as a reminder, that recent restructuring is expected to drop approximately $23 million in annualized compensation cost savings, and we expect the program to be fully executed by the end of April. And so looking ahead, we expect that our Q2 operating expenses will be much more representative of our ongoing cost structure.
Amita Tomkoria: Got it. Jonah, maybe back to you. In terms of branded video, so you talked about moving away from branded video as source of revenue. Does that mean — like what does that mean? Does that mean you’ll no longer offer these types of products to clients or can you just elaborate on that shift a bit more?
Jonah Peretti: Yes. I think the biggest challenge is with branded video, and I would say the way we had previously operated with video, was that the one-off video that is posted on a social platform or a video platform like YouTube is not a very scalable, durable form of video production, where every single video needs to succeed on its own. And on the branded side, it’s a lot of work to come up with some unique idea for every single branded integration that doesn’t necessarily have a natural home or reason for someone to watch it. So I don’t think it’s great from a margin standpoint, from a time standpoint or great for clients. Really, we have put a lot of thought into this and to be smarter about how we make video, and so certainly, one form of making video is partnerships that we’ve done with streamers to make feature films and video that costs millions of dollars to make, but is really differentiated because it’s unique IP.
I think when we look at something like Hot Ones, it’s also very strong IP that we can extend into a whole bunch of different business lines, from selling hot sauce, to sponsorships to product integration, but none of them are one-off videos. It’s a familiar format that repeats, that audiences love and are expecting and that has natural ways to integrate brands. So I think that is a great area to focus on, where you have strong IP and repeat viewership like that. For Tasty, it’s really about creators and the Tasty brand plus creators is just incredibly powerful, and we’ve seen food creators to be so excited to engage with us and partner with brands as well. So we’re focused on really looking at how do we make video in a way that is sustainable and profitable that lends itself to higher margin revenue and is something that can scale better than the one-off branded videos.
I think the divestiture of Complex helps us move away from some of the high-cost, lower-margin, custom-branded content. A lot of the brands that transacted with Complex kind of wanted some totally unique type of branded integration where you’d be starting from zero in some cases in terms of building something. And I think that’s pretty different from Tasty and First We Feast, which are also much more pop culture focused and really fit well with BuzzFeed. Buzzfeed, Hot Ones, Tasty, they’re all pop culture brands that reach huge audiences, and that have great context for brand integration that can be done in a way that is more scalable, where you’re not doing sort of agency type work of coming up with de novo concepts for one-off videos or limited series and things like that.
