O’Rourke Media Group Posts Industry-Leading 2022 Revenue Growth
There is no better way to start my 2nd annual company letter than by acknowledging our talented people in each market and functional area that make it happen every day. We just completed our four-year anniversary in December and 2022 was the most exciting year yet at O’Rourke Media Group. Results are outstanding, we have a winning culture that is strengthening every day, and we have an adaptive company strategy that is clearly working.
2022 Highlights and Results
Our two most important metrics on the scorecard: Total company revenue was +46% vs. prior year. Cash flow was +54%.
Same store advertising revenue +16% vs. prior. I believe these were the most impressive results for us in 2022!
Digital advertising revenue +80% vs. prior year; 32% of total ad revenue with a gross margin of 68% (this is winning margin on the bottom line!). We have built what is now officially a kick-ass digital agency that has helped drive overall advertising revenue growth.
Reader revenue, which is 99% print driven, was relatively flat to prior year. Our digital audience growth was impressive-Page Views +38% and Users +35% vs. prior year.
EBITDA margin finished the year at 14%. Margin was impacted by higher expenses associated with payroll (added headcount and merit raises), printing, delivery expenses, launch of a 401 (k) plan/company match and higher overall operating costs. I am proud of our team and the fact that employee retention across the board was excellent, and we did not engage in any forced layoffs for the 3rd straight year. Additionally, 2022 was another year of reinvesting cash flow to support growth objectives specifically in Sales, Digital and News. These investments negatively impacted margin in the short-term but will help support revenue growth in 2023 and for many years to come.
We acquired and successfully integrated the Delaware acquisition (The Guide) last April. General Manager Michele Swain and our employees in Delaware have done an amazing job with the transition.
We work hard as a team to always be focused on the coming months and years vs. what is in the rearview mirror so I feel compelled to include January 2023 results. Same store advertising revenue +15% to prior year. The team is starting the year with a win and wants to go undefeated this year to outperform their 11-1 record in 2022.
Every employee in the Company contributes to our success, but I would like to extend special recognition to VP-Sales Caleb Anderson and VP-Digital Joe Mathes. We have the best of the best in charge of these areas of the business. Additional recognition to others on the top management team: Joe Paul (Digital Sales Manager), Pam Mathes (General Manager-WI), Michele Swain (GM-Delaware), Megan Ivey (Digital Marketing Fulfillment Manager), Sally Shepherd (Director or IT and Process Improvement), Rachel Hayes (Business Office Manager), Sharon Schjoth (Office, Circ, Marketing Manager-WI), Dave Pevonka (Operations Director-MN/WI), Jim Johnson (Managing Editor-MN/WI) and my wife Denise (AP, Payroll, AR, my voice of reason in many situations). I could pick this team up and run any size media company in the U.S. (probably the world).
I would also like to recognize our managing editors Bridget Higdon (Managing Editor-VT), Kelly Mixer (Managing Editor-AZ), Tara Jones (Managing Editor-Sheboygan, Madison), Jonathan Bailey (Editor-Ripon), Mark Sherry (Editor-Kiel), Phil Scherer (Editor-Las Vegas) and all of our reporters and designers for their performance publishing great print publications while also delivering excellent digital audience growth. Keeping content in the middle of our strategy is mission-critical, and this team delivers!
I have never been more excited about where we are going as a Company. For anyone new reading our annual letter, here is what we are all about…
About the Company
O’Rourke Media Group is a fast-growing company that owns and operates hyper-local, community newspapers, niche publications, a full-service digital agency and commercial real estate holdings. We are family-owned and mission-driven to save newspapers and local media companies by investing in the people, resources and technology needed to grow revenue and thrive for many years to come.
We currently operate in six states with 24 publications and hyperlocal websites (soon to be 41 by the end of Q1 2023). Our News teams excel at producing unique content and useful information that fuels an engaged, growing audience across print and digital platforms. And, we have established ourselves as a top-performing sales company in the media industry.
Market Highlights
New Mexico: Our team in Las Vegas crushed it in 2022. Excellent results with total revenue +64% to PY. The print product is outstanding regardless of how the NM Press Association casts its votes, and the digital audience stats are impressive. The team is fun to work with and exceptionally independent—that is a big deal in a company that is anti-corporate!
Arizona: Our team in the desert has made me look smart for acquiring a monthly print publication with rapidly declining revenue during the Covid-19 pandemic. Total revenue in 2022 finished +33% to prior and digital revenue 20% of the total, up from zero in 2021! The Sales team is winning! We have rebuilt the News team which has resulted in a significantly improved print product and fast-growing digital audience. The support team in AZ gets an A+!
Vermont: We had a great year in 2022 with total revenue finishing +14% to prior year. Digital is 63% of advertising revenue, which is unbelievable. The team in News produces, hands down, the best local newspaper in the state of Vermont to go along with an impressive digital audience!
Minnesota: Advertising revenue +20% to prior year; total revenue +10%. Totally revamped Sales team over the past few years comprised of experienced sellers and a number of newcomers into media sales. Our digital talent is the best of the best in this market and we have an up-and-coming team in News putting out strong print products–page views +55% to prior year! We opened a new office in a key market, Hudson.
Delaware: Many potential media company buyers and peer companies ran from the opportunity to acquire this business—it is a niche advertising business with a heavy reliance on classified revenue. What nonsense. I love this team. They have outperformed year one top and bottom-line expectations in 2022, and we are working towards opening new revenue and audience growth opportunities in a big market area (Delmarva) with a fantastic, reputable brand. And, oh yeah, we print and deliver with our own team of dedicated operations and production employees!
Wisconsin: This group is a revenue and profit machine that just keeps getting better and better. Four businesses acquired since Sept ’19, combined into one, aligned team. Great print products and digital audience growth. Revenue +27% to prior year; digital revenue +42% to prior year and it is highly likely to get better in 2023! Another situation where digital talent is the best of the best!
Total Company Revenue—expecting growth year after year
Recessionary economy or not, consistently growing revenue year after year is tough to accomplish in most businesses. The traditional media industry has been hyper about digital first, print is dead, new revenue sources, digital subscriptions, non-profits, asking the government to intervene with several different acts and on and on. Transformation has been discussed for 20+ years. I have not researched this but it feels like the longest business transformation ever. I have gone through my own spurts of digital, digital, digital, and print is dead but have come to the realization that our business situation/opportunity is not that complex: BUILD A TEAM AND CULTURE THAT CAN GROW TOTAL REVENUE EVERY YEAR. A company’s growth strategy needs to be adaptive and revenue diversification is important.
A look ahead at 2023 for O’Rourke Media Group
We expect to grow total revenue minimally by 30-40% vs. prior year through a combination of organic growth (10-15%) and three to four acquisitions.
People. People. People. I am amazed and humbled by the talented group of employees that work at O’Rourke Media Group. Employee retention is outstanding, and we have been able to steadily onboard new talent in each functional area. We will absolutely continue building our depth and talent in 2023!
Our net debt leverage ratio is exceptional at 1.2X EBITDA so we will continue to reinvest cash flow into resources needed to grow revenue, improve content, expand into new markets, and launch new products/solutions.
We have recently partnered with a progressive consulting firm to roll out a greatly improved, more cost-effective benefits program for employees. The healthcare system is broken with no fix in sight, but we are working hard to navigate through it all to provide employees with the best, most affordable healthcare options possible.
Back in January 2022, we rolled out our 401 (k) retirement savings plans. More and more employees contribute, and we are pacing to improve the company match significantly in 2024.
In Q4, we formed a partnership with Flip-Pay to position us for reader revenue growth, print and digital, while also bringing in the technology stack to more effectively build and leverage our 1st party data to drive revenue. We have never been more dead-set against the digital meter/paywall, but we’re on to something here that will drive significant revenue growth!
Below are key objectives for the Company. Each team and market is aligned with ongoing initiatives that fall under these objectives with low, middle and exceed monthly revenue targets established.
- Sales team optimization. This is our number one company objective, hands-down. We have a top-performing sales team in place but we are all committed to taking it to a higher level in 2023.
- Strengthen the core business. There are so many opportunities to unlock growth within our core business. Print advertising, print subscriptions, classified, inserts, print and design and on and on.
- Grow digital agency revenue. Steadily increase monthly active digital agency advertisers, maintain great service and retention, build out internal marketing and lead gen, and EXPAND the sponsored content revenue segment. We also have attention on AI and how to best maximize this new tool with advertisers.
- Improve processes and efficiency. This area of our business is loaded with unsung heroes in every one of our markets. But, in good times and bad, there is always room for improvement, sometimes significant improvement.
In terms of the bigger picture and beyond 2023, we plan to continue to expand O’Rourke Media Group into 100+ markets over the next two to three years. We really do not have any geographic boundaries; we build around people and teams. Additionally, we are looking to make a strategic acquisition, and or, investment in a company in the IT/Technology Services business segment. Stay tuned….
In conclusion, I would like to again thank everyone on the team for the hard work and dedication over the past year at O’Rourke Media Group. I am really looking forward to working with you all to continue on our growth path in 2023. Please do not ever hesitate to reach out to me directly with questions, concerns, suggestions, or ideas.
Jim O’Rourke
jorourke@orourkemediagroup.com
312-995-9452
CEO