Investors reportedly pressuring BuzzFeed to shut down its newsroom
By Matt Collins Article may include affiliate links
Following news of an exec exodus and buyout offers going out to about 30 BuzzFeed News staffers came reports that major shareholders in the parent company are pushing for the newsroom to be shut down completely.
Major unnamed stakeholders in the now-public company have reportedly contacted CEO Jonah Peretti specifically about the company’s BuzzFeed News brand.
The brand currently loses about $10 million a year, according to CNBC sources. While cutting payroll could help with profitability, it’s also not clear if the site can continue to attract eyeballs when there’s fewer people to generate content.
The company used a similar strategy after it acquired HuffPost from Verizon Media in 2021 and cut 70 people from staff.
BuzzFeed News operates separately from the primary BuzzFeed brand, which is largely focused on creating viral content such as quizzes and listicles. The news division, however, has made a name for itself in the industry, including breaking major stories and winning several prestigious journalism prizes.
BuzzFeed as a whole is profitable, but it’s also facing challenges from shareholders.
The company went public in 2021 using a special purpose acquisition vehicle, an IPO-related strategy that appears to have gone sour for it. In BuzzFeed’s case, the SPAC took a hit after some key investors who were to contribute cash to the fund pulled out. BuzzFeed is also being sued by current and former employees over how the IPO was handled, who claim it cost them millions.
In its first outing as a public company, BuzzFeed reported $146 million in revenue for the last quarter of 2021, which was up 18% year over year and $398 million in all of 2021, which was up 24%. It also reported $41.6 million in profit.
However, investors seem to be taking issue with the fact the company missed revenue goals by 30% (Wall Street had been expecting $520 million). The company also noted revenue is expected to be down slightly in the first quarter of 2021.
CNBC reports that shuttering BuzzFeed News could add up to $300 million in market capitalization to a floundering stock.
Going forward, the company is said to be exploring more short-form video, streaming and commerce options as revenue streams.
Like many digital media companies, BuzzFeed makes most of its revenue from showing ads, affiliate marketing links and content partnerships. These approaches generally require the company to attract a large number of readers.
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