BuzzFeed Founder and CEO Jonah Peretti
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BuzzFeed The company announced Tuesday that it is shrinking its money-losing news organization, amid what people familiar with the matter describe as broader investor concern that the division is weighing on the company.
Several major shareholders have urged BuzzFeed CEO Jonah Peretti to shut down the entire news operation, said the people who asked not to be named because the discussions were private. BuzzFeed declined to comment.
Two people said that BuzzFeed News, which is part of its content division, has about 100 employees and loses nearly $10 million annually. The company, which also has advertising and trading departments, Tuesday said Full-year content revenue grew 9% in 2021 to $130 million.
A shareholder told CNBC that closing the newsroom could add up to $300 million in market capitalization to distressed stocks. The digital media company went public via a special purpose acquisition vehicle in December. The shares immediately dropped nearly 40% in the first week of trading and never recovered.
BuzzFeed’s stock nearly fluctuated Tuesday, after the company reported earnings and this story was published.
Peretti has been an outspoken advocate of the importance of BuzzFeed News for years, He called it “good for the world, good for business, and good for our corporate culture.” The organization’s newsroom has won many awards, including Pulitzer Prize And the George Polk Award.
“This morning we announced plans to accelerate profitability for BuzzFeed News, including leadership changes, the addition of a dedicated business development group, and a planned reduction in strength,” Peretti said on Tuesday. “We will prioritize investments around covering today’s top news, culture and entertainment, celebrities, and life online.”
The company has offered voluntary buyouts to fewer than 30 employees, according to a person familiar with the matter, who asked not to be named because the decision is private. The acquisition is only available to reporters and editors who cover investigations, inequality, politics, or science and have worked for the company for more than a year. BuzzFeed plans to make a file Purchase proposal to NewsGuild of New York regarding its US employees.
Instead of shutting down BuzzFeed News, Peretti is trying to make the division profitable. He has a template ready: he made the decision 70 HuffPost employees were laid off last year after Acquisition of the company from Verizon Media.
“Although BuzzFeed is a profitable company, we don’t have the resources to support another two years of losses,” Peretti said at the time. “The most responsible thing we can do is manage our costs and make sure BuzzFeed – and HuffPost – are set up for long-term prosperity. That’s why we made the difficult decision to restructure HuffPost to reach profitability faster. Our goal is for HuffPost to break the tie this year.”
HuffPost is now profitable, according to a person familiar with the organization.
Ahead of the job cuts, BuzzFeed News editor-in-chief Mark Shoves told employees today that he is leaving the company. Samantha Hennig, Executive Editor of Strategy at BuzzFeed News, will run the newsroom on an interim basis.
In its fourth-quarter earnings statement, Buzzfeed said quarterly revenue grew 18% year-over-year to $146 million. Profits rose to $41.6 million, up 29% from the same period the previous year.
Full-year revenue grew 24% year-over-year to $398 million. Net income doubled from last year to $25.9 million.
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