BuzzFeed’s First Earnings Report Follows Chilling of SPAC Digital Media Deals

BuzzFeed’s public listing continues to be a cautionary tale for digital media startups seeking new funding and looking to go public.

Why is it important: The public market potential for newspaper companies looked strong in 2020, but the market has since cooled. Today, investor pressure prompted dramatic cuts to the Pulitzer Prize-winning news division of BuzzFeed.

Driving the news: BuzzFeed’s first earnings report fell far short of what it promised SPAC investors. The company posted $398 million in revenue and $26 million in profit for 2021, well below the $521 million in revenue and $57 million in profit it originally forecast.

  • CEO Jonah Peretti announced the voluntary departures and buyouts of executives for his news division because he no longer plans to subsidize the unprofitable business with money from other departments.
  • The Guardian reported in May 2020, amid BuzzFeed’s earlier layoffs, that Peretti said he was “investing heavily” in news. He estimated losing $10 million in 2020 and $6 million in 2021.
  • But several major shareholders had since urged Peretti to shut down the news division, CNBC reported Tuesday.
  • During Tuesday’s conference call, Peretti also announced layoffs for 1.7% of BuzzFeed’s total workforce — or about 25 jobs — affecting BuzzFeed Video and Complex’s editorial team.

State of play: Digital media companies considering SPAC deals had watched BuzzFeed’s stock market debut, as Axios’ Sara Fischer wrote in November. Most of them have since delayed any plans.

  • BDG suspended its plans, founder and CEO Bryan Goldberg told Axios last month.
  • Vox media is focused on growing as a private company, sources also told Axios last month.
  • Nine Media Group formed a SPAC last year, but has yet to introduce a public company with it. Vox Media has since acquired Group Nine, and SPAC has until January 2023 to act.
  • vice media raised more private funds after months of SPAC talks.
  • Forbes is still planning its SPAC merger, however, and is days away from its deadline.

Yes, but: Some media entrepreneurs still see it as an opportunity. Ben Smith, who built BuzzFeed’s newsroom in 2012 as the first EIC and left for The New York Times in 2020, is raising money for his new media startup, Semafor. Other news organizations have gone the non-profit route.

The bottom line: Media owners’ fears about the public market — especially when it’s as volatile as 2022 — impacting their business decisions have proven true.

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