BuzzFeeds founder and CEO Jonah Peretti
Manuel Blondeau | AOP.Press/Corbis | Getty Images
BuzzFeed is shrinking its money-losing news organization, the company announced Tuesday, amid what people familiar with the matter describe as a broader investor concern that the division is burdening the company.
Several major shareholders have urged BuzzFeeds founder and CEO Jonah Peretti to close the entire news operation, said the people, who asked not to be named because the discussions were private. BuzzFeed declined to comment.
BuzzFeeds shares closed above 6% higher at $ 5.27 on Tuesday.
BuzzFeed News, which is part of its content division, has about 100 employees and loses about $ 10 million a year, two of the individuals said. The company, which also has advertising and commerce divisions, said Tuesday that its full-year content revenue grew 9% in 2021 to $ 130 million.
A shareholder told CNBC that a closure of the newsroom could add up to $ 300 million in market value to the struggling stock. The digital media company was listed through a special-purpose acquisition in December. The shares immediately fell nearly 40% in their first week of trading and have not recovered.
Peretti has been a vocal advocate for the importance of BuzzFeed News for years, calling it “good for the world, good for business and good for our corporate culture.” The organization’s newsroom has won several awards, including a Pulitzer Prize and a George Polk Prize.
“This morning, we announced plans to accelerate the profitability of BuzzFeed News, including leadership changes, the addition of a dedicated business development team and a planned reduction in effect,” Peretti said Tuesday. “We will prioritize investments around covering today’s biggest news, culture and entertainment, celebrities and life on the Internet.”
Read more: BuzzFeed says people spend less time on Facebook
The company has offered voluntary redemptions to fewer than 30 employees, says a person with knowledge of the case, who asked not to be mentioned because the decision is private. The purchase is only available to journalists and editors who cover surveys, inequality, politics or science and have worked for the company for more than a year. BuzzFeed plans to make the acquisition proposal to the NewsGuild of New York regarding its U.S. employees.
Instead of shutting down BuzzFeed News, Peretti is trying to make the division profitable. He has a finished template: He made the decision to lay off 70 HuffPost employees last year after buying the company from Verizon Media.
“Although BuzzFeed is a profitable company, we do not 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 ensure that BuzzFeed – and HuffPost – are set up to thrive in the long run. That’s why we have made the difficult decision to restructure HuffPost to achieve faster Our goal is for HuffPost to balance this year. “
HuffPost is now profitable, according to someone familiar with the organization.
Ahead of the job cuts, Mark Schoofs, BuzzFeed News’ editor-in-chief, told staff on Tuesday that he was leaving the company. Samantha Henig, BuzzFeed News’ managing editor of Strategy, will lead the newsroom on a temporary basis.
In its fourth-quarter earnings announcement, Buzzfeed said quarterly revenue grew 18% year-over-year to $ 146 million. Profit rose to $ 41.6 million, an increase of 29% over the same period last year.
Revenue for the full year grew 24% year-over-year to $ 398 million. Net income more than doubled from last year to $ 25.9 million.
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