New York Times vs Buz­zfeed

Financial Mirror (Cyprus) - - FRONT PAGE -

Buz­zfeed, a com­pany that has come to call it­self a me­dia op­er­a­tion in­stead of the so­cial me­dia dis­trib­u­tor of clever lists, which it has been for sev­eral years, raised $50 mln, ac­cord­ing to pri­mary in­vestor An­dreessen Horowitz. Ac­cord­ing to sev­eral me­dia re­ports, this val­ues Buz­zfeed at $1 bln, not far from the mar­ket cap of pub­licly traded The New York Times Com­pany (NYSE: NYT), which sits at $1.9 bln. Many me­dia ex­perts ex­pect the rel­a­tive val­ues of the two com­pa­nies to re­verse them­selves soon. Buz­zfeed, they would say, is grow­ing rapidly and is the face of new me­dia. The New York Times, on the other hand, is dy­ing.

The An­dreessen Horowitz ra­tio­nale for the Buz­zfeed in­vest­ment is that Buz­zFeed started out fo­cus­ing on light­weight con­tent like memes, lists, funny pho­tos, etc. This led some in­dus­try ob­servers to dis­miss Buz­zfeed as a “toy”. The com­pany has since moved steadily up mar­ket, fol­low­ing the typ­i­cal path of dis­rup­tive tech­nolo­gies. It now has an editorial staff of over 200 peo­ple cov­er­ing a wide range of topics – pol­i­tics, sports, busi­ness, entertainment, travel, etc – and plans to in­vest sig­nif­i­cantly more in high-qual­ity con­tent in the com­ing years.

An­dreessen Horowitz’s part­ner Chris Dixon added: “Buz­zFeed has tech­nol­ogy at its core. Its 100+ person tech team has cre­ated world-class sys­tems for an­a­lyt­ics, ad­ver­tis­ing and con­tent man­age­ment. En­gi­neers are first class cit­i­zens. Ev­ery­thing is built for mo­bile de­vices from the out­set. In­ter­net na­tive for­mats like lists, tweets, pins, an­i­mated GIFs, etc. are treated as equals to older for­mats like pho­tos, videos, and long form es­says. Buz­zFeed takes the in­ter­net and com­puter science se­ri­ously.”

Most crit­ics say that the old me­dia stal­wart, The New York Times, has none of these things. It is not in the process of be­com­ing se­ri­ous jour­nal­ism. It is one of se­ri­ous jour­nal­ism’s great stars. It would be hard to find a New York Times ex­ec­u­tive who prizes en­gi­neers above writ­ers, re­porters and ed­i­tors.

So, at the tra­di­tional end of the se­ri­ous jour­nal­ist spec­trum, The New York Times has been sav­aged. Its share price reached nearly $80 in April 1998, be­fore broad­band and In­ter­net as we know it.

The stock trades at $12.50 now, af­ter de­clin­ing more than 20% this year. First among the rea­sons for the share price drop is the com­pany’s earn­ings, which get worse ev­ery quar­ter. They were down 0.6% in the most re­cently re­ported quar­ter to $389 mln. The only con­trib­u­tor to the steadi­ness was the sale of dig­i­tal sub­scrip­tions. They rose 32,000 from the pe­riod be­fore to 831,000. The fig­ure is im­pres­sive, but the growth rate has slowed from when the prod­ucts were re­leased. And dig­i­tal ad­ver­tis­ing, which was sup­posed to be the New York Times’ sal­va­tion, grew only 3.4% to $41.5 mln, a growth rate that can­not off­set the col­lapse in print ad­ver­tis­ing.

On the other hand, Dixon claims that Buz­zfeed will pro­duce “triple digit” rev­enues this year, which could be any­thing from $100 mln to $999 mln. And the com­pany will be prof­itable. Pre­sum­ably, its growth rate is spec­tac­u­lar, or An­dreessen Horowitz would not have in­vested at all.

It is dif­fi­cult to say how large Buz­zfeed’s au­di­ence is com­pared to The New York Times sites. Chris Dixon says Buz­zfeed reaches 150 mln a month. In­dus­try au­di­ence mea­sure­ment gold stan­dard comS­core re­ports that Buz­zfeed has 26 mln unique vis­i­tors on desk­tops in the U.S. to The New York Times’ 31.8 mln. Buz­zfeed’s au­di­ence has sub­stan­tial reach be­yond desk­tops to tablets and smart­phones, so maybe Dixon is right about his 150 mln.

Even if Buz­zfeed re­mains a jum­ble of sim­ple lists, it is a jum­ble tens of mil­lions of peo­ple want to read in much greater and greater num­bers. Un­for­tu­nately, The New York Times is mov­ing in the op­po­site di­rec­tion.

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