Founder looks to mergers to restore Buzzfeed’s fortunes
BuzzFeed has long positioned itself as the future of publishing – it practices the mysterious arts of digital media better than anyone. From the beginning, its ability to know, before anyone else, what sort of content would go viral delivered it a large audience and helped the company attract half a billion dollars in venture money and a steady stream of mostly positive media attention.
Then came 2017, when the company fell far short of its revenue goal of $350 million. Sales instead came in flat at about $260 million, according to three people with knowledge of the matter who spoke on the condition of anonymity to discuss the company’s finances.
One hundred people were laid off. Considerations for a public offering in late 2018 were shelved.
But efforts to re-establish its fortunes have already begun. The company expects to surpass $300 million in revenue this year, the three people said.
To get there, BuzzFeed now sells cookware at Walmart and accepts banner ads on its webpages. It runs a morning show on Twitter, a weekly one on Facebook and another on Netflix, all of which are paid for by the platforms. Its newsroom and its entertainment studio churn out thousands of videos and articles each week, to an audience of 690 million people every month. The company also gets a commission when a reader buys a product on Amazon or other commerce sites after clicking through from one of BuzzFeed’s recommended product links, known as affiliate marketing.
And on Monday, BuzzFeed News announced a membership model that provides exclusive access to newsletters and behindthe-scenes content for $5 a month. A $100 donation gets you a tote bag. (BuzzFeed’s website will remain free.)
Still, these are largely stopgaps. The better solution, according to Jonah Peretti, a founder of the company and its chief executive, would require a much more audacious effort: a series of mergers with five or six top internet publishers.
“You have Vice and Vox Media and Group Nine and Refinery,” Peretti said. “There’s tons of them that are doing interesting work.”
He extolled the logic of combining forces: A larger entity could lobby for a higher percentage of the ad dollars Facebook and Google share with publishers whenever their content, videos in particular, run on the platforms. In turn, publishers can supply them with content that is safe for users and friendlier for advertisers.
He pointed to how Facebook, YouTube and Twitter have had to answer for the latest content crisis plaguing social media. In addition to Russia’s misinformation campaign to try to sway the 2016 presidential election in the United States, hate speech and conspiracy theories regularly show up on their platforms.
“Having some bigger companies that actually care about the quality of the content feels like something that’s very valuable,” he said.
Though initial discussions involving a few companies have taken place, they were all very preliminary, according to five people with knowledge of the matter who spoke on the condition of anonymity to describe private discussions. BuzzFeed has spoken to at least one other company, while other publishers have had separate discussions, these people said. Peretti declined to name which companies he has talked to regarding any potential mergers.
Any deal would be difficult to pull off given the number of investors involved and the compounding losses that would result from combining several money-losing startups. Staff cuts would be inevitable.
Still, publishers have been getting squeezed by the tech platforms as online advertising rates con- tinue to level off.
“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” he said.