Verizon Media is said to be seeking a buyer for
HuffPost, the left-leaning news and culture website founded in 2005 -- less than a year after Mark Zuckerberg started Facebook in his dorm
room. We know how that turned out.
With a steep drop in ad spending during the pandemic recession, Verizon has been shopping
HuffPost to publishers such as Group Nine Media, Penske
Media, Bustle Digital Media, Vox Media and J2 Global, owner of Ziff Davis, the
New York
Postreported this week, citing unnamed sources.
HuffPostis likely to record $40 million in revenue this year, posting steep losses with annual expenses of $60 million to $70
million, the newspaper reported. Any buyer would have to take on the publisher as a vanity project or tax-loss carryforward worthy of the Trump Organization.
All kidding aside, the value of
HuffPostdepends on measures of cash flow, such as earnings before interest, taxes, depreciation and amortization — and whether deep cost cuts could put it on a course toward
profitability. Yes, that's a quaint notion in the internet era, but eliminating half of the company's headcount might be necessary to stem the red ink.
HuffPost was somewhat of a
pioneer when Arianna Huffington, Andrew Breitbart, Kenneth Lerer, Jonah Peretti
founded the site as a liberal antidote to The Drudge Report, Breitbart's former employer. He went on to start the conservative Breitbart News, while Lerer and Peretti launched
BuzzFeed.
Since then, the digital publishing market has grown more crowded, with search and social media capturing a bigger share of ad revenue. With the entry of Amazon and retailers
like Walmart, Target and CVS Pharmacy into digital ad sales, the market is growing even more fragmented.
In fact, the digital advertising market is reaching maturity after years of
double-digit growth that helped to fuel revenue for digital publishers. As the market recovers from the pandemic, it's set to enter a period of single-digit growth that will affect every company,
including Google and Facebook.
Google's parent company, Alphabet, recently reported the first decline in ad revenue in its 26-year history, with the pandemic bringing a reckoning that was
bound to happen as Amazon becomes more aggressive with its investments in digital media.
Perhaps HuffPost can downsize and find a buyer like the Slate Group, whose online publication
Slate was originally founded by Microsoft when the tech giant aspired to rival America Online as an internet gateway. Without recounting AOL's history, it ended up buying The Huffington
Post, as it was known, for $315 million in 2011. Verizon absorbed the publisher when it bought AOL four years later for about $4.4 billion, a valuation that's unfathomable now.