'HuffPost' Can Find Buyer - After Deep Cost Cuts

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.

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