The news this week that BuzzFeed, the high-profile digital media company that had a disappointing IPO last year, is reducing the size of its award-winning but money-losing news division under pressure from investors, puts the company at an existential crossroads.
It can focus on its unique brand of light viral content, often deployed in the service of marketers, or it can complement that distinct voice with the gravitas that a news organization brings.
Perhaps, in the long term, it can’t do both.
BuzzFeed News has been a world-class news organization, winning a Pulitzer Prize and a George Polk Award in 2021 for separate stories. It also made headlines in 2017 when it became the first news organization to publish the Steele Dossier, a collection of memos that purported to connect presidential candidate Donald Trump to Russian operatives.
But now the newly public company, its stock languishing at around $4 and $5, is under financial pressure from shareholders, and the news division is said to be losing $10 million per year. As a result, in connection with Tuesday’s earnings announcement for the fourth quarter and full-year 2021, CEO Jonah Peretti told the staff in a memo that the news division is being reduced through voluntary buyouts, according to The New York Times.
At the same time, Editor in Chief Mark Schoofs, who took over the job in 2020, said that he would be stepping down and that Tom Namako, the deputy editor in chief, and Ariel Kaminer, the executive editor of investigations, would also be departing. Peretti said the cuts will amount to 1.7% of the workforce and also include the video team and content-producers at Complex Networks, which BuzzFeed acquired as part of its Special-Purpose Acquisition Company IPO in December.
Going forward, Peretti said in the memo to the staff obtained by the New York Times, BuzzFeed News will need to “prioritize the areas of coverage our audience connects with the most.”
All this is a significant setback and course reversal for BuzzFeed. News, Peretti wrote in a 2015 article, “is the heart and soul of any great media company.”
“News might not be as big a business as entertainment, but news is the best way to have a big impact on the world,” Peretti continued. “Having a great news organization has a positive effect on BuzzFeed's entire culture and makes the whole organization better. Even our team members who work on entertainment content or on the business side are proud to work at a company that is breaking big, important stories.”
“News is also becoming an increasingly good business,” Peretti wrote.
Apparently, it’s not good enough, as the company continues a rear-guard action with its news division. In 2019, it cut the overall size of the workforce, including in the news division, by 15%.In its earnings report, BuzzFeed reported overall revenue for 2021 of $398 million, a 24% year-over-year increase. This upswing was led by double-digit growth in advertising and commerce, the company said. Q4 revenue was $145.7 million, for an increase of 18% from 2020. BuzzFeed ad revenue grew 37%, to $205.8 million, and content-related revenue grew 9%, to $130.2 million. Adjusted EBITDA grew by 35%, to $41.5 million, or 10.4% of revenues.