Update (1350ET): After releasing its (abysmal) first quarterly results as a public company, Buzzfeed has reportedly hit upon a novel strategy for reviving its dying business: shutting down its newsroom.
Presumably, this would mean relying entirely on unpaid high schoolers to produce its content.
According to a CNBC report, several large investors have urged CEO Peretti to shut down Buzzfeed news, which still employs dozens of journalists.
One shareholder reportedly believes that shutting down the newsroom could add as much as $300 million to the company's market capitalization. Right now, Buzzfeed News has more than 100 employees, and currently costs the company about $10 million a year to run.
Peretti said on Tuesday's earnings call that the company was already planning another round of layoffs.
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Measured against the lofty standards that Buzzfeed founder Jonah Peretti pitched to the company's venture capital backers nearly ten years ago, the company's financial performance has been an abject failure. And after replenishing its capital reserves with a SPAC offering late last year, BZFD added thousands of retail (and many institutional) investors to its growing list of bagholders.
Anybody who bought shares during or shortly after the company's December de-SPACing has been saddled with heavy losses. And unfortunately for them, the company's financial position has continued to deterioriate, as the FT reported Tuesday that the company has so far missed the lofty revenue projections it pitched to its SPAC fund investors by more than 30%.
When it agreed last June to go public in a deal with a blank cheque company, BuzzFeed told potential investors its revenue would soar to $521mn in 2021, $654mn in 2022, and $1.1bn in 2024, driven by what it called “rapid scale and monetisation with a deep understanding of virality and social”.
Special purpose acquisition vehicle 890 Fifth Avenue Partners raised $288mn ahead of its merger with BuzzFeed, but those investors pulled 94 per cent of their money out before the company went public in December.
Their caution was validated on Tuesday as BuzzFeed reported revenue for 2021 of only $398mn in its maiden annual results as a public company. This was up from $321mn for 2020, but was boosted by two acquisitions completed last year - those of digital media companies HuffPost and Complex Networks. BuzzFeed declined to say how much additional revenue was provided by those deals.
As if these financial results weren't bad enough, three of the site's top editors announced Tuesday that they are leaving the company, the latest in a seemingly never-ending wave of defections.
same morning: Buzzfeed reports revenue is 31% lower than it promised to investors last year.— Anna Nicolaou (@annaknicolaou) March 22, 2022
Buzzfeed told investors it would make $520m in 2021, and this would soar to $1.1bn in 2024.
actual 2021 revenue: $398m. https://t.co/QePtLjHN78
Desperate for something to tell its investors, CEO Jonah Peretti whined to investors about how the site's readers were abandoning Facebook (integrating its content with Facebook was supposed to be a key part of Buzzfeed's original business strategy, along with its failed pivot to video). As a result, management is now banking on a "pivot to TikTok".
this is also part of the restructuring for buzzfeed news. 'pivot to tiktok' is the new pivot to video https://t.co/FM8D8gIQLf— Anna Nicolaou (@annaknicolaou) March 22, 2022
To top it off, the abysmal performance of the company's stock price has placed its other post-SPAC growth strategy - hoovering up other failing digital brands (like the Huffington Post and Complex, two companies it acquired last year) - further out of reach (since Buzzeed's stock is the currency it was supposed to depend on).
As if all this weren't enough, former Buzzfeed editor-in-chief Ben Smith has left the NYT to launch a new media company with an inscrutable name: Semafor. No, it's not a pharmaceutical company, it's another media venture aimed at America's 200M "college educated" readers.
According to Axios, which broke the news of Smith's new venture, "the word "semaphore" is derived from the ancient Greek word meaning "sêma," or signal, and "phore," which means carrier or bearer of a signal."
What's more, Axios said Ben and his brother Justin Smith are "very confident" that the new company "is going to be a very viable and successful option."
Any VCs who buy into this pitch probably deserve to be fleeced of their millions.