Last night’s news that NBCUniversal (a broadcast company) was investing in BuzzFeed (a digital media company) for a valuation that approaches The New York Times (a legacy company) sent journalists to Twitter to discuss the comparisons:
BuzzFeed is now worth $1.7B https://t.co/okZNPZNYjs How that compares in publishing:
— Gerry Smith (@gerryfsmith) October 21, 2016
Buzzfeed now valued at just a tick below The New York Times. https://t.co/9XVU3fOvHc
— Alex Weprin (@alexweprin) October 21, 2016
As my colleague Rick Edmonds reminds me, these aren’t apples-to-apples comparisons. BuzzFeed has separate divisions for news and entertainment, and its entertainment efforts are widely viewed as more profitable than its journalism.
This is largely owing to the fact that BuzzFeed Entertainment is comparatively video-rich, which means the lighter side of the business can reap the benefits of higher advertising rates and increased distribution on social media.
Jay Yarow, the executive editor at Business Insider, made that point on Twitter this morning:
BuzzFeed is a different business than NYT! Stop making this comparison, unless you think NYT should spin up an entertainment business. https://t.co/psn8u6w8GD
— Jay Yarow (@jyarow) October 21, 2016
Yarow is right to point out the division, one that’s been recognized in the last two years by several major media corporations.
As print ad revenue continues to fall, companies with both newspaper and broadcast assets have recognized the difference in value between the two and opted to separate their more lucrative video businesses from their ink-and-paper ones. Gannett, Tribune Company and Scripps have all executed corporate spinoffs, leaving their print businesses to fend for themselves or be purchased by other companies (as Scripps was by Gannett in April).
But there’s a parallel movement afoot in media that makes the comparison seem reasonable. Given the emphasis that Facebook has put on video, many news organizations — including The New York Times — are investing heavily in production of video content. Higher CPMs and a ready audience are driving demand for video, which is being met by generally text-centric outlets like The Washington Post, Vox and The Times.
In a world where traditional divisions between media companies are disappearing, perhaps valuing BuzzFeed alongside The New York Times isn’t outrageous as it sounds.