BuzzFeed became the first digital-only media company to go public last December. It marked another rite of passage Tuesday morning with its first quarterly earnings report as a public company.
As is often the case with these reports, BuzzFeed’s was a mixed bag. It did record healthy revenue growth — 24% — for the full year of 2021 and a profit. On the other hand, CEO Jonah Peretti conceded, the company is facing a tough challenge and some revenue declines and potential operating losses this year.
The reason? Its young target audience is moving away from Facebook to newer platforms like TikTok and Instagram. BuzzFeed is adapting by producing more short-form videos. That builds audience and engaged time with the content. However, the added traffic does not yet generate significant advertising or commerce revenue as its display on Facebook has done.
Separately, BuzzFeed announced that Mark Schoofs, editor-in-chief of BuzzFeed News, is leaving the company. Samantha Henig, who runs the business side of that division, will take over as interim editor-in-chief.
In a note to staff, Peretti wrote that he and Henig “will talk to BuzzFeed News later today about our plans to position BuzzFeed News to thrive in the current media ecosystem, accelerate its path to profitability, and become a stronger financial contributor to the overall BuzzFeed, Inc. business. This means that BuzzFeed News will need to get smaller, which we have reached out to discuss with the union–and to prioritize the areas of coverage our audience connects with most.”
A spokesman said that shrinking the company’s overall workforce by about 1.7% is part of the plan to avoid continuing losses.
In a memo to staff, Schoofs said that the company hopes to achieve the planned reduction via buyouts rather than layoffs. The move is necessary, he wrote, to bring the division, which has long been subsidized by other parts of BuzzFeed’s operation, into profitability by the end of 2023.
Schoofs said that deputy editor-in-chief Tom Namako is also leaving the company. Separately, Variety reported that head of investigations Ariel Kaminer is departing, too.
BuzzFeed acquired HuffPost 11 months ago. That added both audience and the volume of news content, but BuzzFeed also has had to absorb HuffPost’s operating losses. BuzzFeed immediately made cuts at HuffPost, including shutting down HuffPost Canada
It made another acquisition later in the year, spending $300 million for pop culture and entertainment site Complex Networks, and faces the costs of integrating that company into its existing lines of business.
News has long been part of what BuzzFeed has to offer, but the company’s bigger effort goes into lighter content, heavy on quizzes and listicles, a format it helped popularize.
BuzzFeed’s initial public offering in December did not go as hoped. The stock was priced at $10 a share, but, in the space of a week fell to half that, where it has remained.
A group of employees sued last week, claiming the structure of the offering blocked them from selling their shares quickly as their value declined.
Nonetheless, the BuzzFeed IPO had the benefit of raising capital with which the company could finance the 2021 acquisitions and future ones.
Even after the poor stock performance, BuzzFeed’s market capitalization (the number of shares times price) is roughly the same as Gannett, the nation’s largest newspaper chain with 250 dailies. That suggests that even with financial hiccups, the market prefers an all-digital media company to one still making a transition from print.
Peretti was co-founder of HuffPost and then founder of BuzzFeed in the mid-2000s. As he said in an earnings conference call Tuesday, the HuffPost audience, older and more news-oriented, is complementary to BuzzFeed’s, which is targeted at young adults.
Both have had editorial successes. HuffPost won a Pulitzer Prize for national reporting in 2012 for stories on wounded veterans. BuzzFeed News won its first Pulitzer last year for an exposé of China’s mass detention of Muslims.
The business fortunes of BuzzFeed will likely have ripples for other large and established digital news companies. The New York Times reported in December that others like Vice and Vox had been considering IPOs of their own but backed off after seeing the results of BuzzFeed’s
Tuesday’s announcement had little immediate impact on BuzzFeed stock, with shares trading up slightly at just over $5 a share mid-morning.
Never one for modesty, BuzzFeed describes itself in press releases as “a premier digital media company for the most diverse, most online, and most socially engaged generations the world has ever seen.”