BuzzFeed will lay off 15% of its staff and close its news department, BuzzFeed CEO Jonah Peretti wrote in an email to employees on Thursday.
The layoffs will affect BuzzFeed’s business, content, administrative and technical teams. About 180 people will likely be made redundant. The firm’s staff numbered roughly 1,200 according to essentially the most recent securities filing.
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BuzzFeed News, part of the content division of the digital media company, had about 100 employees and was losing about $10 million a yr, two people conversant in the matter told CNBC. It stood out from BuzzFeed’s predominant viral content-generating brand with easy news and investigative reports. BuzzFeed news won the Pulitzer Prize in 2021 for reports of mass detentions of Muslims in China. Several large shareholders called on Peretti to shut down its news business.
The corporate’s shares have fallen about 90% since its IPO in late 2021. On Thursday, shares fell nearly 20% to close at 75 cents.
The news comes at a difficult time for digital media corporations as publishers cut jobs and advertisers cut spending. These cuts affected corporations similar to the publisher of the Wall Street Journal, Dow Jones and Vox Media. In January, Vice Media resumed the sale process at a lower valuation, CNBC previously reported. The corporate, which was valued at $5.7 billion in 2017, was expected to fetch a price below $1 billion.
“There is not any more free lunch in [digital media] within the sense that the promoting market this yr is just not particularly strong and all the things has to be earned,” said Jonathan Miller, president of Integrated Media, which makes a speciality of investing in digital media.
Miller added that going public might be not the very best strategy for digital media corporations like Buzzfeed. “There aren’t that many public corporations in digital media. And I believe investment dollars on the whole will likely be hard to come by unless you show a very differentiated plan.”
BuzzFeed wasn’t the one digital media company to announce layoffs on Thursday. An insider, owned by German conglomerate Axel Springer, told staff Thursday morning that it was cutting its total workforce by 10%, including unionized and unaffiliated staff, according to an internal memo viewed by CNBC. Affected staff will receive not less than 13 weeks of basic pay and medical advantages will likely be covered until August, the memo said.
Insider executives said the layoffs were due to a big recession in ad spend in technology and finance, in addition to disruptions in distribution and revenue sharing.
“As you already know, your industry has been under considerable pressure for over a yr. The economic turmoil that has affected many of our customers and partners can also be affecting us,” Insider CEO Barbara Peng wrote in a memo. “Unfortunately, so as to keep our business healthy and competitive, we want to downsize our team. We’ve got tried very hard to avoid this step and we apologize for the impact it should have on many of you.”
Peretti said the HuffPost and BuzzFeed flagship site will open up a number of roles for BuzzFeed News editors and reporters. The corporate can even cut budgets, vacancies and most other discretionary expenses.
“We have faced more challenges than I can count over the previous few years: the pandemic, the waning SPAC market that brought in less capital, the tech recession, the tough economy, the declining stock market, the slowing digital promoting market, and the regular audience and platform changes,” he wrote. Peretti.
Peretti pleaded guilty to not managing these changes higher and was “slow to accept that big platforms wouldn’t provide the distribution or financial backing required to support premium, free journalism built specifically for social media.”
Peretti also wrote that chief revenue officer Edgar Hernandez and chief operating officer Christian Baesler had decided to leave the corporate.
BuzzFeed laid off nearly 12% of its workforce, or roughly 180 employees, in December 2022. The corporate says the layoffs were in response to tough economic conditions and the acquisition of Complex Networks. BuzzFeed reduced its footprint in Latest York City last yr and can reduce its Los Angeles properties from 4 buildings to one.
The digital media company scaled down its news business in an attempt to make BuzzFeed News profitable, leading to the departure of several editors. Last yr, the corporate went public through a special purpose vehicle that fell nearly 40% in its first week of trading.
One shareholder told CNBC last yr that closing the newsroom might be $300 million in market capitalization of the stock.
Peretti also wrote that the corporate is proposing job cuts in some international markets.
–Lilian Rizzo of CNBC contributed to this text.
Read the total note from Jonah Peretti below:
Hello everyone,
I’m writing to announce some difficult news. Today, we’re reducing staff by roughly 15% across our business, content, technical and administrative teams and are starting the method of shutting down BuzzFeed News. As well as, we propose employment reductions in some international markets.
Affected employees (apart from those in BuzzFeed news) will receive an email from HR shortly. In case you are receiving this message from me, you aren’t affected by today’s changes. For BuzzFeed News, we have now began discussions with the News Guild about these activities.
As part of today’s changes, each our CRO Edgar Hernandez and COO Christian Baesler have made the choice to leave the corporate. I’m grateful to them for his or her passion and dedication to Complex and BuzzFeed, Inc. Christian will likely be with us until the top of April and Edgar until the top of May to help with the transition.
Marcela Martin, our CEO, will immediately assume responsibility for all revenue functions. Within the US, Andrew Guendjoian is our latest head of sales and Ken Blom will proceed as head of tax operations. Globally, international sales will likely be transferred to Wealthy Reid, Head of International and Head of Studio, who also reports to Marcela.
I actually have great confidence on this revenue management team and within the early plans I’ve seen to speed up the efficiency of our business organization. We’ll share more about their plans next week in Business All Hands (and we’re extending the invitation to your complete company).
The changes being introduced by the business organization today are focused on reducing layers of their organization, increasing the speed and effectiveness of presentations, streamlining our product range, doubling the number of creators and bringing AI improvements to every aspect of our sales process.
While layoffs are going down in almost every branch, we have now determined that the corporate can now not fund BuzzFeed News as a standalone organization. In consequence, we will likely be contacting the News Guild regarding our cost reduction plans and what this can mean for union members affected.
HuffPost and BuzzFeed Dot Com have indicated that they will likely be opening up a variety of roles for BuzzFeed News members. These roles will likely be aligned with the business objectives of these departments and can align with the talents and strengths of many BuzzFeed News editors and reporters. We raised this concept with the News Guild this morning and look forward to further discussions. Moving forward, we could have one news brand at HuffPost that’s profitable, with a loyal audience right on the front page.
I need to explain a bit more why we made these very painful decisions. Over the past few years, we have now faced more challenges than I can count: the pandemic, a weakening SPAC market that brought in less capital, a tech recession, a troublesome economy, a falling stock market, a slowing digital promoting market, and regular audiences and platform shifts. Coping with all these hurdles directly is one of the the reason why we had to make difficult decisions to cut more jobs and cut expenses.
But I also want to be clear: I could have managed these changes higher since the CEO of this company and our leadership team could have performed higher despite these circumstances. Our job is to adapt, change, improve and keep going despite the world’s challenges. We are able to and can do higher.
Particularly, the mixing process of BuzzFeed and Complex and the unification of our two business organizations ought to be faster and higher. The macro environment is difficult, but we had the potential to generate way more revenue than we have now achieved within the last 12 months.
Moreover, I made a decision to overinvest in BuzzFeed News because I really like their work and mission a lot. This allowed me to accept that the large platforms wouldn’t provide the distribution or financial backing required to support premium, free journalism built specifically for social media.
More broadly, I wish I had maintained higher profitability standards inside the company to give us the buffer we wanted to take care of the economic and industry crisis and avoid painful days like today. Our mission, our cultural impact and our audience are paramount, but we want a stronger business to protect and sustain this essential work.
Please note that we have now exhausted many other austerity measures to preserve as many roles as possible. We limit budgets, vacancies, travel and entertainment, and most other non-revenue discretionary expenses. Just as we reduced our Latest York footprint last yr, we can even reduce our Los Angeles properties from 4 buildings to one, saving thousands and thousands in costs and in addition reflecting our current hybrid workflow.
I actually have learned from these mistakes and the team that’s moving forward has also learned from them. We all know that the changes and enhancements we’re making today are essential steps to constructing a greater future.
Over the following few months, we’ll work together to lead a more agile and focused business organization that may generate more revenue. We are going to focus our news efforts on HuffPost, a brand that’s profitable and has a highly engaged, loyal audience that’s less depending on social media platforms. We are going to empower our editorial teams across all our brands to do the very best creative work and construct an interface where that work may be packaged and delivered more effectively to advertisers. We can even introduce more customer innovation in the shape of creators, AI and cultural events that may only occur in BuzzFeed, Complex, HuffPost, Tasty and First We Feast.
It might not appear to be it today, but I’m convinced that the longer term of digital media is ours. Our industry is suffering and prepared for a resurgence. We’re making great efforts today and can begin to fight our way to a vibrant future.
On Monday, we’ll begin discussions with each division on how to proceed. Within the meantime, I hope you will find a while for yourself this weekend.
Thanks for supporting one another in a difficult day.
Jonah