- November 20, 2020
- Posted by: Stratford Team
- Category: Business
BuzzFeed is buying HuffPost from Verizon in a stock deal that will let the telecom giant retain a minority investment in the digital news and aggregation website, which had been struggling even prior to the pandemic.
Jonah Peretti, founder and CEO of BuzzFeed, was one of the co-founders of the site when it was launched as the Huffington Post with Arianna Huffington in 2006.
Terms of the deal were not disclosed, but the companies say they plan to syndicate content across each other’s platforms, explore monetization opportunities and leverage emerging ad formats.
“I still vividly remember the night we launched HuffPost and the excitement of growing it into a major news outlet during those early years,” Peretti said in a memo to BuzzFeed staffers announcing the deal.
“But we aren’t buying HuffPost because of its illustrious past or my personal connection; we pursued this opportunity because we are excited about the future of HuffPost and all the potential it has to continue to define the media landscape for years to come.”
Peretti said he intends to continue to operate HuffPost as a separate brand and will search for a new editor-in-chief. The post has been vacant since March when Lydia Polgreen resigned after four years to become head of content at podcasting company Gimlet Media, owned by Spotify.
Verizon Media, a unit of Verizon Communications, picked up HuffPost in 2015 when it purchased AOL for $4.4 billion in 2015. AOL had paid $315 million for Huffington Post in 2011.
By 2018, Verizon said it had slashed the value of Oath, the digital media subsidiary that housed HuffPost, Yahoo and AOL, by $4.6 billion as the news sites struggled to compete for ad dollars against Silicon Valley giants like Facebook and Google. The write-down left the unit with a value of just $200 million.
As The Post reported in September, Verizon had been hunting for a buyer of a majority stake to help it cut costs. Even prior to the pandemic, the company had been losing money with revenue of between $45 million and $50 million a year and annual expenses of between $60 million and $70 million, sources said at the time.
BuzzFeed, which enjoyed robust growth in its early years, when it used pet videos and listicles to boost traffic, has also struggled in recent years to compete with Silicon Valley even as it’s added staff in an effort to expand into more serious news coverage.
BuzzFeed began missing its revenue targets starting in 2017. And longtime editor-in-chief Ben Smith resigned earlier this year to become a media columnist at the New York Times.
The website instituted pay cuts of between 5 and 25 percent in March due to the pandemic and then in May furloughed 68 employees. That followed cuts from 2019 due to the changing ad market.
“Though COVID made 2020 more challenging, we’re emerging from the pandemic in a position of strength — profitable, diversified, and more relevant than ever,” he said in the memo to staffers.
“On top of that, COVID is accelerating the shift to digital and benefiting digital-first businesses. If we move quickly and strategically, we can be the formidable leader in our space — with the strongest brands and the most diversified revenue base. We now have the right operating model for a modern digital media company and the opportunity to apply our diversified revenue model to companies that have strong brands and complementary audiences to ours.”
The two companies have unsettled labor relations with their respective unions. BuzzFeed voluntarily recognized the New Guild of New York as the bargaining agent for its editorial employees in July 2019, but has not hammered out a contract.
HuffPost had voluntarily recognized the Writers Guild of America East in 2016 and hammered out a two-year contract in 2017. In February, the union ratified a new three-year contract.