Insert your own BuzzFeed emojis here for this surprise deal.
After running into a cash crunch as a publicly traded company, BuzzFeed has found a buyer in Byron Allen, the Comics Unleashed CBS late-night host and mogul behind some assets of The Weather Channel, as well as a patchwork collection of syndicated shows, channels and 13 broadcast affiliate TV stations that comprise his Allen Media Group.
In a $120 million agreement, Allen will take a 52 percent majority stake in the company as well as the CEO role from founder Jonah Peretti, funded by $20 million in cash and $100 million in the form of a promissory note due five years after deal close, which is expected in May. The move was revealed as BuzzFeed reported quarterly earnings that included a nearly 20 percent decline in advertising revenue year-over-year. The company’s net loss for the quarter was $15.1 million, up from $12.5 million last year.
In addition to the deal with Allen, Peretti has signaled that there will be more cost cuts at BuzzFeed as well as the spinoff of its studios division and food brand Tasty into a separate entity. A move like this could be a precursor to a potential sell off of that division to another interested suitor on the hunt for a unit that once was at the forefront of viral cooking and food videos.
The sale for just $20 million upfront marks a dramatic fall from where BuzzFeed stood at its height of cultural relevance, when Peretti had reportedly turned down a $650 million offer from Disney. (“We were crazy not to sell the company in 2014,” former BuzzFeed News editor-in-chief Ben Smith has said.) At that time, BuzzFeed had surfed the waves of Mark Zuckerberg’s decision to send millions of readers from Facebook outside of the platform to news sites.
In addition to the deal with Allen, Peretti has signaled that there will be more cost cuts at BuzzFeed as well as the spinoff of its studios division and food brand Tasty into a separate entity. A move like this could be a precursor to a potential sell off of that division to another interested suitor on the hunt for a unit that once was at the forefront of viral cooking and food videos.
The sale for just $20 million upfront marks a dramatic fall from where BuzzFeed stood at its height of cultural relevance, when Peretti had reportedly turned down a $650 million offer from Disney. (“We were crazy not to sell the company in 2014,” former BuzzFeed News editor-in-chief Ben Smith has said.) At that time, BuzzFeed had surfed the waves of Mark Zuckerberg’s decision to send millions of readers from Facebook outside of the platform to news sites.
BuzzFeed’s listicles, quizzes, memes and content mix was built for an era where users found links on social media, then shared them on their own accounts to followers. In a TikTok and Instagram era fueled by personalized algorithms and endless video clips, that model is now far less effective. BuzzFeed’s flagship site reached about 33 million unique visitors in April, down year-over-year, per Comscore. That number is also far smaller than scaled national newspapers like USA Today (nearly 50 million) or celebrity glossies like People (more than 65 million). In its next era, BuzzFeed may choose to bet in the video streaming space.
For Allen, taking over BuzzFeed at a bargain price follows a playbook that he’s been operating on for years, including picking up The Weather Channel’s linear TV brand in 2018 (its digital operation and data-driven apps are owned by a private equity firm) and buying and flipping local television stations. Most recently, Allen paid CBS in order to take over Stephen Colbert’s The Late Show time slot and replace it with his Comics Unleashed variety series.
(Excerpt) Read more in: The Hollywood Reporter