BuzzFeed BuzzFeed CEO Jonah Peretti (Jonah Peretti) wrote in an email to employees on Thursday that it will lay off 15% of its staff and close its news department.
The layoffs will affect BuzzFeed’s business, content, management and technology teams. The number of layoffs is about 180. The company employs about 1,200 people as of its most recent securities filing.
BuzzFeed News, part of the content division of the digital media company with about 100 employees, is losing about $10 million a year, two people familiar with the matter told CNBC last year. It differs from the main BuzzFeed brand, which produces viral content, by offering straight news and investigative reporting. BuzzFeed News won the pulitzer prize 2021 reports on mass detention of Muslims in China. Several major shareholders have urged Peretti to close its news business.
The company’s shares have fallen about 90% since its initial public offering in late 2021. The stock fell nearly 20 percent Thursday to close at 75 cents.
The news comes at a tough time for digital media companies, as publishers are laying off staff and advertisers cut spending. The cuts have affected companies such as Wall Street Journal publisher Dow Jones and Vox Media. In January, Vice Media restarted the sale process at a lower valuation, CNBC previously reported. The company, valued at $5.7 billion in 2017, is up for sale for less than $1 billion.
“In a sense, there’s no free lunch anymore in the (digital media) space because the ad market isn’t particularly strong this year and everything has to be earned,” said Jonathan Miller, chief executive of Digital Media-focused Integrated Media Investments. .
Going public may not be the best strategy for a digital media company like Buzzfeed, Miller added. “There aren’t many public companies in the digital media space. And I think unless you can show a really differentiated plan, it’s going to be hard to get funding.”
BuzzFeed wasn’t the only digital media company to announce layoffs on Thursday. Insider, which is owned by German conglomerate Axel Springer, told employees Thursday morning that it would lay off 10% of its workforce, both unionized and nonunion, according to an internal memo seen by CNBC. Affected employees will receive at least 13 weeks of base pay and medical benefits through August, the memo said.
Internal executives said the layoffs stemmed from a severe downturn in technology and financial ad spending, as well as disruptions in distribution and revenue share.
“As you know, your industry has been under significant stress for over a year. Economic headwinds have hurt many of our customers and partners, and have affected us,” Insider President Barbara Peng wrote in the memo. “Unfortunately, in order to maintain the health and competitiveness of our company, we need to downsize our team. We worked hard to avoid taking this step, and we apologize for the impact it has had on many of you.”
Peretti said the Huffington Post and BuzzFeed flagship sites will open positions for BuzzFeed News editors and reporters. The company will also reduce budgets, open positions and most other discretionary spending.
“Over the past few years, we’ve faced more challenges than I could have imagined: pandemic, declining capital generation from a declining SPAC market, tech recession, economic downturn, stock market declines, digital ad market deceleration and sustained audience and platform shifts,” Peretti wrote.
Peretti admits he hasn’t managed the changes better, and that it’s “difficult to accept that the big platforms won’t provide the distribution or financial support needed to support premium free journalism built for social media.”
Peretti also wrote that revenue chief Edgar Hernandez and operations chief Christian Baesler decided to leave the company.
Back in December 2022, BuzzFeed laid off nearly 12% of its workforce, or about 180 employees. The company said the layoffs were in response to a challenging economic situation and the acquisition of Complex Networks. BuzzFeed reduced its New York footprint last year and reduced its Los Angeles real estate from four buildings to one.
The digital media company scaled back its news operations in an attempt to make BuzzFeed News profitable, leading to the departure of several editors. The company went public last year through a special purpose acquisition vehicle, and shares fell nearly 40% in their first week of trading.
Closing the newsroom could cost the stock $300 million in market value, one shareholder told CNBC last year.
Peretti also wrote that the company is proposing layoffs in some international markets.
–CNBC’s Lillian Rizzo contributed to this article.
Read Jonah Peretti’s full explanation below:
I am writing to announce some difficult news. Today, we are laying off approximately 15% of our staff across our business, content, technology and management teams, and are beginning to shut down BuzzFeed News. In addition, we have proposed layoffs in some international markets.
Affected employees (except those on BuzzFeed News) will receive an email from HR shortly. If you received this note from me, you are not affected by today’s change. For BuzzFeed News, we have begun discussing these actions with the News Guild.
As part of today’s changes, our CRO Edgar Hernandez and COO Christian Baesler have both made the decision to step down from the company. I am grateful for their passion and dedication to Complex and BuzzFeed, Inc. Christian will be with us at the end of April and Edgar will be with us at the end of May to help with the transition.
Our President, Marcela Martin, will take immediate responsibility for all revenue functions. In the US, Andrew Guendjoian is our new Head of Sales and Ken Blom will continue as Head of Revenue Operations. Globally, International Sales will be led by Rich Reid, International Director and Studio Head, reporting to Marcela.
I have full confidence in this revenue leadership team and the early plans I’ve seen from them to accelerate the performance of our business organization. We’ll share more about their program next week at Business All Hands (we’ll be sending out invites company-wide).
The changes business organizations are making today are focused on reducing organizational layers, increasing merchandising speed and efficiency, simplifying our product portfolio, doubling down on creators, and starting to introduce AI enhancements into every aspect of our sales process.
While nearly every division is laying off staff, we’ve determined that the company can no longer continue to fund BuzzFeed News as an independent organization. We will therefore be engaging with press associations about our cost-cutting plans and what this means for affected union members.
HuffPost and BuzzFeed Dot Com have indicated that they will open up select roles to members of BuzzFeed News. These roles will align with the business goals of these divisions and match the skills and strengths of BuzzFeed News’ many editors and reporters. We raised this idea with the News Guild this morning and look forward to discussing it further. Going forward, we will have a profitable single news brand within the Huffington Post with loyal direct front page readers.
I want to explain a bit more about why we make these very painful decisions. Over the past few years, we’ve faced more challenges than I could have imagined: pandemic, declining capital generation from a declining SPAC market, tech recession, economic downturn, stock market decline, digital ad market deceleration, and continued audience and platform transfer. Dealing with all of these impediments at once is part of the reason we need to make difficult decisions to eliminate more jobs and reduce expenses.
But I also want to be clear: As CEO of this company, I could have handled these changes better, and our leadership team could have performed better under these circumstances. Our job is to adapt, change, improve and execute as the world faces challenges. We can and will do better.
The integration process of BuzzFeed and Complex in particular, and the unification of our two business organizations, should have been executed faster and better. The macro environment is tough, but we have the potential to generate more revenue than we have delivered over the past 12 months.
Also, I decided to overinvest in BuzzFeed News because I really like their work and mission. This makes it hard for me to accept that the big platforms won’t provide the distribution or financial support needed to support quality free journalism built for social media.
More broadly, I regret that I did not hold the company to a higher standard of profitability to provide us with the cushion we need to weather the economic and industry downturn and avoid painful days like today. Our mission, our impact on culture, and our audience are paramount, but we need a stronger business to protect and sustain this important work.
Please know that we have exhausted many other cost-saving measures to preserve as many jobs as possible. We are reducing our budget, job vacancies, travel and entertainment, and most other discretionary non-revenue-generating expenses. Just as we reduced our footprint in New York City last year, we will reduce our real estate in Los Angeles – from four buildings to one, which will save millions of dollars in costs and reflect our current state of work mix .
I learned from those mistakes, and so did the team going forward. We know that the changes and improvements we make today are necessary steps in building a better future.
Over the next few months, we will work together to run a more agile and focused business organization with the ability to generate additional revenue. We will focus our journalism efforts on The Huffington Post, a profitable brand with a highly engaged, loyal audience and less reliance on social platforms. We will empower editorial teams across all of our brands to do their best creative work and build an interface where that work can be packaged and brought to advertisers more effectively. We’ll bring customers more innovations in the form of creators, artificial intelligence, and cultural moments that can only happen at BuzzFeed, Complex, HuffPost, Tasty, and First We Feast.
It might not feel that way today, but I believe the future of digital media belongs to us. Our industry is hurting and poised to be reborn. Today we are fighting hard, and we will start fighting for a better future.
On Monday, we will begin conversations with each department about the way forward. In the meantime, I hope you all make time for yourselves this weekend.
Thank you for supporting each other on a tough day.