BuzzFeed founder and CEO John Peretti
Manuel Blondeau | AOP.Press/Corbis | Getty Images
BuzzFeed is downsizing its money-losing news organization, the company announced Tuesday, amid what people familiar with the matter are citing broader investor concern that the division is weighing down the company.
Several major shareholders called on BuzzFeed CEO John Peretti to end all news activity, the people said, who asked not to be named because the discussions were private. BuzzFeed declined to comment.
BuzzFeed News, which is part of its content division, has about 100 employees and is losing about $10 million a year, two of the sources say. The company, which also has an advertising and commercial division, said Tuesday its annual content revenue is up 9% in 2021 to $130 million.
One shareholder told CNBC that closing the newsroom could add up to $300 million in market capitalization to distressed stocks. In December, the digital media company went public through a special acquisition tool. The stock immediately fell nearly 40% in its first week of trading and did not recover.
BuzzFeed shares fell around Tuesday after the company reported earnings and this story was published.
Peretti has been a vocal advocate for the importance of BuzzFeed news for many years. calling it “good for the world, good for business, and good for our corporate culture.” The editorial staff of the organization has received several awards, including Pulitzer Prize as well as George Polk Award.
“We announced plans this morning to accelerate BuzzFeed News’s profitability, including a change in leadership, the addition of a dedicated business development team, and a planned downsizing,” Peretti said Tuesday. “We will prioritize investment in coverage of the day’s most important news, culture and entertainment, celebrities and online life.”
More: BuzzFeed reports people are spending less time on Facebook
The company has offered a voluntary buyout to fewer than 30 employees, according to a person familiar with the matter, who asked not to be named because the decision is private. The buyout is only available to reporters and editors who cover investigative, inequality, politics, or science and have been with the company for more than a year. BuzzFeed plans to do an offer to buy out the New York News Guild against its American employees.
Instead of shutting down BuzzFeed News, Peretti is trying to make the division profitable. He has a ready template: He made a decision lay off 70 HuffPost employees last year after the acquisition of the company from Verizon Media.
“While BuzzFeed is a profitable company, we don’t have the resources to cover another two years of losses,” Peretti said at the time. “The most responsible thing we can do is manage our costs and ensure that BuzzFeed and HuffPost prosper in the long term. That’s why we made the difficult decision to restructure HuffPost to reach profitability faster. Our goal is for HuffPost to break even this year.”
According to a person familiar with the organization, HuffPost is now profitable.
Ahead of job cuts, Mark Schofs, editor-in-chief of BuzzFeed News, told employees today that he is leaving the company. Samantha Hoenig, executive editor of BuzzFeed News strategy, will temporarily lead the newsroom.
In its fourth-quarter earnings report, Buzzfeed said quarterly revenue was up 18% year-on-year to $146 million. Profit rose to $41.6 million, up 29% from the same period a year earlier.
Annual revenue increased 24% year-over-year to $398 million. Net income more than doubled year-over-year to $25.9 million.
WATCH: Why BuzzFeed has so much volatility after it went public via SPAC
Disclosure: NBC and CNBC are divisions of NBCUniversal.