The award-winning BuzzFeed News team is about to get smaller. On Tuesday, CEO Jonah Peretti announced the company would make major changes to its newsroom staff in a quest to reach profitability. The changes were announced on Tuesday, the same day BuzzFeed released its first earnings report since its IPO last year.
“This morning we announced plans to accelerate profitability for BuzzFeed News, including leadership changes, the addition of a dedicated business development group, and a planned reduction in force,” said Peretti. “We will prioritize investments around coverage of the biggest news of the day, culture, entertainment, celebrity, and life on the internet.”
Three of BuzzFeed News’ top editors have left the company before the newsroom cuts: Mark Schoofs, editor in chief; Tom Namako, deputy editor in chief; and Ariel Kaminer, executive editor of investigations. Schoofs told staff in an email that the company’s decisions were made to help the company become profitable, after missing revenue targets. Until a replacement for Schoofs is found, Samantha Henig, executive editor of strategy, will serve as interim editor in chief.
Buyouts will be offered to fewer than 30 employees, and are only available to reporters and editors who cover investigations, inequality, politics or science who have worked for BuzzFeed for at least a year, says CNBC. Additional cuts across the company will also be made, including cuts to the BuzzFeed video team and the editorial team at Complex Networks, according to The New York Times. BuzzFeed acquired Complex Networks last summer for $300 million.
“The cuts impact around 1.7% of our total work force today,” said Peretti in an email to staff. “And we don’t take that lightly.”
Profitable or not?
Overall, the company’s revenue increased for 2021 to $397.6 million, a 37% increase year-over-year.
BuzzFeed’s revenue comes from three different categories: advertising, content and commerce. Advertising revenue for 2021 was $205.8 million, a 37% increase; content revenue was $130.2 million, a 9% increase; and commerce revenue was $61.6 million, a 19% decrease. Net income for the year was $25.9 million, an increase of 132% over the prior year. Time spent with BuzzFeed content in 2021 was 789 million hours on BuzzFeed sites and third-party platforms, representing a 6% increase.
It isn’t all sunshine and unicorns though, reports CNBC. BuzzFeed News, which operates under the company’s content division, employs about 100 people and loses about $10 million a year. Unnamed sources say that several of BuzzFeed’s large shareholders want the company to shut down the entire newsroom because it isn’t profitable. Peretti hopes it doesn’t come to that. Afterall, the 11-year-old digital news outlet won a Pulitzer Prize in 2021 for a series of articles highlighting the scale of China’s internment of Uyghurs. According to Axios, BuzzFeed is valued at about $610 million dollars. This is in stark contrast to the $1.15 billion valuation the day it went public.
Staffers file unrelated arbitration claims
In an unrelated action, two complaints have been filed by dozens of current and former BuzzFeed employees who allege they were prevented from selling their shares when the company went public in December 2021. This caused major financial losses for the employees. Some are still unable to sell their shares. The claims seek $8.6 million in damages.
BuzzFeed denies the allegations.
“BuzzFeed prioritized communication with former and current employees last year to provide them with the information they needed to manage their equity as we merged with 890 5th Avenue Partners and became a public company,” a spokesperson for BuzzFeed Inc. said in a statement to Axios. “It’s regrettable that the stock price declined, but there is no merit to the claims and we intend to rebut them vigorously.”
There is no good way to spin this. BuzzFeed needs to reorganize its news division to stop losing money. Unfortunately, that means staff cuts and a change in news philosophy. Instead of covering topics like the war in Ukraine, the Kentanji Brown Jackson confirmation hearings or Madeleine Albright’s death as they currently do, they will be resigned to writing about celebrities, culture and life online. That is a major shift, but BuzzFeed is at the mercy of their investors and their financials.