BuzzFeed will lay off 15% of staff and shut down its news unit, BuzzFeed CEO Jonah Peretti wrote in an email to staff Thursday.
The layoffs will affect BuzzFeed’s business, content, administration and tech teams. The layoffs amount to about 180 people. The company’s staff totaled about 1,200 people as of its most recent securities filing.
BuzzFeed News, part of the digital media company’s content division, had about 100 employees and lost about $10 million a year, two people familiar with the matter told CNBC last year. It stood apart from the main, viral-content-generating BuzzFeed brand with straight news and investigative reporting. BuzzFeed News won a Pulitzer Prize in 2021 for its reporting on China’s mass detention of Muslims. Several large shareholders had urged Peretti to shut down its news operations.
Shares of the company have fallen about 90% since its IPO in late 2021. The stock fell nearly 20% Thursday, closing at 75 cents.
The news comes during a tough period for digital media companies as publishers are cutting staff as advertisers reduce spending. These cuts have impacted companies like Wall Street Journal publisher Dow Jones and Vox Media. In January, Vice Media restarted its sale process at a lower valuation, CNBC previously reported. The company, which was valued at $5.7 billion in 2017, was poised to fetch a price of below $1 billion.
“There’s no free lunch anymore in the [digital media] space in the sense that the advertising market this year is not particularly strong, and everything has to be earned,” said Jonathan Miller, the CEO of Integrated Media, which specializes in digital media investments.
Miller added that going public is probably not the best strategy for digital media companies like Buzzfeed. “There’s not that many public companies in digital media. And I think investment dollars in general will be tough to come by unless you can show a real differentiated plan.”
BuzzFeed wasn’t the only digital media company to announce layoffs Thursday. Insider, which is owned by German conglomerate Axel Springer, told staff Thursday morning it was reducing its total headcount by 10%, including union and non-union staffers, according to an internal memo viewed by CNBC. Affected employees will receive a minimum of 13 weeks of base pay and medical benefits will be covered through August, the memo says.
Insider executives said layoffs have stemmed from a significant recession in advertising spending in technology and finance, as well as disruptions to distribution and revenue share.
“As you know your industry has been under significant pressure for more than a year. The economic headwinds that have hurt many of our clients and partners are also affecting us,” Insider President Barbara Peng wrote in the memo. “Unfortunately, to keep our company healthy and competitive, we need to reduce the size of our team. We have tried hard to avoid taking this step, and we are sorry about the impact it will have on many of you.”
The state of BuzzFeed
Peretti said HuffPost and BuzzFeed’s flagship site will open a number of roles for BuzzFeed News editors and reporters. The company will also reduce budgets, open roles and most other discretionary expenditures.
“We’ve faced more challenges than I can count in the past few years: a pandemic, a fading SPAC market that yielded less capital, a tech recession, a tough economy, a declining stock market, a decelerating digital advertising market and ongoing audience and platform shifts,” Peretti wrote.
Peretti admitted fault for not managing these changes better and being “slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.”
Peretti also wrote that revenue chief Edgar Hernandez and operating chief Christian Baesler decided to exit the company.
BuzzFeed cut nearly 12% of its workforce, or around 180 staffers, back in December 2022. The company said the layoffs came in response to challenging economic conditions and its acquisition of Complex Networks. BuzzFeed reduced its footprint in New York last year and will reduce its real estate in Los Angeles from four buildings down to one.
The digital media company scaled back its news operation in an attempt to make BuzzFeed News profitable, resulting in the departure of several editors. The company went public via a special purpose acquisition vehicle last year, which sent shares down nearly 40% in its first week of trading.
One shareholder told CNBC last year that shutting down the newsroom could amount to $300 million of market capitalization to the stock.
Peretti also wrote that the company is proposing headcount reductions in some international markets.
–CNBC’s Lillian Rizzo contributed to this article.
Read the full note from Jonah Peretti below:
I am writing to announce some difficult news. We are reducing our workforce by approximately 15% today across our Business, Content, Tech and Admin teams, and beginning the process of closing BuzzFeed News. Additionally, we are proposing headcount reductions in some international markets.
Impacted employees (other than those in BuzzFeed News) will receive an email from HR shortly. If you are receiving this note from me, you are not impacted by today’s changes. For BuzzFeed News, we have begun discussions with the News Guild about these actions.
As part of today’s changes, both our CRO Edgar Hernandez and COO Christian Baesler have made the decision to exit the company. I’m grateful to both of them for their passion and dedication to Complex and to BuzzFeed, Inc. Christian will be with us through the end of April, and Edgar through the end of May to help with the transition.
Marcela Martin, our President, will take on responsibility for all revenue functions effective immediately. In the US, Andrew Guendjoian is our new Head of Sales, and Ken Blom will continue in his role as Head of Revenue Operations. Globally, International Sales will move under Rich Reid, Head of International and Head of Studio, also reporting to Marcela.
I have great confidence in this revenue leadership team, and the early plans I’ve seen from them to accelerate performance from our Business Org. We will share more on their plans in the Business All Hands next week (and we are extending an invite company-wide).
The changes the Business Organization is making today are focused on reducing layers in their organization, increasing speed and effectiveness of pitches, streamlining our product mix, doubling down on creators, and beginning to bring AI enhancements to every aspect of our sales process.
While layoffs are occurring across nearly every division, we’ve determined that the company can no longer continue to fund BuzzFeed News as a standalone organization. As a result, we will engage with the News Guild about our cost reduction plans and what this will mean for the affected union members.
HuffPost and BuzzFeed Dot Com have signaled that they will open a number of select roles for members of BuzzFeed News. These roles will be aligned with those divisions’ business goals and match the skills and strengths of many of BuzzFeed News’s editors and reporters. We raised this idea with the News Guild this morning and look forward to discussing it further. Moving forward, we will have a single news brand in HuffPost, which is profitable, with a loyal direct front page audience.
I want to explain a little more about why we’ve come to these deeply painful decisions. We’ve faced more challenges than I can count in the past few years: a pandemic, a fading SPAC market that yielded less capital, a tech recession, a tough economy, a declining stock market, a decelerating digital advertising market and ongoing audience and platform shifts. Dealing with all of these obstacles at once is part of why we’ve needed to make the difficult decisions to eliminate more jobs and reduce spending.
But I also want to be clear: I could have managed these changes better as the CEO of this company and our leadership team could have performed better despite these circumstances. Our job is to adapt, change, improve, and perform despite the challenges in the world. We can and will do better.
In particular, the integration process of BuzzFeed and Complex, and the unification of our two business organizations, should have been executed faster and better. The macro environment is tough, but we had the potential to generate much more revenue than we delivered over the past 12 months.
Additionally, I made the decision to overinvest in BuzzFeed News because I love their work and mission so much. This made me slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.
More broadly, I regret that I didn’t hold the company to higher standards for profitability, to give us the buffer needed to manage through economic and industry downturns and avoid painful days like today. Our mission, our impact on culture, and our audience is what matters most, but we need a stronger business to protect and sustain this important work.
Please know that we exhausted many other cost saving measures to preserve as many jobs as possible. We are reducing budgets, open roles, travel and entertainment, and most other discretionary, non-revenue generating expenditures. Just as we reduced our footprint in NYC last year, we will be reducing our real estate in Los Angeles — from four buildings down to one, which saves millions in costs as well as mirrors our current hybrid state of work.
I’ve learned from these mistakes, and the team moving forward has learned from them as well. We know that the changes and improvements we are making today are necessary steps to building a better future.
Over the next couple of months, we will work together to run a more agile and focused business organization with the capacity to bring in more revenue. We will concentrate our news efforts in HuffPost, a brand that is profitable with a highly engaged, loyal audience that is less dependent on social platforms. We will empower our editorial teams at all of our brands to do the very best creative work and build an interface where that work can be packaged and brought to advertisers more effectively. And we will bring more innovation to clients in the form of creators, AI, and cultural moments that can only happen across BuzzFeed, Complex, HuffPost, Tasty and First We Feast.
It might not feel this way today, but I am confident the future of digital media is ours for the taking. Our industry is hurting and ready to be reborn. We are taking great pains today, and will begin to fight our way to a bright future.
On Monday we’ll begin to have conversations with each division about the way forward. And in the meantime, I hope you can take time for yourselves this weekend.
Thank you for supporting one another on a difficult day.