The digital media company BuzzFeed announced yesterday that it will be shutting down one of its general news websites – BuzzFeed News – while it will also be reducing its headcount by 15% to cope with a changing macroeconomic environment and a drop in ad revenues.
This results in approximately 205 people being let go based on the total number of employees reported by the company as of 31 December last year. The company confirmed that different departments including Business, Content, Tech, and Admin will be impacted by the measure.
In addition to these layoffs, two C-level officers will be leaving the firm as well. This is the case of Edgar Hernandez, BuzzFeed’s Chief Revenue Officer, and Christian Baesler, the company’s Chief Operating Officer.
BuzzFeed’s President, Marcela Marin, will take over Hernandez’s role in the organization while no immediate replacement was announced for Baesler.
The company estimates that it will spend from $7 to $11 million in charges related to severance and other workforce reduction related expenditures.
BuzzFeed has Faced Multiple Headwinds in the Past Three Years
“We’ve encountered numerous challenges over the past few years: a pandemic, a dwindling SPAC market that provided less funding, a tech recession, a struggling economy, a falling stock market, a slowing digital advertising market, and ongoing changes in audience and platforms,” said Jonah Peretti, the CEO of BuzzFeed, about the decision.
Peretti also highlighted that it is no longer feasible for the parent company to support BuzzFeed News financially as the unit has failed to bring in the level of revenue the top executive initially expected.
HuffPost will be from now on the only general news website owned and operated by BuzzFeed. A handful of positions at this unit will be offered to both journalists and editors from BuzzFeed News.
The company has already engaged in talks with the News Guild – a union that advocates for the rights of journalists and media workers – to discuss the best course of action for both the company and its workers.
Peretti admitted that he “overinvested” in BuzzFeed News and didn’t realize how hard it would be to make a premium subscription model financially viable. He also mentioned that the company had tried all other cost-saving options besides layoffs, such as cutting back on discretionary spending and reducing the number of offices they lease.
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“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”, the media executive reflected.
According to Peretti, HuffPost is a profitable brand with a loyal following and all efforts will be concentrated on developing this news service along with the rest of the brands that the company currently operates including Tasty and Complex.
BuzzFeed’s Limited Cash Reserves Might be a Concern for Investors
BuzzFeed reported an 8% decline in total revenues during the fourth quarter of 2022 which was caused primarily by a 27% drop in advertising income during this period. Meanwhile, the firm reported a net loss of $106.2 million, mainly due to a non-cash impairment charge.
Meanwhile, the company ended 2022 with $55.8 million in liquid reserves after shedding around $25 million in cash during that same period. These cash figures emphasize how important it is for the firm to reduce its overhead and turn a profit at a point when finding cheap financing can be difficult for tech firms.
BuzzFeed stock went down 19.7% yesterday following the news. The company went public in December 2021 after merging with a special purpose acquisition company (SPAC). Since then, the stock has shed nearly 92% of its value.
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