BuzzFeed and the demands of being public

On Tuesday, Mark Schoofs, the editor in chief of BuzzFeed News, told staff that he and two other senior editors—Tom Namako, deputy editor in chief, and Ariel Kaminer, the executive editor of the investigations unit—were leaving the company and that the news division was being downsized, with voluntary buyouts offered to staffers on the site’s investigations, science, politics, and inequality teams. Schoofs, according to an email obtained by the New York Times, told staff that he hoped reductions would be achieved through buyouts, rather than layoffs; BuzzFeed, the parent company, had “subsidized BuzzFeed News for many years,” Schoofs also wrote, and the newsroom needed to “accelerate the timeline to profitability.” Jonah Peretti, CEO of BuzzFeed, said in a separate staff email that jobs would also be cut on the BuzzFeed video team as well as the editorial team at Complex Networks, a company BuzzFeed acquired last year after going public via a merger with a special purpose acquisition company, or spac. Peretti, in his email, said the newsroom needed to “prioritize the areas of coverage our audience connects with the most.”

Following Schoofs’s email, Peretti talked about leadership changes during an all-hands meeting, and said BuzzFeed was looking at “the addition of a dedicated business development group,” Defector’s Laura Wagner reported. According to Wagner, Peretti then left the meeting abruptly and took no questions from staff. “I have worked at this company for nearly 7 years,” Julia Reinstein, a senior reporter at BuzzFeed News, wrote on Twitter, “and I’ve never felt so disrespected than seeing my CEO log off without answering a single question about why he wants to gut my newsroom.” A staffer who was at the all-hands meeting described the atmosphere to Wagner as “acrimonious.”

The cuts announced on Tuesday are nothing new for BuzzFeed. Last year, in a bid to “drive long-term sustainability,” as Peretti put it, the company laid off 70 employees; they included 47 US-based staffers at HuffPost, which BuzzFeed acquired from Verizon in 2020. In 2019, BuzzFeed laid off more than 200 reporters, editors, and other editorial staff, including entire teams and large chunks of its international bureaus in the UK and Australia. Some wondered whether changes made by Facebook to its news-recommendation algorithms had helped bring about the reductions—and, as I wrote for CJR, whether BuzzFeed had hitched itself too tightly to Facebook’s wagon, which can change direction at a moment’s notice.

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Since then, BuzzFeed itself has become profitable: in its financial results, also released Tuesday, the company’s revenue fell well short of its $500 million forecast, but profit rose to almost $30 million, up 132 percent compared to the previous year. The news division, however, has never been a moneymaker. Reports have put BuzzFeed News’s estimated annual losses at about $10 million, which means that if BuzzFeed were to shut it down, the company’s profit could rise by as much as 30 percent. “Several large shareholders have urged Peretti to shut down the entire news operation,” Alex Sherman reported for CNBC following Schoofs’s email. “One shareholder told CNBC shutting down the newsroom could add up to $300 million of market capitalization to the struggling stock.” After the layoff news, BuzzFeed’s stock rose 6 percent.

The dynamics reshaping BuzzFeed News exist at many public companies. BuzzFeed may be profitable, but when you are publicly traded, there is constant pressure to become even more profitable. Meeting that profit drive almost always requires growth in revenue and/or cost cuts, and human beings are among the most expensive assets in a typical media company. Pressure to grow quickly is a factor for private companies as well, especially if they are funded by venture capital (as BuzzFeed was), but that pressure exists primarily behind the scenes, based on numbers that can only be seen by a handful of people, and may involve more distant investment-time horizons. When a company starts trading on a stock exchange, the numbers all become public—and that makes the pressure more public as well.

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BuzzFeed has felt that pressure almost from the moment it listed its new stock. When it was promoting the merger with the spac, BuzzFeed said it would soon be worth $1.5 billion. Shares fell on their first day of trading, however, in part because a number of large investors in the spac—who were unaware of the planned merger with BuzzFeed—pulled their money before the deal was finalized, which some traders took as a bad omen. The closing price on BuzzFeed’s first day gave the company a valuation of just over $1 billion; it has since fallen to about half that. Whether the cutbacks will make investors any more enthusiastic about the company is unknown; if they don’t, there could be more news-related cuts to come.

Here’s more on BuzzFeed:

  • Exigency: The BuzzFeed News Union sent a letter to all staff pointing out that the company can’t let anyone go unless there is “a complete collective bargaining agreement” or a “financial exigency” that compels the company to act urgently. According to the union, BuzzFeed management has confirmed that there is not currently a financial exigency—and “while you’ve heard a lot about News ‘losing money’ the truth is—as we all know!—News has always run at a loss. What’s wild is that we are running at a smaller loss now than ever before.” If there are layoffs, the union letter continued, “they will have to be negotiated.”
  • Failure: Kate Aurthur, editor at large at Variety and a former editor at BuzzFeed News, said in the wake of the layoff news that the BuzzFeed stock offering was “a catastrophic failure on every level, and a ridiculous failure of management.” Eoin Higgins, a freelance journalist, called it the “dying digital media property shuffle: Job cuts—lower traffic—bleeding ad revenue—more cuts—lower traffic—bleeding ad revenue—more cuts—rinse—repeat.” Sarah Kelly, a former journalist with SBNation, said, “I have yet to see a news organization improve its journalism through layoffs and buyouts and I’ve been around since 2011.”
  • Reputation: Peretti said in an exclusive interview with me in 2018 that he was committed to news. He called BuzzFeed News a “strong brand” and said it ranked high with millennials and other Web users in terms of trust, so he thought it would probably not be as affected by changes at Facebook. “We haven’t de-emphasized news at all,” Peretti said at the time. “BuzzFeed News had a really tremendous year, with lots of scoops and high-impact stories, [but] there’s always a question of, over time, what is the rate of growth of news v. entertainment.” A news operation, he said, had “reputational benefits.”

 

Other notable stories:

  • Oksana Baulina, a journalist for The Insider, a Russian investigative news outlet, has died in Kyiv, according to the site. It’s unclear what caused her death, but she was reporting on a rocket attack in the Ukrainian capital, according to The Insider. Before joining that publication, Baulina worked as a producer for the Anti-Corruption Foundation; after it was declared an extremist organization, she had to leave Russia. “Oksana was funny, dedicated, and extremely brave,” said Shaun Walker, a reporter for The Guardian. “Another victim of this awful senseless mess.”
  • Dafna Linzer will be joining Politico as executive editor, the news outlet announced Wednesday. She is a former foreign correspondent for the Associated Press, in Jerusalem and at the United Nations, and has worked at both NBC News and MSNBC; she was the first senior investigative reporter hired at ProPublica, where she wrote about criminal justice reform, race disparities, and human rights law. Before that, she was a national security correspondent at the Washington Post. She is currently a fellow at the Georgetown Institute of Politics and Public Service.
  • Russia’s communications regulator, Roskomnadzor, has blocked Google News, accusing it of allowing access to what the Russian government agency calls fake material about the country’s invasion of Ukraine, Reuters reported Wednesday. Interfax, a Russian news service, said the regulator, acting on a request from Russia’s prosecutor general, ruled that “the American online news resource in question provided access to numerous publications and materials containing inauthentic and publicly important information about the course of the special military operation on the territory of Ukraine.”
  • Politico reports that Reuters told staff it will remove all the content of the Russian state news agency TASS from its business-to-business service Reuters Connect. The wire service said that “making TASS content available on Reuters Connect is not aligned with the Thomson Reuters Trust Principles.” The move follows criticism from multiple Reuters journalists and others about the company’s partnership with the Russian state-controlled media organization, which dates back to 2020.
  • Caleb Pershan writes for CJR about an ongoing court case involving Project Veritas, a conservative group known for hidden-camera sting operations designed to embarrass liberals and mainstream news outlets. “US attorneys investigating the theft of Ashley Biden’s diary during the 2020 election campaign compelled Microsoft to turn over emails from nine accounts associated with Veritas,” Pershan reports—information that came from a court filing by Veritas that Microsoft confirmed.
  • Nieman Journalism Lab profiles Coffee or Die magazine—a military-news site and print magazine, owned by the Black Rifle Coffee Company, whose staff includes veterans from various branches of the US military. Coffee or Die has published a number of dispatches from Kyiv, and has a senior editor and contributing writer in Ukraine.
  • Meera Selva, currently the director of the Journalism Fellowship Programme and the deputy director of the Reuters Institute for the Study of Journalism, has just been appointed the new CEO of Internews Europe. Selva previously worked as a London correspondent for the Associated Press and Africa correspondent for the Independent newspaper, as well as for Handelsblatt Global in Singapore, where she established the newspaper’s first Asia bureau.
  • Boston’s public radio station, WBUR, spoke with Sara Morrison, a reporter from Recode, about right-wing criticism of DuckDuckGo, an alternative search engine that came under fire for down-ranking Russian disinformation in its search index. The move angered some conservatives who believed DuckDuckGo was a “neutral” service. In a statement about the decision to down-rank sites like Russia Today, CEO Gabriel Weinberg said he was “sickened by Russia’s invasion of Ukraine and the gigantic humanitarian crisis it continues to create.” Fox News anchor Tucker Carlson lamented that DuckDuckGo had “joined the herd.”

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Mathew Ingram is CJR’s chief digital writer. Previously, he was a senior writer with Fortune magazine. He has written about the intersection between media and technology since the earliest days of the commercial internet. His writing has been published in the Washington Post and the Financial Times as well as by Reuters and Bloomberg.

TOP IMAGE: NEW YORK, NEW YORK - DECEMBER 06: BuzzFeed Inc.'s Listing Day at Nasdaq on December 06, 2021 in New York City. (Photo by Bennett Raglin/Getty Images for BuzzFeed Inc.)