Buzzfeed — In late 2022, the tech industry kicked off a wave of mass layoffs that would continue into 2023.
Recently, the news and media industry witnessed a similar trend in one particular company: BuzzFeed.
The digital media company has thrived in the age of the internet, but now it is bound to go through a shakeup.
On Thursday, CEO John Peretti emailed staff, announcing that BuzzFeed is laying off 15% of its staff while also shutting down the news unit.
The decision would significantly impact several teams within the company, namely the administration, business, content, and tech teams.
The layoffs amount to over 180 people.
In the company’s most recent securities filing, BuzzFeed had a total staff of around 1,200 people.
BuzzFeed News is a branch of the digital media giant’s content division with over 100 staff employed.
According to two sources familiar with the situation, the branch lost around $10 million annually.
BuzzFeed stood out from the leading viral-content-generating brand, delivering straight news and investigative reporting.
In 2021, BuzzFeed News won a Pulitzer Prize for the branch’s reporting on China’s mass Muslim detention.
While the branch has been successful, several large shareholders urged John Peretti to shut down the news operation.
Since its late 2021 IPO, the company’s shares have fallen by around 90%.
On Thursday, the stocks dropped to nearly 20%, closing at 75 cents.
The reports came amid a difficult period for digital media companies, with publishers cutting staff as advertisers seek to reduce spending.
The cuts have also impacted companies like Wall Street Journal, publisher Dow Jones, and Vox Media.
In January, Vice Media started its sale process again, but at a lower valuation.
The company had been valued at $5.7 billion in 2017 and was poised to draw a price below $1 billion.
Jonathan Miller, the CEO of Integrated Media, a company that specializes in digital media investments, offered some hard insights:
“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.”
Miller also noted that a digital media company like Buzzfeed going public would not be the best strategy.
“There’s not that many public companies in digital media,” he said.
“And I think investment dollars in general will be tough to come by unless you can show a real differentiated plan.”
BuzzFeed is not the only digital media company to announce mass layoffs.
Insider, owned by German conglomerate Axel Spring, told staff it was cutting its total headcount by 10%.
The announcement came as an internal memo affecting union and non-union workers.
According to the memo, employees affected will receive a minimum of 13 weeks of base pay.
Their medical benefits will also be covered until August.
Insider executives said the layoffs stemmed from a significant recession in advertising spending in tech, finance, and distribution and revenue share disruptions.
“As you know, your industry has been under significant pressure for more than a year,” Insider President Barbara Peng wrote.
“The economic headwinds that have hurt many of our clients and partners are also affecting us.”
“Unfortunately, to keep our company healthy and competitive, we need to reduce the size of our team.”
“We have tried to avoid taking this step, and we are sorry about the impact it will have on many of you.”
According to John Peretti, HuffPost and BuzzFeed’s flagship site is opening several roles for BuzzFeed News editors and reporters.
The company is also reducing budgets and opening roles, and 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,” he wrote.
Peretti took responsibility for not managing the changes better.
He also admitted that he was slow to accept that big platforms could not provide the necessary distribution or financial support for premium, free journalism purpose-built support for social media.
The BuzzFeed CEO also wrote that revenue chief Edgar Hernandez and operating chief Christian Baesler are going to leave the company.
In December 2022, BuzzFeed let go of around 180 staffers or 12% of its workforce.
The company said the layoffs were a response to the challenging economic conditions and BuzzFeed’s acquisition of Complex Networks.
BuzzFeed also reduced its footprint in New York in 2022.
It also let go of three of its four buildings in Los Angeles.
The digital media company pulled back news operations to make BuzzFeed News more profitable, but it prompted the departure of several editors.
The company went public through a special purpose acquisition vehicle in 2022, leading shares down by almost 40% in the first week of trading.
A shareholder said shutting down the newsroom could amount to the stock’s $300 million market cap.
John Peretti also said the company proposes headcount reductions in several international markets.