Buzzfeed has never made a profit in 13 years, after being in business that long it is hard to claim you are still a start-up, or as they put it in a statement accompanying the late filing of the UK subsidiary’s annual accounts “still in investment mode”. Which is another way of saying “still losing money”.
The UK subsidiary has quadrupled losses, turnover slumped 35% to £21.6 million, which they say was due to “intercompany revenue” from parent company BuzzFeed Inc. dropping £14.8 million. Whatever those financial shenanigans were they have come to an end. Investors will marvel at how Buzzfeed has burnt through over $500 million of their money which they will never get back.
The pivot to video which was Buzzfeed’s big bet doesn’t appear to be paying any dividends in the UK at least, nor will it until advertisers value the audience. If as, Guido suspects, they have a primarily youthful audience they will not be able to command rates much above Facebook, which means thin margins. Guido has been trying to figure out how to make video or podcasts commercially viable and concluded that until advertisers create audio or video content that needs distribution to his audience, it just won’t be profitable. The Spectator uses their excellent podcast output as a gateway drug to becoming a subscriber, Business Insider and HuffPo are generating significant revenue with sponsored videos. The Economist is very successfully monetising their podcast audience to the tune of millions from corporate advertisers. The Economist demonstrates that if advertisers can be shown you have a valuable audience, they will pay. Buzzfeed’s problem is that their audience is the same “trash audience” that can be bought off Facebook or Google for pennies…
Sky News‘s ‘Election Social‘ programme on Thursday evening is set to be a corker. Co-organised by BuzzFeed, the show’s political balance is non-existent. Sky News’s Lewis Goodall and Roland Manthorpe will co-host with two Buzzfeed journalists…
Guido understands that BuzzFeed was responsible for much of the running order, resulting in an extraordinary ideological bias. The only Conservative supporters announced for the show are youth activists Luke Black and Emily Hewertson. They will be facing a torrent of left-wing comment from Corbynistya writer Maya Goodfellow, the New Statesman‘s Sarah Manavis, left-wing writer Mollie Goodfellow, anti-tory comedian Michael Spicer, Corbynista stand up Sooz Kempner, leftie comedian Munya Chawawa, and Corbynista journalist Kieran Yates.
Taking into account the two lefty Buzzfeed hosts and former Labour activist Sky News correspondent, that’s an overwhelming 80% of the show taken up by left-wing commentators.
Last week, CityAM reported that Buzzfeed UK “is under fierce pressure from financial authorities for failing to produce its company accounts more than two months after the deadline.”
Government agency Companies House had lodged a proposal to strike Buzzfeed from the official register as its 2018 accounts, which were due by 30 September this year, have still not been filed. Today they were issued today with the official strike-off notice.
Why the accounts are over two months late being filed is not explained. According to City A.M. the company was “running at an unsustainable rate”. Buzzfeed’s accounts for 2017 showed a pre-tax loss of £1.9 million and the firm owed £7.7 million to creditors at the end of the year. It is very unusual to file accounts so late that the firm risks being struck off.
A statement from the company says
BuzzFeed UK Ltd. will be filing our 2018 financials by the end of the year. Earlier this quarter we concluded the global audit of BuzzFeed Inc. on time with no unusual findings.
We have great confidence in our global operations and are extremely pleased with the contribution they make to our wider company. This year saw us diversify our revenue putting us in an even better position than ever: launching shows like #What2Watch, selling products like spices with Schwartz and customisable Tasty cookbooks and putting rocket boosters behind our affiliate.
Which means the accounts for 2018 won’t be filed until 2020. The delay is only because of good news? Right?
It is becoming a start-the-year tradition for Buzzfeed to fire staff in January, they did so last year and last night the CEO Jonah Peretti emailed staff telling them he’s firing 250 of them next week:
I’m writing with sad news: we are doing layoffs at BuzzFeed next week. We will be making a 15% overall reduction in headcount across the company. I’m sending this tonight because I wanted you to hear it from me directly instead of from the press.
Over the past few months, we’ve done extensive work examining the trends in our business and the evolving economics of the digital platforms. We’ve developed a good understanding of where we can consolidate our teams, focus in on the content that is working, and achieve the right cost structure to support our multi-revenue model. We are confident the changes we are making will put us on a firm foundation and allow us to invest and grow sustainably for years to come.
I’m so proud of what our team accomplished over the last year, including diversifying our revenue, and growing our business double digits. Unfortunately, revenue growth by itself isn’t enough to be successful in the long run. The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again. These changes will allow us to be the clear winner in the market as the economics of digital media continue to improve.
I’ll share more about our future structure in a few days, but today I want to focus on what will be a difficult week, especially for the people who are leaving the company. These are talented people, friends, and valued colleagues, who’ve made huge contributions to our success, and who’ve done nothing wrong. Even though I’m confident this is the right business decision, it is upsetting and disappointing.
On a personal note, I’ve never thought about my job as “just business.” I care about the people at BuzzFeed more than anything other than my family. This will be a tough week for all of us and I realize it will be much worse for the people losing their jobs. To them, I want to say thank you, I’m sorry our work together is ending this way, and I hope we get to work together again in the future. Our loss will be to the benefit of other organizations where I know you will go on to make formidable contributions.
We will be back to you with specifics on the process by Monday at the latest. Thank you all in advance for your compassion and kindness as we go through this process.
Buzzfeed has burnt through over $500 million of investors money which they are unlikely to ever get back. Investors are no longer interested in an online land grab for readers without profits. Peretti is looking to merge the company with rivals as they strive to stem losses. Last year the struggling firm fired over a third of their UK staff. Presumably the UK editor Janine Gibson quit last week because she didn’t want to oversee another round of job cuts…
Buzzfeed UK filed their accounts for 2017 on Christmas Eve. They show that revenue rose an impressive 62% to £33,363,304, unfortunately expenses also rose 48% to £35,288,846 resulting in an operating loss of £1,900,229. Which is an improvement on the previous year’s £3,543,554 loss. Head count rose in 2017 from 204 to 283 staff, resulting in a wage bill of £19,073,982 giving an average wage cost of £67,399. That was way too high in today’s media environment…
These accounts only cover the financial year up to December 2017, sure enough the following January Buzzfeed let go of a third of the London staff. It will be interesting to see how this impacts the bottom line for this year. Buzzfeed previously got a substantial 23% of their traffic from Facebook, how the great algorithm change impacted Buzzfeed is yet to be seen. It is unlikely to have been positive for traffic…
Buzzfeed UK includes financial reporting for Germany, Brazil, Spain, Mexico and India – the French division was closed down. Buzzfeed’s CEO Jonah Peretti has told the New York Times that a merger with Vice and other big digital media publishers would be a way for them to compete with Facebook and Google for advertising revenue. One thing is for sure, sky high valuations for new media assets are coming back down to earth because “everyone is for sale“. Venture capital funded media assets like Buzzfeed are being sold at a fraction of their previous valuations. Buzzfeed has missed the window for an IPO and a chance for investors to cash in. Surviving in a tough market is the main game…
MediaGuido has previously reported on how the Buzzfeed newsroom is split over attempts by some staff to unionise. Above is a letter from the National Union of Journalists which was left on Buzzfeed employees’ desks in the office last week. Guido is not sure a patronising Steve Buscemi meme and a listicle on “12 Reasons Why Buzzfeed UK Needs Union Recognition” is the best way to convince staff of their case.
Multiple people in the Buzzfeed newsroom say the NUJ letter has caused genuine anger for two reasons. One Buzzfeed source says it is deeply misleading and takes credit for changes that were always going to happen. Buzzfeed journalists believe the pro-unionisation side of the office are lying to their colleagues about their achievements.
A second Buzzfeed source says the NUJ letter is significant because the Central Arbitration Committee is currently deciding whether there is to be a secret ballot on unionisation, and the letter does not even countenance the idea that there should be a vote. That Buzzfeed source says: “It’s strange a movement that professes to be about rights for the workers doesn’t even want those workers to have a say from the outset”. A third Buzzfeed source says: “People are exhausted by all this, it is tearing the office apart”. It seems the NUJ’s dirty tactics of fibbing to hacks and opposing workplace democracy are not going down well…