BuzzFeed investors pushed CEO Jonah Peretti to shut down the newsroom – Reuters News in France and abroad

Jonah Peretti, Founder and CEO of BuzzFeed

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BuzzFeed is cutting its money-losing news organization, the company announced Tuesday, amid what people familiar with the matter describe as broader investor concern that the division is weighing on the company.

Several major shareholders urged BuzzFeed CEO Jonah Peretti to halt the entire press operation, said the people, who asked not to be named because the discussions were private. BuzzFeed declined to comment.

BuzzFeed News, part of its content division, has about 100 employees and loses about $10 million a year, two people said. The company, which also has advertising and commerce divisions, said tuesday its full-year content revenue grew 9% in 2021 to $130 million.

A shareholder told CNBC that the newsroom closure could add up to $300 million in market capitalization to the struggling stock. The digital media company went public via a special purpose acquisition vehicle in December. The shares immediately fell almost 40% in its first week of trading and did not recover.

BuzzFeed shares tumbled around Tuesday after the company reported earnings and this story ran.

Peretti has been championing the importance of BuzzFeed News for years, calling it “good for the world, good for business and good for our corporate culture”. The organisation’s press room has won several awards, including a Pulitzer Prize and the George Polk Prize.

“This morning, we announced plans to accelerate BuzzFeed News’ profitability, including leadership changes, the addition of a dedicated business development group, and a planned reduction in staff,” Peretti said Tuesday. “We will prioritize investments around coverage of the biggest news of the day, culture and entertainment, celebrities and life on the internet. »

Read more: BuzzFeed says people are spending less time on Facebook

The company has offered voluntary buyouts to fewer than 30 employees, according to a person familiar with the matter, who asked not to be named because the decision is private. The buyout is only available to journalists and editors who cover surveys, inequality, politics or science and have worked for the company for more than a year. BuzzFeed plans to do the takeover proposal to the NewsGuild of New York regarding its American employees.

Rather than shut down BuzzFeed News, Peretti is trying to make the division profitable. He has a model ready to use: he made the decision to fired 70 HuffPost employees last year after acquiring the company from Verizon Media.

“Although BuzzFeed is a profitable business, we don’t have the resources to sustain another two years of losses,” Peretti said at the time. “The most responsible thing we can do is manage our costs and ensure that BuzzFeed – and HuffPost – are set up to thrive for the long term. That’s why we made the difficult decision to restructure HuffPost to achieve profitability faster. Our goal is for HuffPost to break even this year. »

HuffPost is now profitable, according to a person familiar with the organization.

The editor leaves

Ahead of the job cuts, BuzzFeed News editor Mark Schoofs told staff today that he was leaving the company. Samantha Henig, BuzzFeed News’ strategy editor, will lead the newsroom on an interim basis.

Associate Editor Tom Namako and Ariel Kaminer, Investigations Editor, also resign. Namako is join the NBC News digital operation as editor-in-chief.

In its fourth-quarter earnings release, Buzzfeed said quarterly revenue rose 18% year-over-year to $146 million. Profit reached $41.6 million, up 29% from the same period a year earlier.

Full-year revenue increased 24% year over year to $398 million. Net income more than doubled from a year ago to $25.9 million.

WATCH: Why there’s so much volatility in BuzzFeed after it was released via SPAC

Disclosure: NBC and CNBC are divisions of NBCUniversal.

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BuzzFeed investors pushed CEO Jonah Peretti to shut down the newsroom – Reuters News in France and abroad