By Joseph Chalfant
Digital media company Buzzfeed announced plans to go public through a merger with a special purpose acquisition company (SPAC).
The deal with 890 Fifth Avenue Partners has an expected valuation of $1.5 billion. The move would enable the company to acquire competitors in the pop culture sphere, and its first purchase is already in the works. On June 17, The Information reported that Buzzfeed began negotiations to buy out digital entertainment publisher Complex Networks for $300 million.
The deal will not be its first venture into acquiring rivals in the digital media industry. In November 2020, Buzzfeed purchased the online outlet Huffington Post, which Buzzfeed CEO Jonah Peretti co-founded in 2005, from Verizon for an undisclosed amount, according to the Wall Street Journal.
The pop culture and youth entertainment brand is also seeking to grow its share of the digital advertising marketplace. Additional liquidity would enable Buzzfeed to better battle against tech giants like Google, which was forced to pay a fine and change its advertising practices after admitting to predatory behavior in early June.
This is not the 15-year-old company’s first attempt to launch an IPO. In 2017, Buzzfeed sought to expand but was crippled by poor profitability. According to the Wall Street Journal, the group missed its revenue target by 20%, falling $350 million short of expectations. After missing its projections, Buzzfeed stopped its attempt at going public and began to restructure.
Buzzfeed’s journey back to viability has been rocky. In 2019, CNN reported that Buzzfeed was forced to downsize 220 staffers, amounting to 15% of its workforce. Staffing problems continued through early 2020 as editor-in-chief of the outlet Ben Smith left for a columnist position at the New York Times.
Buzzfeed managed to become profitable for the first time since 2014 at the end of last year. The change came, in part, because Buzzfeed managed to cut $30 million in overhead in 2020, and a further $50 million in 2019, according to the Wall Street Journal.
Previously, venture capital enabled Buzzfeed to keep its doors open. Fox News reported that NBCUniversal first invested $200 million into the company in 2015. In 2016, NBC poured another $200 million into Buzzfeed, leading to a $1.7 billion valuation.
Now, Peretti has turned the company around. The launch of its IPO could be the jolt Buzzfeed needs to capture more of the digital entertainment and advertising market.