BuzzFeed and the demands of being public

Note: This was originally published as the daily newsletter for the Columbia Journalism Review, where I am the chief digital writer

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—are leaving the company, and the news division is being downsized via buyouts and/or layoffs, with most of the reductions coming in investigations, science, politics, and inequality. Schoofs said that BuzzFeed, the parent company, had “subsidized BuzzFeed News for many years,” and that 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 lost on the video team and the editorial team at Complex Networks, a company BuzzFeed acquired last year just after going public via a merger with a special purpose acquisition company or SPAC. Peretti said the newsroom needed to “prioritize the areas of coverage our audience connects with the most.”

During an all-hands meeting on Tuesday, following the resignations of Schoofs and the two other top editors, Peretti talked about leadership changes and said BuzzFeed was looking at “the addition of a dedicated business development group,” Laura Wagner of Defector reported. However, Peretti left the meeting abruptly and took no questions from staff, which seemed to irritate more than a few of those present. Julia Reinstein, a senior reporter at BuzzFeed News, said on Twitter: “I have worked at this company for nearly 7 years 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 as “acrimonious.”

The cuts announced on Tuesday are nothing new for BuzzFeed. Last year, the company laid off 70 employees, including 47 HuffPost staffers based in the US, as part of what Peretti said was an attempt to “drive longterm sustainability” (BuzzFeed acquired HuffPost 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 Facebook had helped cause the reductions by changing its news recommendation algorithms. But as I wrote for CJR then: “If the giant social network is partly to blame, it is mostly because editors at BuzzFeed yoked themselves so tightly to Facebook’s wagon, even after the Zuckerberg empire provided ample evidence it would move the goalposts at a moment’s notice.”

Since then, BuzzFeed has managed to become profitable: in its financial results, also released Tuesday, the company’s revenue fell well short of its $500 million forecast, but profit was up 132 percent. The news division, however, has never been a money maker. It is estimated to lose about $10 million per year, which means that if BuzzFeed were to shut it down, the company’s profit could rise by as much as 30 percent. That’s why some investors have been pushing the company to get out of the news business completely, according to Alex Sherman of CNBC. “Several large shareholders have urged Peretti to shut down the entire news operation,” he wrote. “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 six percent.

This highlights a dynamic that exists with many public companies. BuzzFeed may be profitable, but when you are publicly traded, there is constant pressure to become even more profitable. That almost always requires growth in revenue and/or cost cuts, and one of the easiest things to cut is staff, since 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 the pressure exists primarily behind the scenes, based on numbers that can only be seen by a handful of people (some VCs also have longer investment time horizons than the public markets). When a company starts trading on a stock exchange, the numbers all become public, and that makes the pressure more public as well.

BuzzFeed has felt that pressure almost from the moment it listed its new stock: when it was promoting the merger with the SPAC, the company said it would soon be worth $1.5 billion. The 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 out 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, and 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 at BuzzFeed.

Here’s more on BuzzFeed:

Exigency: The BuzzFeed 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 (you know, that thing we’ve been working on for 2+ years!)” or there is 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 said, “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 highly 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. “BuzzFeed News had 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 vs. entertainment.” He said a news operation 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, the Insider said. Before joining The Insider, Baulina worked as a producer for the Anti-Corruption Foundation, but 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. He said Baulina “was putting a new life together in Warsaw.

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 Pro Publica, 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 military operation in Ukraine, Reuters reported Wednesday. The Interfax 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, which has a Ukraine-based senior editor—Nolan Peterson, a former US Air Force special operations pilot—and Jariko Denman, a contributing writer who files regular dispatches from Kyiv. The magazine also has a team of 20 other full-time staffers who provide daily news for people in the military, as well as veterans and first responders. Marty Skovlund, Jr., Coffee or Die‘s executive editor, served in the U.S. Army for eight years before becoming a reporter.

Meera Selva, currently Director of the Journalism Fellowship Programme and Deputy Director at the Reuters Institute for the Study of Journalism, has just been appointed as the new CEO of Internews Europe, which the director of the Reuters Institute called “one of the most important non-profits supporting independent journalism and news media across the world.” Selva previously worked as a London correspondent for the Associated Press and Africa correspondent for the Independent newspaper, and 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. The alternative search engine came under fire recently for down-ranking Russian disinformation in its search index, which 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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