What Happens to BuzzFeed News Now?
After the SPAC, the Pulitzer Prize-winning newsroom is now a small money-losing division of a much larger publicly traded media company
With shares now publicly trading on Nasdaq under the ticker symbol “BZFD,” 15-year-old BuzzFeed reached a milestone today that has been more than seven years in the making. After multiple rounds of rumors of an acquisition by a behemoth like The Walt Disney Co. or NBC Universal, the moment answers some big financial questions about the company: BuzzFeed merged with the special purpose acquisition company (SPAC) 890 5th Avenue Partners Inc., named after the fictional address of the headquarters of Marvel’s Avengers. When it first began trading, shares shot up 52 percent to a high of $14.62 but quickly retreated to around $8.50, more than 10 percent less than where the shares traded before the SPAC merger. But the answers to many of the questions about one of its best-known properties, BuzzFeed News, now one of many tentacles in its diversified revenue strategy, remain unknown.
The news division is a small part of the entire BuzzFeed corporate operation — which also now includes HuffPost and Complex — with its 105 employees accounting for 7.5 percent of its total workforce. The newsroom has had a disproportionate impact on the company’s public perception — especially among other journalists. Yet, it’s never fit neatly into the overall corporate strategy. BuzzFeed News’s roots go back to late 2011 when Ben Smith, then a senior political writer for Politico, joined as the company’s first-ever editor-in-chief. Up to then, BuzzFeed had been a technology play, devising algorithms to surface “the hottest, most social content on the web,” by co-founder and CEO Jonah Peretti after a bruising experience building the technology side of The Huffington Post.
With Smith, BuzzFeed splashed into the political media fishbowl right away with a big scooplet that John McCain would the next day endorse Mitt Romney in the 2012 Republican primary. So quick was BuzzFeed’s capture of the Beltway zeitgeist that one year later, when Netflix debuted its first hit original, House of Cards, one of its main characters was a hotshot reporter for a BuzzFeed clone called Slugline. Among its many accomplishments, this past year BuzzFeed News won its first Pulitzer Prize for international reporting on Xinjiang.
From early on, Peretti, who controls 65 percent of the voting power in the public entity, has been clear that he has little interest in running a non-profitable newsroom. In his 2012 state of the company memo, less than one year into the news division’s existence, he declared, “they aren’t just a hood ornament to lend the site prestige.” And in a podcast with Recode’s Peter Kafka released on Monday, Peretti pointedly noted that “[BuzzFeed News] is the only content team at the company that doesn’t contribute profit to the company. It’s the only one where it’s subsidized by the other parts of the business.” He added, “I’m still comfortable with it, to a point, but it’s not the same point it was in the past.”
So it is no surprise that the BuzzFeed News Union did not greet the financial occasion with undiluted enthusiasm. Last Thursday, all 61 of its members walked out on the day of the shareholder meeting where the SPAC mergers were approved. Their most pressing issue was that the union is still working without a collective bargaining agreement after being recognized in July 2019. “I don’t necessarily think that the SPAC is inherently negative. I think it’s just a moment that really demonstrates where BuzzFeed’s priorities are,” said unit chair and political reporter Addy Baird. “Their priorities are to buy other media outlets and make rich executives richer, and our priority is getting this contract done.”
BuzzFeed management seems to have taken the union walkout seriously. On Thursday morning, deputy editor-in-chief Tom Namako sent an email to union members informing them that if they didn’t retroactively ask for paid time off, their pay would be docked for the day of the walkout. “We’re calling on them to back down from that,” Baird said. “But nonetheless, every single one of our members held strong, nobody went back to work. That scare tactic did not scare us. … What I think management often doesn’t understand is that this only further mobilizes people,” she said. “This is such a clear demonstration of the exact kind of hyper-controlling, ‘pinching pennies while you’re going for a $1.5 billion valuation’ type attitude that they bring to the table.”
Though it’s harder to put dollars and cents to it, also at issue is the larger question of where traditional journalism fits in with BuzzFeed’s mission to be the “home to the best of the Internet.” As Baird sees it, part of the problem is that the people they’re negotiating with seem detached from the newsroom’s culture. “It’s actually BuzzFeed proper upper management at the table. There’s one newsroom editor, but we’re really dealing with BuzzFeed lawyers, BuzzFeed outside counsel, Buzzfeed HR,” she said. “I don’t necessarily think that they think about the work in the way that we do. We’ve said to them at the table, we’ve said it publicly, that this is a question of journalistic integrity.”
Along with pay raises, one of the key demands for the union in the contract negotiations is protecting its members from being punished for not hitting traffic or revenue targets. “For there to be any kind of connection between discipline and traffic inherently undermines your own editorial independence,” Baird said. “So, in that sense, I think they are certainly trying to chip away at it.”
In SEC filings submitted on July 30 as part of the SPAC process, the company said, “BuzzFeed News is a key part of our value proposition driving significant direct traffic to our sites and applications.” The filing also noted, “Our results could be adversely affected if future labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations, or if a larger percentage of our workforce were to be unionized.”
BuzzFeed News has been fighting for its place within the company for quite some time. In August 2016, it was split from a video-focused entertainment division, which Peretti said in an announcement would allow editor Smith to “focus primarily on news, his first and enduring love.” In July 2018, BuzzFeed News was siloed off into its own site and then, six months later, lost 43 of its 250 employees (more than double its current size), including the entire national and national security desks, in a round of company-wide layoffs. Baird said that the news division’s bargaining unit has shrunk to 61 members from a post-recognition peak of roughly 75 members following additional layoffs last summer.
Back in the more hoary, expansionist times of 2013, Peretti once celebrated his growing newsroom: “This is why Ben has been growing his team so aggressively, building new teams to cover topics from business to travel, hiring Lisa Tozzi to run our breaking news desk, hiring Miriam Elder to build a team of foreign correspondents around the world, hiring Steve Kandell to lead longform features, and launching the Michael Hastings fellowship to continue Michael’s legacy of fearless investigative reporting. And this is just the beginning.”
Today all of those people have departed: Tozzi is now the digital director of Rolling Stone, Elder is the executive editor of Vanity Fair’s The Hive, Kandell is an editor at Apple Music, the Hastings Fellowship, named after a BuzzFeed reporter who died in a car crash in 2013, has not been offered since 2015, and Smith exited in 2020 to be the media columnist for The New York Times.
(Relatedly, one sub-drama the BuzzFeed SPAC might finally put to rest is the recurring criticism Smith has faced for being a Times journalist covering the media while also owning a stake in BuzzFeed through stock options granted while he worked there. Prior to today’s trading, there was nowhere for Smith or other employees who had stock to off-load those shares. According to the SEC filing, after the merger with the SPAC, old BuzzFeed options will be converted into options to purchase stock in the new company, and those can now be sold on the open market.)
“There is a natural tension over how to reward people who are doing such important work for the world when there are also financial realities to what we can afford as a company,” Peretti said in an interview with the Financial Times published on Sunday. “A Pulitzer doesn’t come with revenue, and that’s OK, it’s part of the mission. But we also need to make sure we keep fiscal rigor.”
A year ago, when BuzzFeed announced it was purchasing HuffPost, there was concern among union members that the two newsrooms would begin to be seen as redundant and face further budgetary pressures. “When they acquired HuffPost, that was something that we asked a lot of questions about, and they guaranteed to all of us that they see HuffPost as its own independent brand, with its own independent identity label, and that they want to maintain that,” said Baird. So far, the two units have existed mainly independently. “We don’t buy other media brands because we want them to look, feel, and sound like BuzzFeed,” Peretti wrote in a memo this past June. “We buy them because they are additive, they enrich our team with talented new creators, they expand the audiences we serve.”
The BuzzFeed News Union, a NewsGuild unit, has used the HuffPost Union, which was organized by the WGA in 2016 and reached its first contract a year later, as a point of comparison in its own bargaining. In their previous wage proposal, the union set out a floor of $70,000. In management’s most recent proposal, its second counter-proposal on wages, they offered a $50,000 floor and a minimum 2.5 percent wage increase across the union, with 1 percent going to everyone and the other 1.5 percent being distributed as raises based on who management deems merits them. “They’re not only below a lot of industry standards,” Baird said, “they’re actually below the HuffPost contract, which has a salary floor of $60,000 and a guaranteed wage increase of 3 percent per year.”
In perhaps the clearest example of the confusion over how the news division fits in with BuzzFeed, one of the other disputes in the contract talks is over what work BuzzFeed News employees can do on their own time. While BuzzFeed management is aware that news does not bolster its profitability, it also appears to be acutely sensitive to any ways that its journalists might undercut its other divisions. “Their argument is that every single media company in the entire world is competitive with BuzzFeed, and so are a whole bunch of other types of industries, because we have Tasty, which is food-related, we have people in LA that do comedy videos,” Baird said. “They have been talking about any work, paid or unpaid, by the way, that is competitive with BuzzFeed itself. So they’re saying we can’t go to an open mic night, have a five minutes stand-up set, film it, and post it online, because that would compete with the comedy work that some of our BuzzFeed side colleagues do in LA.”
The first bargaining session since going public is scheduled for Tuesday, December 7, and, after long stretches of no negotiations, the union and management are now meeting every other week to discuss proposals. “We hope the union will present a response on these issues,” a BuzzFeed spokesperson said in a statement to Off the Record. “We couldn’t be more excited about everything that lies ahead for BuzzFeed and its employees.”
“I really hope that by the time we’re chugging along as a public company, that our contract is done and ratified,” Baird said. “I think what’s going to change the tenor of our negotiations is this action that we’ve taken. This is really a demonstration of our power as workers, of our ability to disrupt the day, to withhold our labor.”