Another online news business is in trouble, with Buzzfeed moving to flog assets in an effort to pay down looming debt.
The US operation who also have web site operation in Australia is selling First We Feast, the studio behind its popular YouTube talk show “Hot Ones,” for $82.5 million.
The business was acquired three years ago for $300M with many of these web news sites now sticking their hands out in an effort to get money from the likes of Google and Facebook’s Meta.
Shares of BuzzFeed dived 10% to $4.01 on the announcement,
The stock market steadily declined from its peak of $34.24 when the company first went public.
Buzzfeed management appears to be desperate to stabilize its business as questions are raised as to why news organizations such as Buzzfeed have been unable to attract a direct audience that allows them to be commercially viable.
The same applies in Australia where several leading news businesses are relying on social media to drive traffic to their sites so that they get a click but also want social media to fund their struggling businesses.
This is not the only asset that Buzzfeed has had to sell in February agreed to sell its Complex business for about $109 million to live-video shopping company NTWRK.
They also moved to cut 16% of its workforce at the time in an effort to boost profits claims the Wall Street Journal.
The First We Feast brand produces media content and merchandise focused on food.
Buzzfeed said the sale completes its strategic shift from lower-margin content production, while it pivots to other higher-margin, tech-enabled revenue lines including programmatic advertising and affiliate commerce.
Chief Executive Jonah Peretti claims that the offloading of assets will reduce debt as they try to position itself for future benefits related to artificial intelligence.
BuzzFeed said it is required to utilize 95% of the proceeds from the sale, or about $75.6 million after certain expenses, to redeem certain convertible senior notes due in 2026, according to a securities filing.
BuzzFeed also guided adjusted revenue between $54 million and $58 million as well as adjusted Ebitda in the range of $4 million and $9 million.
BuzzFeed’s challenges mirror those of the broader news industry in Australia with companies set to push for Facebook owner Meta to return to the negotiating table, after Labor announced it would force tech platforms including TikTok owner ByteDance to pay hundreds of millions of dollars in new taxes unless they strike deals to pay for Australian news, the AFR reported.
The move could also impact Apple and Microsoft with Apple News and LinkedIn products facing scrutiny if they meet the threshold of having Australian revenue greater than $250 million a year.
Under the proposed laws, the Australian Taxation Office would impose an annual charge on social media and search companies worth more than the value of deals struck under the existing news media bargaining code, which is about $200 million a year.
Platforms that do deals to pay news publishers would then be able to offset the value of those deals against the new tax – which Labor will call a charge – plus a percentage-based uplift.
For example, if the ATO imposes a $11 million charge on a platform and grants a 10 per cent uplift, the platform would need to do deals with news publishers worth at least $10 million to avoid having to pay the ATO.
