BuzzFeed Inc. (NASDAQ: BZFD) management took a beating as part of a new book by author and editor Ben Smith. The book is titled “Traffic.” (It is ironic because the jury is still out on his new venture, the newsletter chain “Semafor.”) BuzzFeed’s CEO Jonah Peretti is singled out, particularly for turning down an offer from Disney to buy his company for $650 million, some of which was performance-based, in 2013. (Customers are abandoning these 25 brands.)
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What the book does not do, in detail, is fast forward to today. BuzzFeed laid off 180 people, 15% of the staff, and shuttered BuzzFeed News. As its stock trades at $0.64 (and falling), and the company’s market cap is down to $98 million, the upcoming earnings report will show whether those cost cuts are enough.
In the final quarter of 2022, BuzzFeed’s revenue was $134 million, down 8% from the previous quarter. Most of this was a write-down, and BuzzFeed used the odd measure of adjusted EBITDA as a sign of profit. This number was $18 million.
The truly bad news was its forecast for the first quarter of 2023. Revenue is expected to drop to a range of $61 million to $67 million. Adjusted EBITA is expected to be a negative $18 million to $25 million. BuzzFeed had $56 million of cash on its balance sheet at the end of 2022. This may not be enough to fund BuzzFeed through 2023 if quarterly revenue figures remain near $65 million–even with the savings from the cuts.
BuzzFeed has three alternatives if it runs low on cash. One is to take on long-term debt. The question is who would do the financing, unless Peretti has a believable plan for a turnaround. The second is to sell the company. A new owner would have to cut expenses further for that to work. Finally, BuzzFeed could try to sell more stock. Even if that were a possibility, current shareholders would be diluted, and the stock could drop to half of where it trades today. If BuzzFeed can make that work, it would give the company some time.
The real challenge for BuzzFeed is no different from than for many other media companies, both digital and legacy. New media companies like Vice, Vox Media and Arena Group have faced revenue problems. So have legacy companies like Gannett.
The best years for most media companies may be in the rearview mirror.
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