About a year ago, BuzzFeed CEO Jonah Peretti laid off 70 employees, including 47 HuffPost staffers based in the U.S., in an effort to, as he put it, “drive longterm sustainability.” Today, he announced that he will once again be “reducing” his company’s workforce in order to “accelerate profitability.” Peretti has overseen layoffs several times during his tenure at BuzzFeed, each time explaining them a necessary step towards profitability. But BuzzFeed, the massive digital media conglomerate that went public earlier this year through a SPAC, is now firmly profitable. Though its nearly $400 million in revenue from last year was still well short of the borderline fraudulent projections it set for itself, the company, it can’t be denied, is in good health: Last year it was in the green for the second straight year, reaching $25.9 million in profit, up 132 percent year-over-year. But you see, it could be even more profitable, if you simply hack away at a financially underperforming part of the company.
BuzzFeed News, the investigatory arm of the company that’s done incredible work all over the world, is not a money maker for BuzzFeed. Thanks to the broken online advertising economy, relentless media consolidation, a distrustful public, and the general ills of late-stage capitalism, it is, by and large, not very profitable to produce great journalism.
In an all-hands meeting held this afternoon—following resignation announcements from BuzzFeed News Editor-in-Chief Mark Schoofs and two other top editors, Tom Namako and Ariel Kaminer—Peretti said he’s making cuts to BuzzFeed News. He said he has “plans to accelerate profitability for BuzzFeed News, including leadership changes, the addition of a dedicated business development group, and a planned reduction in force.” Shortly thereafter, Peretti handed things off to an interim member of company leadership and left the call.
“People are mad he didn’t take follow-up questions,” said a BuzzFeed News employee who was in the meeting and characterized the call as “acrimonious.” Some BuzzFeed staffers said as much publicly.
The BuzzFeed News employee who spoke to Defector said Peretti talked about the news team needing to do “faster investigations” and have a higher metabolism. To put it another way: more work, and faster, but with fewer people. In his farewell email, Schoofs emphasized that the cuts had nothing to do with staffers’ work. “This is not your fault,” he wrote in his email, obtained by The Wrap. “You have done everything we asked, producing incandescent journalism that changed the world.” Schoofs also said that he hoped the company would at least avoid layoffs via voluntary buyouts negotiated with the union.
Making cuts and laying off people who are good at their jobs is simply part of the business model for media executives who build companies with the goal of scaling ever bigger, make criminally optimistic revenue projections that inevitably fall short, and then have to engage in some ritual bloodletting in order to appease investors, even though overall profits are up. But targeting BuzzFeed News for cuts is a change for Peretti, which he acknowledged in today’s meeting. According to the BuzzFeed News employee, Peretti said he is “no longer going to subsidize news with revenue from other divisions.” For years, Peretti had maintained that “news is the heart and soul of any great media company.” In 2015 he said BuzzFeed committing itself to news was “good for the world, it’s good for business, and it’s good for our company culture.” In 2020, after editor and future media maven Ben Smith left BuzzFeed News, Peretti reiterated his previous stance, saying Smith’s departure would not change the company’s identity.
“We want to do everything possible to continue Ben’s legacy,” Peretti told The New York Times. “We want to break news and be fearless and stand up to power to do all the things that define what BuzzFeed News is.”
So what changed? CNBC has one possible explanation. A report published today cited people “familiar with the matter” who said that “several large shareholders have urged Peretti to shut down the entire news operation,” which employs about 100 people and loses “roughly $10 million a year.” It also included some incredible stock market-guy math:
One shareholder told CNBC shutting down the newsroom could add up to $300 million of market capitalization to the struggling stock. The digital media company went public via special purpose acquisition vehicle in December. Shares immediately fell nearly 40% in its first week of trading and haven’t recovered.
It’s amusing to wonder which anonymous people may have leaked this tidbit to the press, seeing as it simultaneously makes BuzzFeed News out to be a financial drag on the company and Peretti out to be the hero standing between snarling investors and the newsroom. As the reporter who wrote the story phrased it: “BuzzFeed CEO Jonah Peretti’s decision to offer voluntary buyouts to fewer than 30 newsroom staffers is actually a compromise/olive branch to some significant shareholders who want the entire BuzzFeed newsroom abolished.”
In the end, to whatever extent Peretti may have once cared about producing good journalism, or indeed about anything other than profit margins, no longer matters. BuzzFeed is a public company and it exists to make money for investors. Peretti exists to make sure the company makes the maximum amount of money for investors. And that’s how you end up with an award-winning newsroom being gutted for no good reason.
Update 7:20 p.m. ET: BuzzFeed News Union Responds
The BuzzFeed News Union bargaining committee sent an email to the full unit saying, basically, “Not so fast.” The email, obtained by Defector, reads in part:
Management cannot conduct layoffs or buyouts unless (i) they are part of a complete collective bargaining agreement (read: us having a ratified union contract with a Reductions in Force provision… you know, that thing we’ve been working on for 2+ years!) or (ii) there is a financial exigency (more on this below). The company confirmed to us today 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.
So: What is an exigency? Well, we’ve been through one. Back in 2020, there was a financial exigency caused by COVID. That is why we negotiated a one-time agreement for some small reductions in force and saved a ton of jobs through the work-sharing arrangement that we proposed and the company ultimately agreed to. But again, in both Brews and our meeting with management’s bargaining committee this afternoon, management confirmed that this is not a financial exigency. So, if there are going to be buyouts, they will have to be negotiated as part of our full collective bargaining agreement.
BuzzFeed did not immediately respond to Defector’s request for comment.