BuzzFeed Reaches Deal to Go Public Via SPAC, Acquire Complex Networks
BuzzFeed Inc. said Thursday it has reached a deal to go public through a merger with a special-purpose acquisition company, part of a plan to consolidate other players in digital media.
The deal with 890 5th Avenue Partners Inc.—a blank-check company named after the headquarters of Marvel’s Avengers superheroes and founded by investor Adam Rothstein—is expected to close by the end of the year, BuzzFeed said.
As part of the transaction, the company also said it is acquiring Complex Networks, a digital publisher that specializes in streetwear, music and pop culture, for $300 million in cash and stock from
Verizon Communications Inc.
and Hearst Corp., which together bought Complex in 2016. BuzzFeed is vying for greater scale to better compete for online ad dollars with tech giants such as
com Inc. and
BuzzFeed said the combined company would be valued at some $1.5 billion, roughly the same level as in 2015, when Comcast Corp.’s NBCUniversal invested $200 million in the new-media startup. BuzzFeed also said Thursday that it is raising $150 million in convertible notes.
The Wall Street Journal reported Wednesday that BuzzFeed could announce a deal to go public this week, following reports from the Information that the company was in talks with 890 5th Avenue Partners and targeting Complex.
The agreement marks a turning point for BuzzFeed founder and Chief Executive Officer Jonah Peretti, a onetime schoolteacher who parlayed his affinity for stunts that went viral on the internet into a winding career as a digital-media entrepreneur. The 47-year-old executive helped found HuffPost alongside Arianna Huffington in 2005 and began work on BuzzFeed in a small workspace in New York’s Chinatown neighborhood in 2006.
“We’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business,” Mr. Peretti said of the deal in a statement Thursday. He added that acquiring Complex “will expand our reach into new audiences, complement our entertainment, news, and lifestyle brands, and open the door to even more revenue opportunities.”
Mr. Peretti hopes the moves will give BuzzFeed enough scale to grow despite the increasing dominance of Google and Facebook over the digital advertising industry, people familiar with the strategy said Wednesday, ahead of the deal announcement. BuzzFeed will also look to continue its growth in other areas including e-commerce and affiliate commerce—the practice of making money by selling products and referring potential customers to websites that sell products they might be interested in.
Even with the addition of Complex and other companies, there is no guarantee that BuzzFeed can further enlarge its share of the digital-ad sector. In recent years, most of the growth has gone to Google, Facebook and Amazon, and the Covid-19 pandemic only accelerated that trend. Those companies—known in the digital-media industry as the “triopoly”—increased their share of the U.S. digital-ad market from 80% in 2019 to a range approaching 90% in 2020, according to an analysis from ad agency GroupM.
Alliances among publishers have been tried before and haven’t generated the scale necessary to slow the triopoly’s accelerating growth. Pangaea, a consortium that aimed to give publishers additional scale in digital advertising, shut down last year, citing impacts from the pandemic.
BuzzFeed has had a long path to becoming a public company after confronting forces that have plagued all of digital media, including an unreliable market for advertising, competition from powerful rivals and investor skepticism.
BuzzFeed was flying high in 2015. Fresh off the NBCUniversal investment, BuzzFeed beefed up its spending in film, television and news. Executives at traditional media companies including NBCUniversal,
and Time Warner foresaw dwindling TV viewership and hoped their digital-media investments would help them attract new audiences.
But since then, the biggest media companies have largely focused on reaching younger viewers through video streaming. Discovery, NBCUniversal and ViacomCBS Inc. have all placed major bets on developing their own streaming services, giving priority to subscriber growth over new investments in new-media companies.
In 2017, BuzzFeed missed its revenue targets of about $350 million by some 15% to 20% and laid off about 100 employees in advertising sales and business operations. The company’s finances improved over the years as Mr. Peretti held down expenses and explored new revenue streams. In 2020, BuzzFeed turned a profit for the first time since 2014, the Journal reported, in part by cutting about $30 million in expenses.
BuzzFeed has already begun to consolidate its rivals. In November, the company said it was buying HuffPost from Verizon in a stock deal for an undisclosed amount. Earlier this month, BuzzFeed News won the Pulitzer Prize for international reporting for articles that revealed efforts by the Chinese government to detain Muslims.
Write to Benjamin Mullin at [email protected]
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