BuzzFeed's plan to go public is all about scale
BuzzFeed's announcement Thursday that it plans to go public via a special purpose acquisition company (SPAC) marked the end of a long era of uncertainty for the company, which helped pioneer the digital media industry.
- It's targeting a $1.5 billion valuation upon combining with 890 Fifth Avenue Partners, Inc., a blank-check company.
- BuzzFeed plans to acquire Complex Networks, a lifestyle and entertainment media company, for $300 million in cash and stock as part of the transaction.
- Prior to its SPAC plans, BuzzFeed had conversations with other digital media giants, like Group Nine Media and Vox Media, about possible partnerships or combinations.
Be smart: Once known for selling native ads alongside cat memes and quizzes, BuzzFeed is now home to a number of brands and business lines.
- Earlier this year, it acquired HuffPost, which sits alongside its own robust news operation, BuzzFeed News, as a sister brand. It also owns Tasty, a digital food brand with a strong commerce business.
- With the Complex acquisition, Peretti says the company will be better positioned to grow its licensing business. Complex produces a number of different streaming shows, most notably, the YouTube hit "Hot Ones."
By the numbers: In an investor deck, BuzzFeed said that it and Complex combined made $421 million in revenue last year, on a pro-forma basis.
- It expects to bring in $521 million next year and over $1 billion by 2024.
- Of that money this year, about half ($261 million) will come from ads, 32% ($165 million) from content (things like licensing fees), and 18% ($95 million) from commerce.
The big picture: BuzzFeed's CEO Jonah Peretti, a veteran internet and technology executive who co-founded BuzzFeed in 2006 and HuffPost in 2005, said he plans to continue to purchase more companies to give BuzzFeed more scale.
- But he's not just interested in traditional content. Peretti says he's eyeing all sorts of digital businesses, from gaming to events and education, per Insider.
What to watch: BuzzFeed's rivals will be eyeing its journey with interest.
- Bustle Digital Group (BDG) says it also intends to go public via a SPAC this year. Group Nine Media's SPAC went public earlier this year.
- Like BuzzFeed, both firms intend to acquire even more brands to give them enough scale to better compete against tech giants like Facebook and Google for ad dollars.
- In an investor deck, BuzzFeed compared itself to other publicly-traded digital firms, like The New York Times, Etsy and IAC, the parent company to DotDash.
Bottom line: BuzzFeed's SPAC IPO sets a precedent for other media giants looking to go public and get bigger in the same fashion.