BuzzFeed's plan to go public is all about scale
Add Axios as your preferred source to
see more of our stories on Google.
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.
Catch up quick: BuzzFeed had originally planned to go public in 2018, but the move was shelved after Facebook changed its content algorithm and publishers scrambled to adjust.
- 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.
