Feb 21, 2024 - Business

BuzzFeed sells Complex for $108 million, announces job cuts

Data: Yahoo Finance; Chart: Axios Visuals

BuzzFeed has sold Complex, the entertainment media brand it acquired for $300 million in 2021, to livestream shopping platform NTWRK for $108.6 million, the companies announced Wednesday. BuzzFeed also announced a plan to cut expenses, which includes 16% layoffs.

Why it matters: The deal represents an enormous strategy shift for BuzzFeed, which went public two years ago in order to raise money to acquire companies and scale its offerings. Now, it's forced to offload some of its most lucrative franchises as it struggles to survive on the public market.

  • The Wall Street Journal reported that BuzzFeed is also looking to possibly sell its social media food brand Tasty.

Details: As part of the all-cash deal, BuzzFeed will retain ownership of some of Complex's popular franchises, including First We Feast, which produces Complex's popular YouTube program "Hot Ones."

  • Both of those franchises were part of Complex's portfolio when BuzzFeed acquired the publisher in 2021.
  • Universal Music Group, as well as some of NTWRK's current investors, are helping NTWRK finance the deal.

Between the lines: The deal gives NTWRK an engine to accrue customers for its live shopping platform and a broad digital audience to sell products, like sneakers and clothes.

  • Complex's audience is interested in live shopping for those types of goods. The company launched its own sneaker marketplace in 2019.
  • NTWRK has raised at least $60 million from investors such as Live Nation and Foot Locker., luxury company Kering, LionTree Partners, Tenere Capital and Main Street Advisors (whose investors include Jimmy Iovine, Drake and LeBron James).

Be smart: The deal makes sense for NTWRK, given the audience alignment between its existing customer base and Complex fans, NTWRK CEO Aaron Levant told Axios.

  • "It really appeals to the same audience that Complex appeals to — let's say males 18 to 34, who love sneakers, street wear, hip-hop," Levant said.
  • "We want to make Complex shoppable," he said, noting that the brand's top YouTube show is called "Sneaker Shopping."
  • Complex tried to get into commerce by launching a sneaker marketplace in 2019, but that effort took a back seat to events growth.
  • Levant said he plans to invest heavily in all aspects of Complex, including expanding its flagship event ComplexCon.

The big picture: More media companies are looking to commerce as a way to diversify their businesses, especially amid a weaker ad market. This deal, Levant argues, is more sustainable.

  • "In the past, there's been a lot of attempts at media companies trying to launch commerce or e-commerce companies trying to launch media," he said. "I think this (deal) is really holistic to two organizations that have a real core competency in their respective fields."

Zoom out: BuzzFeed has struggled on the public market ever since its volatile public debut in December 2021.

  • The company received a delisting notice from the Nasdaq in June. Last month it was granted a stay of execution, giving it until May to lift its stock price from roughly 30 cents to $1.
  • BuzzFeed has cut back its staff multiple times and shuttered its Pulitzer Prize-winning newsroom last year.
  • Its CEO Jonah Peretti told Axios in April that the firm planned to significantly increase the amount of content it produces via independent internet creators and artificial intelligence.

By the numbers: In its 2021 IPO investor deck, BuzzFeed said that it and Complex combined made $421 million in 2020 revenue, on a pro-forma basis.

  • It projected the combined company to bring in $521 million in 2022 and over $1 billion by 2024.

Reality check: For the first three quarters of 2023, the firm has taken in $218.4 million in revenue. In its latest earnings report last month, the company said it expects to bring in $99 to $110 million in revenue, which would bring its annual revenues to somewhere between $317.4 and $328.4 million for 2023.

  • The company said it had $157 million in debt at the end of the third quarter.

What to watch: BuzzFeed's future as a viable public company looks uncertain. Prior to the deal announcement, BuzzFeed's stock was trading at 21 cents, valuing the company at just $30 million.

  • BuzzFeed said it expects to save $23 million from its newly announced cutbacks.

Go deeper: More about NTWRK

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