BuzzFeed confirms plan to go public

Adam Rothstein, executive chairman of 890 Fifth Avenue Partners and a venture investor known for investments in Israeli tech startups, will join BuzzFeed’s board. Made up of veterans from the worlds of finance and media, the company’s board members include current and former executives at ESPN, NBC, Playboy, Martha Stewart Living Omnimedia, Subversive Capital and the A&E cable network.

It is unclear if BuzzFeed’s shareholders, which include media giants like NBCUniversal, venture capitalists and a raft of current and former BuzzFeed employees, will be able to cash out as soon as the company goes public. It is not unusual for shareholders to have to wait in what is known as a lockup period.

Peretti’s growth strategy appears to hinge on acquiring companies — in part to gain leverage over major distributors like Google and Facebook, but also because BuzzFeed has yet to achieve the kind of needed scale on its own.

In 2018, he quietly sought possible mergers with competitors such as Vice Media, Group Nine and Vox Media. In November, Peretti orchestrated BuzzFeed’s acquisition of HuffPost, the site he helped found in 2005 with Arianna Huffington and investor Kenneth Lerer.

With the addition of Complex, BuzzFeed expects revenue to grow 24% to $521 million this year with pretax profit of about $57 million. Next year, it estimates revenue will hit $654 million and pretax profit of $117 million.

Still, that may not be enough.

“We’ll have opportunities to pursue more acquisitions, and there are more exciting companies out there that we want to pursue,” Peretti said during the news conference Thursday.

When asked which companies he might look to acquire, he responded, “I don’t know, you have any ideas?”

Hatched out of a small office in New York’s Chinatown in 2006, when Peretti was the chief technology officer of The Huffington Post, BuzzFeed started as an experiment in creating content meant to be shared on the web. He left what is now HuffPost in 2011, after AOL bought it for $315 million, and ended up transforming his project into a stand-alone media company with the help of $35 million from investors.

BuzzFeed soon became one of the fastest-growing digital publishers, eventually raising $500 million, and was hailed as the future of news media. But in recent years, it has missed ambitious revenue targets and some of its investors have agitated for a sale.

After a series of layoffs in 2019, BuzzFeed started to diversify its business, selling branded cookware and ramping up its product recommendation section, garnering a commission on each sale through affiliate agreements with Amazon and other companies.

“Our model evolved,” Peretti said in an interview last year.

SPAC deals, once an arcane Wall Street maneuver, have become more common over the last year. Special purpose acquisition companies — shell corporations that list on a stock exchange — are usually created with the goal of buying a private business and taking it public.

Group Nine, a BuzzFeed rival, has gone a different route. It created an SPAC of its own in December, with the aim of finding a company to acquire before going public.