Telco to take minority stake in BuzzFeed under new commercial partnership
Huffpost (Courtesy of Verizon Media)
The HuffPost purchase is part of a larger strategic partnership across content and advertising between BuzzFeed and Verizon, under which Verizon Media will take a minority investment stake in BuzzFeed.
Terms of the deal were not disclosed. Verizon Media had been reportedly trying to offload HuffPost for more than a year and has been in negotiations with BuzzFeed for several months about a sale. The companies didn’t say whether there would be layoffs at HuffPost with the transaction, which is subject to usual closing conditions. The HuffPost acquisition is expected to close by the end of 2020.
BuzzFeed CEO Jonah Peretti — who co-founded Huffington Post with Arianna Huffington in 2005, along with investor Ken Lerer — will lead the combined BuzzFeed/HuffPost group. The addition of HuffPost is expected to boost BuzzFeed’s monthly audience reach by 29%, to 103 million unique monthly visitors, per data from Comscore.
BuzzFeed News and HuffPost will operate as separate, distinct news organizations, according to BuzzFeed. BuzzFeed will commence a search for a new editor-in-chief of HuffPost, after the exit of EIC Lydia Polgreen earlier this year to join Spotify’s Gimlet podcast studio.
“Verizon Media’s strategy has evolved over the past two years to focus on our core strengths — ads, commerce, content and subscriptions,” Guru Gowrappan, CEO of Verizon Media, said in announcing the pact. “The partnership with BuzzFeed complements our road map while also accelerating our transformation and growth.”
In an interview with Variety, Gowrappan said Verizon Media had put HuffPost on a path to grow but he asserted that the BuzzFeed partnership will accelerate that. “The question is, How much more can you scale the business?” he said. “We wanted to make it instead of 3X [growth], looking at more like 10X growth potential and that’s what the BuzzFeed partnership is designed to make happen.” Gowrappan, who had been talking with Peretti about a HuffPost deal since early 2020, added, “We didn’t start this discussion by saying, ‘There are headcount synergies.'”
Almost exactly a year ago, Gowrappan had denied that Verizon Media was looking to sell HuffPost, saying at an industry conference, “It’s so core to our content… We are focusing on creating good journalism, and giving valued content to consumers.”
Peretti said in a statement Thursday, “We’re excited about our partnership with Verizon Media, and mutual benefits that will come from syndicating content across each other’s properties, collaborating on innovative ad products and the future of commerce, and tapping into the strength and creativity of Verizon Media Immersive.”
AOL had acquired HuffPost for $315 million in 2011, before AOL was itself acquired in 2015 by Verizon in a $4.4 billion deal. The site’s namesake, Arianna Huffington, left the company in 2016 to form wellness startup Thrive Global.
Early on in HuffPost’s life, critics complained about its practice of aggregating other news organizations’ reporting and stories as well as building out a network of unpaid contributors. HuffPost would go on to acquire a large staff of journalists doing original reporting — winning a Pulitzer Prize for a series on wounded veterans and their families in 2012 — and in 2018 it shut down the unpaid blogger program. Under Verizon Media, however, HuffPost has struggled to achieve profitability.
As part of the agreement between Verizon Media and BuzzFeed, the companies have agreed to syndicate content across each of their respective platforms. In addition, the companies said they will create a joint “innovation group” to “explore monetization opportunities” and leverage emerging ad formats, including extended reality (XR) and AR applications.
BuzzFeed also will be able to tap into Verizon Media Immersive, which the telco touts as “the largest online XR platform for advertising and content.” Additionally, BuzzFeed will have access to Verizon Media’s ad platform that spans mobile, desktop, video, connected TV and other channels.
BuzzFeed, which says it has become profitable overall after several rounds of cutbacks and layoffs — including furloughs and pay cuts during the COVID pandemic — sees HuffPost as bringing a complementary audience to the company. HuffPost’s readers represent a broader and wealthier demographic than BuzzFeed’s, a source familiar with the companies said. BuzzFeed views HuffPost as a trusted native digital brand that will let BuzzFeed expand its media network horizontally.
“I have vivid memories of growing HuffPost into a major news outlet in its early years, but BuzzFeed is making this acquisition because we believe in the future of HuffPost and the potential it has to continue to define the media landscape for years to come,” Peretti said in the statement. “With the addition of HuffPost, our media network will have more users, spending significantly more time with our content than any of our peers.”
After it brings HuffPost into the fold, BuzzFeed plans to work to diversify the news site’s revenue streams, such as through ecommerce integrations, aiming to ensure it will have a sustainable path forward. As part of that, BuzzFeed expects to leverage the new relationship with Verizon Media to partner on ads, content and product development.
The BuzzFeed-HuffPost combo comes after a wave of consolidation swept through the digital-media sector last year, as companies have sought strength in numbers amid revenue shortfalls and fragmenting audiences. Among the M&A deals: Vice Media Group snapped up Refinery29, looking to forge a stronger reach among millennial women; Vox Media acquired New York Media, which was among a number of print-centric brands that landed new owners; and Discovery-backed Group Nine Media bought female-focused PopSugar.
Variety's Todd Spangler contributed to this post.