By Yuvraj Malik and Greg Bensinger
(Reuters) -BuzzFeed Inc said on Thursday it will shutter its news division, which gained renown for its irreverent and probing coverage but ultimately succumbed to the challenges of its digital-first business model.
Shares of BuzzFeed nosedived 20% to 75 cents after the New York-based media company said it will cease its namesake news and focus on the quirky lists and cooking videos that are its bread and butter. It will lay off some 180 employees in business, content, tech and administration, about 15% of its workforce, BuzzFeed said, and its HuffPost unit will be its primary news division.
Buzzfeed's news division was once viewed as a serious challenger to legacy media companies and won a Pulitzer Prize in 2021 for coverage of China's mass detention of Muslims.
Also Thursday, The Wall Street Journal reported Vice Media Inc had discussed closing its Vice World News unit if it could not find a buyer within a few weeks.
BuzzFeed Chief Executive Jonah Peretti said in a note to staff that “I made the decision to overinvest in BuzzFeed News because I love their work and mission so much.”
“This made me slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media,” he wrote.
BuzzFeed's news unit, founded in 2011, failed to find a working business model and was a consistent money loser. Like other digital media outlets, its reliance on advertising made it susceptible to downturns as marketers shifted to TikTok and other social media platforms.
"Advertisers are cautious with their spending and seeking ways to maximize efficiency and their return on investment," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. "This has led to digital media companies fighting for a smaller pool of advertising dollars," particularly in between U.S. political cycles and sporting events like the Olympics and World Cup.
In December, BuzzFeed cut 12% of its staff.
Peretti on Thursday blamed the pandemic and subsequent economic downturn for the decline in the digital advertising and BuzzFeed's business.
Affected staff would be considered for open roles at the main site BuzzFeed.com, as well as at HuffPost, which was acquired in 2020. The CEO said HuffPost is profitable and has a loyal readership.
As part of the restructuring, the company said Chief Revenue Officer Edgar Hernandez and Chief Operating Officer Christian Baesler have decided to leave. President Marcela Martin will immediately take over all revenue functions.
BuzzFeed, which produces news, videos and online quizzes, was founded in 2006 by Peretti and John Johnson, and went public in 2021 through a blank-check merger. Its shares have lost 93% of their value since the debut.