Jon Allsop: BuzzFeed Goes Public With Confetti and a Staff Walkout

From a story on by Jon Allsop headlined “BuzzFeed goes public with confetti, a quiz, and a staff walkout”:

Yesterday, amid jiggling yellow “omg” and “win” cut-outs and a shower of confetti, BuzzFeed made its debut on the stock exchange. Jonah Peretti, the company’s CEO, was present at the Nasdaq to ring its opening bell; he stood behind a podium marked with the Nasdaq logo and BuzzFeed’s new trading ticker—BZFD—among a crowd of a few dozen people that included Danielle C. Belton, the editor of HuffPost, which BuzzFeed recently acquired, and Dude With Sign, an Instagram celebrity who held up a sign that read “Glad We Didn’t Sell To Waystar,” a nod to the fictional media conglomerate in the hit drama Succession….

If the bells and whistles seemed like a lot, they at least reflected the historic nature of the occasion: BuzzFeed is the first major digital-media company ever to go public. The road to this moment formally began in June, when BuzzFeed announced its intention to merge with 890 Fifth Avenue Partners, a special purpose acquisition company, or SPAC. (A red-hot financial trend in the first months of the year, SPACs, also known as “blank check” firms, are public entities that basically exist to raise investment then use it to buy a private company that then also becomes public, in a process that’s meant to be quicker and easier than a normal IPO.

BuzzFeed also said that it would acquire Complex Networks, a media and entertainment company, with Peretti making it clear that the leeway to make further acquisitions was a key part of the rationale behind the SPAC maneuver in a media industry where scale is increasingly valuable, especially given the digital-advertising dominance of Facebook and Google. At the time, other digital-media companies—notably Bustle Digital Group, Vox Media, Group Nine, and Vice Media—had also been contemplating the SPAC route; in the end, BuzzFeed was the first out of the gate with a firm proposal. The company said that it would be valued at one and a half billion dollars, and that it would raise more than four hundred million dollars as part of the SPAC process, a third of it through debt financing.

Even before BuzzFeed’s announcement, however, the SPAC market had started to cool, with the Securities and Exchange Commission tightening the accounting rules they must abide by.  Digital-media companies’ interest seemed to cool with it: Bustle has said repeatedly that it still plans to go public via a SPAC soon, and Vox is said to still still considering it as one of a range of options, but Group Nine—which already formed its own SPAC—is reportedly still looking for merger partners before it takes the leap, and Vice put its SPAC plans on ice, moving instead to secure a cash injection from existing investors (a week after laying off seventeen staffers). These companies and others are now watching BuzzFeed’s public performance for clues as to their own potential. So far, it’s been a bumpy ride, to say the least. In the end, BuzzFeed raised just sixteen million of the nearly three hundred million (non-debt-financed dollars) invested in the SPAC—a shortfall of ninety-four percent—with many investors in the SPAC, who didn’t know up front that it would merge with BuzzFeed, exercising their right to ask for their money back before the deal was finalized last week….

BuzzFeed’s debut on the stock exchange yesterday was also ultimately disappointing—the company’s share price initially spiked, at one point by around fifty percent, but it then declined sharply and finished down eleven percent from the start of the day. (At yesterday’s closing price, the company would be worth around $1.13 billion.) Numerous observers were uncharitable in their assessment of the stock’s performance: Bloomberg called it “a sign investors are wary” of BuzzFeed; CNBC’s Alex Sherman tweeted thatBuzzFeed‘s first couple hours of trading is emblematic of the digital media industry’s last ten years, or even last year. Things were looking up. Now they’re not.” The New York Times reported that BuzzFeed’s share price could continue to be volatile since a lot of the company’s shares aren’t yet in play, with some shareholders facing restrictions on early trades; meanwhile, some former BuzzFeed employees who wanted—and (theoretically) were permitted—to trade found that they can’t yet, due to bureaucratic obstacles. A company spokesperson told Insider that it’s working to quickly resolve such delays, but some ex-staffers publicly accused BuzzFeed management of prioritizing wealthier investors….

Peretti, for his part, has been bullish, insisting that the SPAC process was purely a means to the end of going public, regardless of the underlying state of that market, and that BuzzFeed will now be in a strong position to pursue acquisitions and grow in a way that benefits the company’s current employees. Ultimately, only time will tell how BuzzFeed fares as a public entity. Whatever its growth looks like, however, the company’s treatment of its staff will remain a live issue. “Consolidation” often precedes cuts, not least at acquired companies; earlier this year, BuzzFeed laid off dozens at staffers at HuffPost just weeks after acquiring the site, and shuttered its Canadian edition. And management have yet to agree on a new contract with BuzzFeed’s unionized staffers, all sixty-one of whom walked off the job on Thursday last week—the same day the company’s shareholders approved the SPAC deal—to draw attention to their dissatisfaction with bosses’ current proposals around pay, staffers’ outside creative rights, and traffic and revenue goals. (Some other provisions have been tentatively agreed upon.) “We’ve been bargaining our contract for almost 2 years,” the union wrote, “but BuzzFeedwon’t budge on critical issues like wages—all while preparing to go public and make executives even richer.”

“There’s a bargaining session planned for tomorrow where we look forward to making more progress with the union,” a BuzzFeed spokesperson told Yahoo Finance yesterday. “Today, the company is celebrating an incredible milestone: becoming the first publicly traded digital media company, with Complex Networks in our ranks, and equity for more deals ahead.” Those celebrations included bringing staffers into BuzzFeed’s offices in New York, Los Angeles, and London, many of them for the first time since the pandemic; staffers told CNN’s Flynn that the mood in New York was upbeat, but that “no one in the office seemed particularly concerned with the performance of the stock.” Online, meanwhile, as Flynn also noted, “people called for a fair contract and higher wages in the replies to a Twitter poll from BuzzFeed’s account that asked followers if they were team Jonah or team acrobatic cat,” atop a split-screen imageof the bell-ringing moment. As of this morning, the cat had ninety percent of the vote.

Bloomberg’s Gerry Smith reports that BuzzFeed is making personnel changes to manage its transition to life as a publicly-traded company, with Michael Del Nin, a former executive at Time Warner and a major European broadcasting company, in talks to become president. “I’m an entrepreneur,” Peretti told Smith. “I don’t have public market experience so we’re adding that to the team as part of this transaction.” Peretti told Smith that “the big thing digital media needs for consolidation is a strong public company and we wanted to be the first.” (BuzzFeed is now known as BuzzFeed, Inc.)

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