BuzzFeed and HuffPost, formerly separate, are now one, as first reported by The Wall Street Journal. Verizon — which previously owned HuffPost, née The Huffington Post — has dumped the powerhouse digital media brand in an all-stock deal.
The pairing makes sense. Jonah Peretti, now CEO of BuzzFeed, was a co-founder of what was then called The Huffington Post. In fact, BuzzFeed, which started its life as a company that abused young people to “curate” viral content for ad dollars and hoovered up tons of venture capital in the process, was founded by Peretti in his free time while he was working at The Huffington Post. (The name was changed in 2017 as part of a company-wide rebranding led by former editor-in-chief Lydia Polgreen, who’s now head of content at Gimlet.)
The more interesting thing is that Verizon has taken a minority stake in BuzzFeed, which is great for BuzzFeed but a little funny. Aren’t they trying to get out of the digital media business? In any case, the merger does a couple of things for these two companies. First, it gives them greater scale, which means they can command more ad dollars from a market that’s been eviscerated by Facebook and Google. Second, it means the merged company probably won’t go under anytime soon.
As the WSJ notes, BuzzFeed acquiring HuffPost — god, this capitalization — means the company is following the new media trend: last year, Vice, Vox, and Group Nine all acquired other digital media businesses. Consolidation, baby. It’s good for business, even though digital media is apparently bad business.
Email from BuzzFeed News EIC Mark Schoofs to staff about what the acquisition of HuffPost means for the two news orgs pic.twitter.com/JwW4XWyeMg— Max Tani (@maxwelltani) November 19, 2020
Our union committee's statement on the news that BuzzFeed is acquiring HuffPost: "We are glad we fought hard for successor language in our contract and have protections of a union contract in this process."— HuffPost Union (@HuffPostUnion) November 19, 2020
As we know from the hit television show Succession, execs would like the digital media business to bring in returns big enough to please their investors, which, in most cases, is not possible. Just last year, HuffPost did a fantastic post-mortem on how Mic.com, a hugely hyped digital media upstart backed by tens of millions in venture cash, ended up sold to Bustle Digital Group for a paltry $5 million. According to Bryan Goldberg, Bustle CEO and buyer of distressed websites, the company had a day of cash left in the bank when he bought it.
If this deal sounds familiar, it’s because what happened to HuffPost is almost exactly what happened to Tumblr. Verizon bought Yahoo for $4.6 billion in 2017, and it got Tumblr as part of the deal. After that, it merged AOL and Yahoo’s media divisions into one huge failure called, hilariously, Oath — which took a $4.6 billion writedown on in 2018, admitting defeat. Tumblr, meanwhile, was sold to Automattic, which owns WordPress, in 2019.
The media business consolidates. That’s the rule.