Buzzfeed Publishing is heading for an IPO and is facing post-startup challenges

The New York Times

If you want to own a piece of BuzzFeed, you have to wait until the first week of December; The publisher’s plan to merge with 890 5th Avenue Partners, one of the blank check companies, will be put to a shareholder vote on Dec. 2, according to a final written securities filing. If investors agree to the deal, BuzzFeed could start trading its shares on the public markets by December 6.

A few extra days are needed due to a second fusion. BuzzFeed, led by founder and CEO Jonah Peretti, will acquire sports and entertainment company Complex Networks as part of its agreement with Partners at 890 5th Street. Buzzfeed and Complex are expected to generate $521 million in revenue this year, with pretax earnings of about $57 million.

Bertie may also have to sell some of his shares to NBC Universal — one of BuzzFeed’s early backers — if the stock does not reach a certain level, according to stock filings. The merger with the blank check company values ​​Buzzfeed at about $1.5 billion, but investors expect it to rise once it goes public.

Buzzfeed, known for its lists, quizzes, riddles and a news section, won the company’s first Pulitzer Prize this year and is currently losing money. In the third quarter, the publishing company posted a 20% increase in revenue to $90 million, but lost about $3.6 million. But when excluding items such as taxes, interest and costs associated with the planned deal, the company says it made nearly $6 million. The revenue gains came largely from a rise in advertising displayed a year after the pandemic that had devastated the advertising sector.

Combined with Complex Networks, BuzzFeed would have generated $121 million in sales, a 17% increase over last year, meaning the combined company from their merger would grow more slowly than a stand-alone unit. Losing money will also give Buzzfeed more readers, and that will bring in more advertisers.

Despite remaining in control of the business after the planned mergers, Peretti will face a new set of pressures once Buzzfeed goes public.

In a statement on Friday, Peretti called the company’s financial performance “impressive” and said its third-quarter results “highlight the strength of our diversified cross-platform business model.”

Despite remaining in control of the business after the planned mergers, Peretti will face a new set of pressures once Buzzfeed goes public.

It will have to answer to institutional investors seeking quarterly returns, expectations that conflict with the long-term financial goals under which startups usually live and die. In other words, continued losses and declining growth will only be tolerated for a specified period.

Bertie may also have to sell some of his shares to NBC Universal, one of Buzzfeed’s early backers, if the stock does not reach a certain level, according to stock filings. The merger with Blank Check Company values ​​BuzzFeed at around $1.5 billion, but investors expect it to rise once it goes public.

Recent deals in digital publishing have inflated some valuations. German group Axel Springer agreed in August to acquire Politico for $1 billion, or nearly 5 times its annual revenue. If investors likewise feel the appetite for BuzzFeed, it could be valued at more than $2.5 billion.

© New York Times Foundation 2021
It was transferred to Al-Arabiya, “Al-Jazeera’s Leadership” page.

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