If you want to get some of BuzzFeed, just wait until the first week of December.
An additional few days are needed due to the second merge. BuzzFeed, led by its founder and CEO John Peretti, will acquire the sports and entertainment publishing company Complex Networks as part of an agreement with 890 5th Avenue Partners. Together, BuzzFeed and Complex are expected to generate $ 521 million in revenue this year, with pretax profit of about $ 57 million.
For now, BuzzFeed, known for its meme-based lists, quizzes and news department that earned the company its first Pulitzer Prize this year, is still losing money. In the third quarter, the publisher recorded a 20 percent increase in revenues to $ 90 million, but lost about $ 3.6 million. Excluding certain elements such as taxes, interest and costs associated with the pending transaction, the company said it raised nearly $ 6 million. The gains came mainly from a spike in display ads a year after the pandemic disrupted the ad business.
Combined with sophisticated networks, BuzzFeed would have generated $ 121 million in sales, up 17 percent from last year, meaning that as a combined business, it will grow at a slower pace than BuzzFeed as a standalone business. Adding Complex, which also results in a loss of money, will nevertheless give BuzzFeed more readers, which will attract more advertisers.
In a statement Friday, Mr. Peretti called the company’s financial performance “impressive” and said the third quarter results “underscore the strength of our diversified cross-platform business model.”
Although he retained control of the business following the planned mergers, Mr. Peretti will face renewed pressure when BuzzFeed goes public. It will have to meet institutional investors seeking quarterly profits, expectations that diverge from the long-term financial goals that startups live (and die). In other words, continued losses and slower growth can only be tolerated for so long.
He may also have to sell some of his shares in NBCUniversal, one of BuzzFeed’s early sponsors, if the stock doesn’t hit a certain level, according to the securities records. The merger with the blanks company BuzzFeed is valued at approximately $ 1.5 billion, but investors expect that amount to rise once it goes public.
Recent digital publishing deals have potentially overstated. German conglomerate Axel Springer agreed in August acquire Politico for $ 1 billion, roughly five times its annual income. If investors are just as optimistic about BuzzFeed, it will be valued at over $ 2.5 billion.