BuzzFeed Adds to C-Suite Following Public Market Debut

BuzzFeed, among the most high-profile players in digital publishing, last month began trading as a public company after merging with special-purpose-acquisition company

890 5th Avenue Partners Inc.

BZFD -1.92%

The transaction involved the acquisition of Complex Networks, a digital publisher that specializes in music and pop culture.

Wall Street hasn’t given BuzzFeed a warm welcome thus far. Its share price has declined nearly 50% to around $5.10 since the SPAC deal closed. BuzzFeed raised roughly $16 million from its public listing, after the SPAC suffered a wave of investor withdrawals.

The company sees itself as a leading vehicle to build scale in the fragmented world of digital media, in part by pursuing deals. “We think there’s a big hole to fill in reaching Millennial and Gen-Z audiences on differentiated content that moves culture, that is creative,” said BuzzFeed founder and Chief Executive

Jonah Peretti.

“I think there’s still work to do to help educate the market about the digital media category and space,” he said.

For the third quarter ending in September, BuzzFeed reported a 20% increase in revenue to $90.1 million, driven largely by a 39% increase in advertising revenue. The company said it lost $3.6 million in the quarter. BuzzFeed projected robust revenue growth when it announced the SPAC deal, saying sales would rise about 25% annually through 2024.

The reduced cash proceeds from the deal won’t affect BuzzFeed’s strategy to acquire additional companies, which continues to be a focus, said Mr. Peretti. He said he is optimistic that the company can continue to grow and win over investors.

Publishers including BuzzFeed have relied heavily on online ad sales for growth. Mr. Peretti said he envisions a company in which other areas such as commerce and content creation are bigger contributors.

“The best model for digital media is a diversified revenue model,” he said. “The downside of diversified revenue is you need more functions. It’s harder to do as a smaller company. As a bigger company with a wider range, with more capability, you can really benefit from economies of scale.”

Mr. Peretti declined to discuss other potential acquisition targets, beyond saying they might look similar to the company’s HuffPost and Complex purchases. He described the companies as “strong brands with audiences complementary to BuzzFeed’s existing consumers.”

Mr. Baesler will be tasked with streamlining back-end functions. That could include areas such as administrative, legal and human resources at the company’s various brands.

Mr. Peretti said he would also look for opportunities to share resources across the publishers. For example, Complex has a strong events business, which could help BuzzFeed build a similar offering. Meanwhile, Complex could learn from BuzzFeed’s stronger affiliate commerce operation, Mr. Baelser said in an interview. In affiliate commerce, publishers generate revenue when consumers purchase products online through partnering retail sites.

Write to Alexandra Bruell at [email protected]