The Other McCain

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Who Keeps Paying BuzzFeed’s Bills?

Posted on | January 30, 2019 | Comments Off on Who Keeps Paying BuzzFeed’s Bills?

 

Harrison Smith at InfoWars reminds us that BuzzFeed, which recently announced it would lay off “15 percent of its staff (with pink slips to go to up to 400 people, according to one insider),” has received nearly half a billion dollars of venture-capital investment since launching in 2006. In April 2013, it was reported that BuzzFeed’s investment was $46 million, which means they’ve attracted about $450 million in new capital over the past six years — despite having never shown a profit!

BuzzFeed has been burning through cash at a rate of $75 million a year and you might think that at some point their investors would become impatient waiting for this operation to show some prospect of making a return on their investment. But it’s the same kind of digital Ponzi scheme where Arianna Huffington spent years losing money with HuffPo before selling it to AOL, which sold out to Yahoo, that got bought up by Verizon. As long as there is a possibility that BuzzFeed could be sold to a giant conglomerate — Viacom or Disney or whatever — the company’s value is whatever it might fetch in such a sale, and if BuzzFeed could be sold for a price above the roughly $500 million in capital that’s been pumped into it over the years, then that investment would not be lost. However, “if” is the crucial word here, and “if” becomes a question: “When?”

Even after laying off 400 people, there seems to be little prospect that BuzzFeed can ever reach profitability as a stand-alone, and where are they going to find a sucker to buy such a money-dump? Recall that Yahoo CEO Marissa Mayer paid $1.1 billion for Tumblr in 2013, but within three years, was forced to admit Tumblr was worthless. Then Yahoo was sold to Verizon for $4.5 billion, with Mayer getting a $23 million “golden parachute” to resign. Suckers like Mayer are starting to become harder to find, however, as investors are less easily deceived by Internet boondoggles than they were just a few years ago. Sooner or later, the millennial clickbait bubble will collapse, and if BuzzFeed doesn’t sell out soon, they may have trouble finding a buyer.



 

Category: Economics, Journalism

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