BuzzFeed Inc. Is Nearing a Financial Cliff—Here’s How It Could Respond

After a challenging 2023, BuzzFeed Inc. will face a series of financial hurdles in the coming months that it will need to navigate deftly to ensure its stability. The company will see $150 million of debt obligations come due in December in the form of convertible notes it raised in June 2021, according to public filings. It is also at risk of being delisted from the Nasdaq if it cannot boost its stock price before May 28, which would trigger a clause moving that payment date up to July. The looming liquidity crunch comes after a series of disappointing quarters for the company—and for many other publishers—that have left its cash reserves depleted and its ability to finance its debts in jeopardy. “BuzzFeed has done one thing well—build an audience—and two things poorly: Monetize that audience effectively and convert it to higher-paying products,” said David Clinch, vice president of partnerships at Mather Economics. “Programmatic advertising used to be a gravy train, but now it’s a hamster wheel and they need to find a way off of it.” The Year of the Living Brands: Why Media IP Refused to Die in 2023 In third-quarter results reported in November, the company delivered $73 million in revenue, down 29% year over year, while the time readers spent on its properties dropped 19%. It posted a loss in the quarter of $13.7 million, and its losses for the first three quarters of 2023 totaled $77.6 million. The company had $42 million in cash as of September. BuzzFeed did not respond to a request for comment. Selling Complex and boosting value If BuzzFeed were to be delisted, the change in status would trigger a default that could force it to repay its $150 million in debt obligations in July, according to public filings. To prevent this, the company plans to sell Complex Media to social commerce platform Ntwrk, in a deal backed by Universal Music, for around $100 million in cash. The deal is expected to close next week, according to a person familiar with the matter. BuzzFeed had hoped that the sale would net $150 million, which it could use to pay down its convertible notes, but it was unable to secure its desired price, according to The Information. Nonetheless, the influx of cash and offloading of expenses could prompt an uptick in the value of BuzzFeed stock. A strong fourth-quarter performance from the company, which will report its results in March, could also bump up the price. If those measures fail, the company pledged in its extension appeal to Nasdaq that it would execute a reverse stock split to meet the minimum bid requirement, according to public filings. This would mean consolidating the existing shares of its stock into fewer, higher-priced shares. No value is lost, but it often indicates a company in financial distress, weakening investor confidence. Selling assets like Tasty To meet its $150 million debt obligation at the end of the year, the company could consider offloading some of its other assets, which include Tasty, First We Feast, Hot Ones and HuffPost, said media analyst Adam Ryan. Doing so would produce immediate liquidity and reduce overhead expenses, but it would also shrink the business, reducing its capacity to generate future revenue and contracting the scale that it can offer advertisers. In November, the company announced a strategic shift in its editorial and commercial structure, in which it transitioned to selling by brand rather than as an aggregated network. Since then, three executives—chief financial officer Felicia DellaFortuna, publisher Dao Nguyen and president Marcela Martin—have left the company. Developing paid products The company could also consider developing paid products—part of a larger effort to monetize its existing audience more efficiently—by treating its franchises more like standalone products and converting readers into paying customers. By operating verticals like Tasty and First We Feast as products and levying registration walls, BuzzFeed could generate reader revenue while gathering first-party data about some of its most passionate readers, said Clinch. It could then pitch those audiences to premium advertisers.