According to a Tuesday report by CNBC, top investors in the multimedia company have pressured BuzzFeed CEO Jonah Peretti to shut down BuzzFeed News "amid what people familiar with the matter describe as broader investor concern that the division is weighing down the company," as CNBC put it.
Among their reported expectations is that doing so would immediately add $300 million of market capitalization to BuzzFeed's stock, which has suffered since it went public in December.
Earlier on Tuesday, Mark Schoofs, BuzzFeed News' editor-in-chief, announced he was stepping down, as were Tom Namako, the deputy editor in chief, and Ariel Kaminer, the executive editor of investigations, ahead of anticipated layoffs connected to budget cuts.
Peretti told BuzzFeed News employees in a Tuesday email obtained by the New York Times that the outlet would need to “prioritize the areas of coverage our audience connects with the most" and slash budgets for the BuzzFeed video, business and administrative teams.
The company went public in December by merging with a special purpose acquisition company (SPAC) used to raise funds for the IPO, which was valued at about $1.5 billion. However, the deal collapsed after investors pulled almost all of their money out of the SPAC ahead of the merger, leaving BuzzFeed with just $16 million. Its stock collapsed and has never recovered, remaining on Tuesday at about $5, or half its value before the IPO. It was the first significant modern digital media company to go public.
Last week, 77 BuzzFeed employees brought complaints against the company with the American Arbitration Association, which settles disputes outside of court. They claimed the company illegally shortchanged them in the merger by a collective $8.7 million.
BuzzFeed News was launched in 2011 and has won numerous awards, including a Pulitzer Prize for International Reporting. The outlet has undergone considerable ebb and flow in its size, including laying off 15% of its workforce in 2019 and canceling separate operations in Australia in an attempt to make the outlet profitable.