The layoffs, impacting approximately 180 employees, occur as the company pivots toward “areas that will drive growth” and away from “areas with less audience engagement,” according to a message sent to employees on Tuesday by BuzzFeed CEO Jonah Peretti and obtained by Axios media reporter Sara Fischer.
“In order for BuzzFeed to weather an economic downturn that I believe will extend well into 2023, we must adapt, invest in our strategy to serve our audience best, and readjust our cost structure,” Peretti remarked. “Our revenues are being impacted by a combination of worsening macroeconomic conditions, and the ongoing audience shift to vertical video, which is still developing from a monetization standpoint.”
Shares of BuzzFeed fell more than 6% to reach $1.07 by market close on Tuesday; the company’s stock has plummeted nearly 90% since its lackluster debut on the NASDAQ last year.
BuzzFeed earned $104 million in revenue as of the third quarter of 2022, according to the company’s most recent earnings report, marking a 15% increase from $90 million in the third quarter of 2021. Net losses, however, increased from $4 million to $27 million over the same period.
Vertical video was recently popularized by social media platform Tiktok, which emerged as the most visited website in the world last year, overcoming Google and other competitors. BuzzFeed has increasingly been packaging celebrity, news, and culture coverage as short-form vertical videos, according to the earnings report. Views on reels, shorts, and TikToks increased more than 60% between the second and third quarters of 2022.
“As we navigate the dual dynamics of the rapid rise of short-form vertical video and a weakening macroeconomic environment, this also means we are focused on preserving cash and leveraging our strong audience signal to direct resources toward the opportunities with the highest potential for monetization,” Peretti told investors.
The reduction in headcount follows similar moves from other media and entertainment companies. Warner Bros Television slashed 26% of headcount across scripted, unscripted, and animation divisions last month. Gannett, a media conglomerate which owns more than 250 local news outlets, announced in August that executives would begin “necessary but painful reductions to staffing” while eliminating some open positions.
Peretti, who said that salaries were the largest expense at BuzzFeed, added that the reduction in payrolls will also help the firm to “consolidate and centralize” operations with Complex Networks, an entertainment company acquired by BuzzFeed last year. BuzzFeed plans to build “a more robust creator business, which requires a close conduit between content, business, and tech, and bringing additional skills and tools to the organization.”
Most of the layoffs will occur in sales, technology, and studio production, as well as BuzzFeed.com and Complex Networks, according to Fischer.
Technology companies such as Amazon, Microsoft, and Tesla have likewise announced hiring pauses or layoffs for their corporate offices over the past several months, citing recessionary risk and broader economic uncertainty. The layoffs in the entertainment industry occur as some investors criticize large corporations, especially in the technology sector, for maintaining bloated payrolls.