Byron Allen just scooped up one of the internet’s most recognizable digital media brands for a fraction of what it was worth a decade ago.
The media mogul and owner of Allen Media Group is taking control of BuzzFeed with a $120 million deal that gives him a 52 percent majority stake and the CEO position, replacing founder Jonah Peretti, who’s shifting focus to artificial intelligence development.
The structure of this acquisition tells you everything about where BuzzFeed stands right now.
Allen’s putting down $20 million in cash, with the remaining $100 million coming as a promissory note due 5 years after the deal closes in May.
Meanwhile, BuzzFeed just reported that advertising revenue dropped nearly 20 percent year-over-year, and the company lost $15.1 million last quarter.
That’s the kind of financial reality that forces founders to make tough decisions about their legacy.
Peretti built BuzzFeed into a cultural force in the early 2010s, when viral content and Facebook distribution were essentially the same thing.
The company was so hot that Disney reportedly offered him $650 million back in 2014, but he turned it down. Now he’s watching his creation get picked up for $20 million upfront.
According to The Hollywood Reporter, the company’s also spinning off its Tasty food brand and studios division into separate entities, which could mean those assets get sold off to other buyers.
What happened to BuzzFeed is basically what happened to every digital media brand that bet everything on social platforms.
When Facebook and Twitter changed their algorithms to keep users on their own sites instead of sending them to external links, the whole model collapsed.
BuzzFeed News shut down in 2023, and the flagship site’s traffic has been steadily declining.
Allen’s betting he can turn this around by pivoting toward streaming video and user-generated content, positioning BuzzFeed as a competitor to YouTube.
He’s already proven he knows how to acquire media assets and restructure them, having picked up Weather Channel properties and recently taking over the Late Show time slot on CBS with his Comics Unleashed series.
Peretti will oversee a new division called BuzzFeed AI, focused on products built around recent advances in artificial intelligence.