Buzzfeed, the 15-year old digital media company is going public via a SPAC and is targeting a $1.5 billion valuation, with expected close in Q4. BuzzFeed bought HuffPost and said it would acquire another publisher, Complex, as part of its plan to go public.
Not long ago, newspapers and magazines were going out of business, and newcomers like BuzzFeed, Vox and Vice Media seemed like the future of the news business. That has changed now as Washington Post, New York Times, Wall Street Journal have flourished, thanks to emphasis on digital journalism and subscription-based business models.
The newcomers are facing an identity crisis. BuzzFeed, Vice, Vox find themselves in a difficult competition with the legacy publications for general readers but also with Facebook and Google for ad dollars. BuzzFeed agreed to cut a quarter of its valuation for the transaction, setting a bad precedent for rivals seeking to go public.
Short Squeez Takeaway: BuzzFeed plans on using the cash raised from the IPO for more acquisitions. It is also considering a subscription-based model like its legacy rivals, which might be the need of the hour given the company's recent struggles. It is an exciting time in the digital media space with all the M&A activity and upcoming IPOs. We only expect to see more consolidation in the industry with the cash raised.