For the digital media industry, there has arguably never been a worse month than January 2019.
In the past two weeks, Vice and BuzzFeed laid off several hundred staffers apiece. The Huffington Post also announced cuts, as did newspaper publishers Gannett and McClatchy. All told, the media industry lost at least 1,000 jobs in a single week, with some estimates eclipsing 2,100 total.
Vice and BuzzFeed were just the latest digital-media titans to make painful staff cuts over the past few months. Gizmodo Media Group cut staff last year, while millennial-focused news outlet Mic fired nearly all its employees and was sold for pennies to Bustle Digital Group.
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BuzzFeed and Vice told employees the layoffs were part of organizational restructuring, cutting from sections top executives felt were underperforming, and retreating from international bureaus. In a memo last week, BuzzFeed CEO Jonah Peretti told staff the company was keeping its core interest in investigations, tech, politics, culture, and breaking news.
The outlook, according to media experts, was bleak. Columbia University’s Emily Bell wrote in The Guardian that the free market was “killing journalism,” while in a lengthy article summarizing media’s recent woes, Jill Lepore bluntly asked in the New Yorker: “Does Journalism Have a Future?”
It was a cold awakening for digital media companies, whose leaders spent the previous decade building massively (possibly over-) valued brands, proclaiming to investors, staff, and any media conference attendee who would listen that they’d soon eclipse the old-school giants of television news and print journalism. Investors, who spent big and expected to be paid back even bigger, have grown restless or disillusioned as Facebook and Google continued to cannibalize the digital advertising game.
“What we're seeing is the end of the late state VC dream that a lot of these companies went for,” one digital media exec said. “It turns out that doesn't scale to billion in valuations.”
Late last year, Peretti publicly floated the idea of forming a massive digital media conglomerate to better reduce costs and fight Google and Facebook, which drive traffic to media sites but also eat away at advertising dollars. And while that outcome appears unlikely in the near future, behind the scenes over the past several months many of the biggest digital media players have held speculative conversations about potential mergers or acquisitions—even if few seem likely or willing to consummate the deals.
Digital media executives who spoke with The Daily Beast on the condition of anonymity said publisher Group Nine remains interested in a potential merger with BuzzFeed, though a person familiar with the negotiations said it is unclear if a deal will go through.
But there are other potential offers on the table if BuzzFeed will have them.
Last month, for example, Peretti visited the Refinery29 offices. When staff asked Refinery29’s CEOs during a recent all-hands meeting about the BuzzFeed boss’ visit, according to two people with direct knowledge, the executives would not say whether they discussed any such merger.
But while BuzzFeed and other big-name outlets grapple with downsizing, digital media publisher Bustle Digital Group has been obsessed with growth. Over the past several months, Bustle’s CEO Bryan Goldberg has pursued acquisitions of a number of media companies with mixed results.
He bought Gawker on the cheap last year, but has struggled with the site’s relaunch following an ugly public feud with several of its new staffers. And former employees at Mic, which laid off nearly all its staff when BDG purchased it late last year, have publicly criticized BDG for hiring new staff and posting content created by axed staffers, occasionally without proper credit. The New York Post has written multiple articles citing Goldberg as a potential buyer for Gizmodo Media Group, which is currently owned by Univision, but GMG leadership has pushed back strongly against that claim.
None of this has seemed to alter Goldberg’s objectives. Gawker has taken advantage of the new glut of talent on the market, reaching out to some former staffers who have been laid off from digital media companies. And one source said Mic is hiring and considering its options strategy forward, even including focusing on video-gaming content.
Meanwhile, other smaller digital brands have contemplated their future amid a tumultuous climate. Outline founder Josh Topolsky has met with a number of digital media executives over the past few months, including those at Mashable, BDG, and IAC, which owns The Daily Beast. In these meetings, Topolsky touted the company’s product, including its content-management system and its advertising technology.
And some major players have been surprisingly absent from recent major media buys, as they quietly struggle with managing an industry downturn.
Vox Media, for example, laid off some staffers last year and has been conspicuously quiet on the market. The company took a victory lap in The New York Times this week by touting its profitability, but multiple digital media insiders with knowledge of other potential future deals said Vox has not been a serious player in any recent conversations.
Media critics have blamed the overall media downturn on overhyped expectations, and restless investors who expected big returns quickly.
But despite doomsday predictions from some about the future of digital media, many observers believe the recent cuts are a painful course correction that will, in the long run, make digital media a more sustainable business.
Slate’s Will Oremus noted that “for all the hyperventilating about the bursting of the online media bubble,” BuzzFeed’s revenue was up to $300 million, compared to $260 million last year. And the New York Times’ Ed Lee pointed out leaner sites with different products like Axios and The Information have appeared to find a sweet spot by keeping costs down and leaning into newsletters and paid subscription products.
Some media critics, like journalism adviser Heidi Moore, suggest such cuts—despite profitability—underscore how media companies’ business models have thus far mainly served to enrich investors.
But some of the cuts, as executives noted to The Daily Beast, were the result of a glut of money with poor planning. “The idea that BuzzFeed went out and hired 250 people without a plan to pay for them is reckless,” said one digital media executive.
The cuts have fostered further tensions between management and staff at major media companies.
Last week, The Daily Beast reported that BuzzFeed staff confronted Peretti with concerns about the company’s layoff process.
And according to two sources familiar, Vice head of digital Josh Cogswell attempted to comfort multiple laid-off staffers by saying they were welcome to freelance for the company—a line which infuriated many staffers losing their jobs.
“That was pretty much the only thing he said,” one former Vice staffer said. “That I wasn't selected based on performance and they would like to keep working with me in a freelance capacity. I would characterize the interaction as ‘smarmy.’”
Vice union organizers fought hard for a better severance package in contract negotations at the end up last year under the impression that the company would have layoffs this year.
BuzzFeed staffers successfully pressured the company into paying out laid-off staffers.
Vice staff have heard rumors for months that there would be site closures.
The company has long flirted with a potential acquisition of Refinery29, but another person close to BuzzFeed said the chances were unlikely.
BuzzFeed News EIC Ben Smith tweeted saying he would be happy to recommend staff who were laid off.
Last week, The Daily Beast reported that BuzzFeed staff confronted Peretti with concerns about the company’s layoff process.
