Buzzfeed is going to lose a lot of money.
NBCUniversal expects to lose about $100 million in its investment deal with BuzzFeed, which in June had planned to go public via a SPAC.
Digital publisher BuzzFeed’s plan was to merge with a special-purpose acquisition company, but NBCUniversal leaders were disappointed at BuzzFeed’s value of $1.5 billion, which is below where it was in previous years, The Wall Street Journal reported. In the deal, NBCUniversal could be facing a loss of $75 to $100 million, depending on the stock price, the report said.
BuzzFeed was seeking a $1.5 billion valuation based on a projected profit of $117 million by the end of 2022. Most of it was pitched as coming from e-commerce revenue. The valuation was 13 times the profit, which was more in line with a tech company rather than a content publisher.
“Virtually all companies are cloaking themselves in a mantle of tech,” Peter Csathy, founder of advisory firm CREATV Media, previously told TheWrap. “The market rewards that with higher valuations and higher multiples. It is certainly a key financing strategy to position yourself more as a tech company than a media company. BuzzFeed is fundamentally a content company but serves up content in a tech-transformed world.”