BuzzFeed Makes Plans to Go Public Via SPAC
BuzzFeed’s Ups and Downs
Digital publisher BuzzFeed announced it is going public via a merger with the SPAC, 890 Fifth Avenue Partners (ENFA). The company is aiming for a $1.5 billion valuation and a deal is expected to close by the end of 2021. BuzzFeed will trade on the Nasdaq with the ticker “BZFD.”
BuzzFeed was in the spotlight in 2015 after NBCUniversal (CMCSA) invested $200 million in the startup. A number of traditional media companies were looking to startups like BuzzFeed as they dealt with falling TV viewership numbers. In recent years these companies have turned to streaming and BuzzFeed has struggled, but investors have high hopes for the next chapter in the company’s story.
BuzzFeed Grows its User Base
As part of the deal, BuzzFeed is buying Complex Networks from Verizon Communications (VZ) and Hearst Corp. Complex Networks is a digital publisher covering pop culture, music, and streetwear. BuzzFeed hopes the acquisition will help it reach new audiences and expand into ecommerce and affiliate commerce. Similarly, BuzzFeed acquired the news company HuffPost from Verizon last fall for an undisclosed amount.
BuzzFeed is making these acquisitions in an effort to ramp up its user base and become competitive with the likes of Google (GOOGL), Facebook (FB), and Amazon (AMZN) in the digital ad space.
Competing With Tech Giants for Digital Ad Business
Google, Facebook, and Amazon are known as the “triopoly” in the digital media industry. These three tech giants already dominated the sector before the pandemic, and that trend has accelerated. In 2019 the three companies controlled 80% of the US digital ad market and in 2020 that increased to 90%.
BuzzFeed will face an uphill battle as it works to generate the scale necessary to lure advertisers away from these three tech giants. Investors will be watching closely to see if BuzzFeed can meet its goals as a public company. A number of other digital publishers including Bustle Digital Group, Vox Media, and Vice Media have held discussions about going public via SPAC. If BuzzFeed’s public debut is successful, similar deals could follow.
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