BuzzFeed recently announced the closing of its sale of Complex to NTWRK to form a new and wide-ranging destination for the future of commerce and media in a $108.6 million all-cash deal. Along with the $108.6 million purchase price, the company received approximately $5.7 million for using the company’s NY offices and severance- and other employment-related costs.
The divestiture of Complex is expected to enhance the company’s profitability and enable greater focus on BuzzFeed, HuffPost, First We Feast (including Hot Ones), and Tasty. And the company also announced a planned strategic restructuring intended to reduce expenses by implementing a 16% reduction in the remaining workforce, which is expected to yield approximately $23 million in annualized compensation cost savings.
BuzzFeed’s restructuring, which will be shared on Wednesday, February 28, 2024, was designed to reduce centralized costs and allow the company to become more agile, sustainable, and profitable. And overall, the company will focus on optimizing sustainable revenue streams with the highest margins. BuzzFeed, First We Feast, HuffPost, and Tasty will each operate entrepreneurially with individual strategies and revenue lines tailored to market and audience dynamics. Plus, the cash proceeds from the sale of Complex will enable BuzzFeed to take meaningful steps toward strengthening its balance sheet and improving liquidity.
The proceeds will be used to: Redeem a portion ($30.9 million) of the company’s convertible notes due 2026; Eliminate the company’s revolving credit facility by repaying it in full ($35.5 million, which includes the amount outstanding plus accrued interest and certain fees); Finance the strategic restructuring to occur on February 28; and optimize working capital.
As of December 31, 2023, BuzzFeed concluded that Complex was classified as a held for sale asset in accordance with U.S. GAAP. The company also issued new financial guidance for the fourth quarter, which ended December 31, 2023, on a continuing operations basis, which excludes expected fourth-quarter contributions from Complex.
1.) Fourth quarter revenues on a continuing operations basis are now expected to be in the range of $73 million to $78 million (and revenue generated from the discontinued operation is now expected to be $14 million to $18 million), as compared to the financial outlook of $99 million to $110 million, provided by the company in its third quarter 2023 earnings release on November 2, 2023.
2.) Fourth quarter Adjusted EBITDA on a continuing operations basis is now expected to be in the range of $15 million to $20 million as compared to the financial outlook of $20 million to $30 million provided by the company in its third quarter 2023 earnings release on November 2, 2023.
UBS Investment Bank served as BuzzFeed’s exclusive financial advisor on the deal. Freshfields Bruckhaus Deringer US LLP served as external legal counsel to BuzzFeed, Inc.
BuzzFeed acquired Complex Networks in December 2021 for approximately $198 million in cash and $96 million in equity. Included in the purchase price were both Complex and the First We Feast brands. And First We Feast (including Hot Ones) was not sold to NTWRK and remained within BuzzFeed.
KEY QUOTES:
“The sale of Complex represents an important strategic step for BuzzFeed, Inc. as we adapt our business to be more profitable, more nimble, and more innovative. This is also an opportunity to unlock greater value for the Complex brand by combining it with NTWRK’s expansive, commerce-driven business.”
“The changes we announced today will enable an exciting next stage for our company, with increased focus on our iconic brands — BuzzFeed, HuffPost, First We Feast and Hot Ones, and Tasty; a more efficient cost structure and operational model; and the ability to accelerate innovation powered by AI and interactive content formats. I look forward to sharing more in the coming months.”
– BuzzFeed CEO Jonah Peretti
“During the fourth quarter our experiential business was impacted in the form of lower sponsorship revenues for the brand’s annual flagship event, ComplexCon, we believe as a result of the Complex asset being held for sale. Further, our overall revenue performance reflects the challenges of delivering against our bundled go-to-market strategy in a tighter digital advertising market. As a result, we have made the decision to reduce the size of our centralized operations enabling our individual brands to operate with more autonomy and deliver against their differentiated value propositions for advertisers.”
– Matt Omer, CFO of BuzzFeed
