BuzzFeed shareholders urged the company's CEO to shut down its money-losing, award-winning news division: report
Some BuzzFeed investors urged the company's CEO to shut down its news division, CNBC reported.
BuzzFeed announced cuts to newsroom staff in its first earnings call as a public company Tuesday.
BuzzFeed News has about 100 employees and loses about $10 million a year, sources told CNBC.
Several BuzzFeed shareholders urged the company's CEO to shut down its entire award-winning news division because it was losing money, CNBC reported Tuesday.
During its first earnings call as a public company on Tuesday, BuzzFeed announced it was laying off 1.7% of its workforce following its acquisition of Complex Networks and calls for voluntary buyouts in its news division.
CEO Jonah Peretti said layoffs largely impacted the company's administration and business units, BuzzFeed's video team, and Complex's editorial staff.
Three newsroom leaders — Editor-in-Chief Mark Schoofs, Deputy Editor-in-Chief Tom Namako, and Ariel Kaminer, executive editor of investigations — also announced their departures from BuzzFeed News.
"This is difficult, painful work, but I don't want to do it through layoffs in News if it can be avoided," Peretti said, according to a recording of the call obtained by Insider.
He added that the company would continue operations in the news division, "but I'm no longer going to subsidize it with revenue from other divisions, and that's a change from the past."
"We did that for many years, but now we need to transform news into a sustainable business," he said.
People familiar with the conversations told CNBC that several large investors in the company pushed Peretti to shrink its money-losing news division. BuzzFeed News, which has about 100 employees, loses about $10 million a year, according to two of the sources.
One investor told CNBC that shutting down the company's news division could add up to $300 million to the total value of BuzzFeed's stock.
Representatives for BuzzFeed and BuzzFeed News did not immediately return Insider's request for comment.
The company saw an 18% increase in revenue in the fourth quarter last year, according to a press release, but its earnings before interest, taxes, depreciation, and amortization declined 12% to $34.2 million. BuzzFeed's commerce 4Q revenue also dropped 26% to $16.7 million.
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