Home / Business / BuzzFeed has started his dismissal, but it's also about a merger

BuzzFeed has started his dismissal, but it's also about a merger

BuzzFeed began dismissing 15 percent of its workforce on Friday – about 200 employees. The next step could be a merger with Group Nine, another major digital publisher.

Speculation about a connection between the two companies are seething for months in the media industry and sources that both companies are familiar with say the two companies actually have discussed a merger. The two companies are not close to a closed deal and can ultimately find other partners. If there is a merger, say sources, this will not happen immediately.

A Buzzfeed representative declined to comment; I asked Group Nine for a comment.

A deal is logical as both BuzzFeed and Group Nine specialize in producing relatively low-cost, high-volume videos using platforms like the Internet Facebook and Google. BuzzFeed CEO Jonah Peretti publicized the idea last fall to bring together big digital publishers to get better terms from Facebook and other merchants.

BuzzFeed and Group Nine also share a link about digital investor Ken Lerer. Lerer, who co-founded HuffPost with Peretti, is the CEO of BuzzFeed. his son Ben Lerer leads the Group Nine. Group Nine was founded in 201

6 when cable TV giant Discovery brought in cash and some assets to a joint venture with three companies closely associated with the Lerer family: Thrillist, a lifestyle publisher aimed at young men; the Dodo, a place for animals and people who love them; and NowThis, a publisher of video news.

Any deal would force companies' backers to agree on a rating. Interestingly, Discovery, which owns the largest stake in Group Nine, would require syncing with rival TV giant Comcast *, which has bumped $ 400 million into Buzzfeed and is the publisher's biggest contributor.

Last fall, Discovery shared investors' estimate of its 42 percent in Group Nine at $ 212 million, which represents a $ 500 million valuation for the entire company. In 2016, BuzzFeed raised $ 200 million from NBC Universal for a valuation of $ 1.7 billion. It is quite possible that the number would drop in today's market after a couple of years ago other digital publishers merged, sold for sale prices, or dropped their ratings .

Both Peretti and Ben Lerer founded companies that should thrive in the social media world, especially with the help of Facebook. While Facebook has been talking to media companies for several years, it is now clear that Facebook (along with Google) will continue to dominate the Internet advertising market and will not share that wealth with publishers. (Your new position for publishers: We'll help you sell subscriptions a business in which we do not operate.)

In response, Peretti has been trying to find new sources of revenue, and now he If this is done, he may try to increase the amount.

* Comcast is an investor of Vox Media, which owns this website.

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