BuzzFeed is preparing to fire over 15% of its employees after the outlet was caught publishing malicious fake news about the President of the United States.
The cutbacks will affect the failing news division, according to sources familiar with the matter, with around 220 employees set to lose their jobs.
The layoffs are happening just one week after a BuzzFeed reporter admitted that the recent Trump Tower “bombshell” was completely fabricated.
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Last week, BuzzFeed set the internet ablaze after it released a dubious story written by Anthony Cormier claiming that Trump had “personally instructed” his former attorney to lie about the date negotiations “in order to obscure Trump’s involvement”.
However, when Cormier was questioned by CNN, he admitted he had not seen any evidence to verify the story’s claims.
BuzzfeedNews Reporter Anthony Cormier appeared on CNN’s New Day and revealed that he had not seen the evidence underlying his report pic.twitter.com/c4B4iH2xhx
— Wojciech Pawelczyk (@Woj_Pawelczyk) January 18, 2019
Cnn.com reports: BuzzFeed CEO Jonah Peretti confirmed the sharp cut on Wednesday after reporters from other news outlets began inquiring.
The layoffs, he said in an internal memo, are part of a broader effort to “put us on a firm foundation and allow us to invest and grow sustainably for years to come.”
After “extensive work” in the past few months, “we’ve developed a good understanding of where we can consolidate our teams, focus in on the content that is working, and achieve the right cost structure to support our multi-revenue model,” Peretti wrote.
He said the “restructuring” will reduce costs and “improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again. These changes will allow us to be the clear winner in the market as the economics of digital media continue to improve.”
Staffers at BuzzFeed have been bracing for bad news for days. Employees had learned senior editors were being flown into BuzzFeed’s New York City offices and cuts to staff were widely speculated about internally. Executives were trying to wait until next week to announce the restructuring, but the speculation and leaks sped up the timeline.
“This is going to be a tough week,” BuzzFeed News editor Ben Smith said in an email to staffers as the news trickled out on Wednesday evening.
“I realize that you will have a lot of questions about specifics. We’re committed to answering them, but we aren’t going to be able to until next week,” he wrote. “Thank you for bearing with us.”
The BuzzFeed contraction comes during a turbulent time in digital media, and the journalism industry as a whole. Verizon announced on Wednesday that it would cut 7% of staff from its media division which is comprised of brands that include Yahoo, AOL, and HuffPost. Layoffs also hit several newspapers owned by Gannett, the nation’s largest newspaper chain, on Wednesday.
Each case has unique characteristics, but the overall story is the same: Changes in advertising and consumer behavior are causing a reckoning in both old and new media.
Facebook and Google have upended the ad business, prompting websites to seek out new sources of revenue.
Digital ventures like BuzzFeed have also been under increasing pressure from venture capitalists, who have provided sizable rounds of funding, to deliver results.
Peretti said in Wednesday’s memo that BuzzFeed’s business has grown by “double digits” in the past year, but “unfortunately, revenue growth by itself isn’t enough to be successful in the long run.”
He added, “Even though I’m confident this is the right business decision, it is upsetting and disappointing.”
BuzzFeed went through a much smaller round of layoffs last September, when its podcasting division was shuttered.
A few months prior to that, in June 2018, BuzzFeed cut 20 staffers as it reorganized its business operations. And in November 2017, the company laid off approximately 100 employees — a move that hit sales and marketing, along with staffers in the British news and business teams. But it has continued to hire in other areas, reshaping itself, like many other digital media companies.
Last year, Peretti floated the idea of digital companies merging with each other to gain better leverage over Facebook and Google and strike better advertising deals.
“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti told The New York Times in an interview last November.
At the time, Peretti mentioned Group Nine Media, Vice, and Vox Media as companies he viewed as “doing interesting work.”
Peretti has spoken to Benjamin Lerer, the chief executive of Group Nine Media, about a possible deal, but the talks are not active at this time, a person familiar with the matter told CNN Business.
Group Nine Media, which formed in 2016, is the parent company of NowThis, Thrillist, The Dodo, and Seeker. The company, whose investors include Discovery and Axel Springer, recently raised an additional $40 million in funding.