BuzzFeed (BZFD) is shutting down its news division as part of wider company layoffs.
According to an internal memo obtained by Yahoo Finance, the company said the shutdown is part of layoffs that will impact 15% of staffers, or about 180 employees, in order to make the business "more agile and focused." As part of that effort, the company will also be reducing budgets, open roles, real estate, and most other non-revenue generating expenditures.
"While layoffs are occurring across nearly every division, we've determined that the company can no longer continue to fund BuzzFeed News as a standalone organization," BuzzFeed CEO Jonah Peretti wrote in a memo to employees, explaining the company will now concentrate its news efforts at its HuffPost brand.
BuzzFeed stock sank as much as 26% on Thursday following the news.
Peretti had been a long-standing champion of BuzzFeed News, explaining he made the decision to over-invest in the division "because I love their work and mission so much," he wrote in the memo.
"This made me slow to accept that the big platforms wouldn't provide the distribution or financial support required to support premium, free journalism purpose-build for social media," he continued, adding: "Please know that we exhausted many other cost savings measures to preserve as many jobs as possible."
Peretti said he regrets not holding the company to a higher standard for profitability, especially amid industry downturns and economic uncertainty. He admitted he could have better managed those challenges as CEO and the leadership team could have performed better.
The company struggled after going public via a special purpose acquisition company, or SPAC, in 2021 with the stock falling more than 90% since that time.
BuzzFeed's struggles after going public deterred fellow media giants like Vice and Bustle from completing their own SPAC deals. Last March, former and current employees filed a lawsuit against Buzzfeed, claiming the company mishandled the public offering and prevented them from selling shares at a higher price allegedly worth millions.
"We've faced more challenges than I can count in the past few years: a pandemic, a fading SPAC market that yielded less capital, a tech recession, a tough economy, a declining stock market, a decelerating digital advertising market and ongoing audience and platform shifts," Peretti said.
Layoffs hit media
Buzzfeed's decision to shutter its news operation also comes amid continued upheaval in the media sector.
On Thursday, Insider confirmed to Yahoo Finance it would be laying off 10% of its workforce, citing "the same economic headwinds as others in our industry."
Disney (DIS) is reportedly planning thousands of job cuts next week as part of its broader effort to slash 7,000 jobs by the summer. The layoffs will include eliminating 15% of its entertainment division, along with various on-air and management positions at ESPN.
Late last year, CNN went through a similar round of layoffs as parent company Warner Bros. Discovery (WBD) looks to slash $4 billion in costs over the next two years.
CNBC reported last year BuzzFeed's news organization lost roughly $10 million a year as shareholders had been pressuring the company to shut down the news division.
"I've learned from these mistakes, and the team moving forward has learned from them as well," Peretti said. "We know that the changes and improvements we are making today are necessary steps to building a better future."
Earlier this year, the stock saw some relief after the company revealed it planned to utilize ChatGPT creator OpenAI to generate and personalize some of its content and enhance its quizzes. Peretti said no jobs would be replaced by AI in the memo.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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