Media tycoon Byron Allen to acquire majority stake in BuzzFeed for $120 million
Source: Global Market Broadcast
Media tycoon Byron Allen will pay $120 million to acquire a majority stake in the digital media company BuzzFeed.
BuzzFeed said on Monday that Allen plans to acquire 40 million shares at $3 per share. Allen’s Allen Media Group owns The Weather Channel and several network-affiliated broadcast channels.
Upon completion of the transaction, Allen’s affiliate, Allen Family Digital, will hold 52% of BuzzFeed’s outstanding shares. The deal will be financed with $20 million in cash and a $100 million promissory note, which matures five years after the deal closes and will bear 5% annual interest.
BuzzFeed stated that the deal is scheduled to close by the end of May.
Allen will also succeed BuzzFeed founder Jonah Peretti as CEO and chairman.
Less than a week before BuzzFeed’s announcement, CBS stated that Allen would take over Stephen Colbert’s late-night time slot. Allen plans to host a show in that slot titled “Comics Unleashed.”
Peretti stated that BuzzFeed plans significant adjustments prior to Allen’s arrival, including cost reductions. He also said the company plans to merge BuzzFeed Studios and Tasty into a new independent entity.
These measures aim to create more liquidity in order to focus on the core BuzzFeed brand and the news website HuffPost.
Allen said: "Our vision is to expand into the realm of free streaming video, audio, and user-generated content, building on the iconic foundations of BuzzFeed and HuffPost."
Peretti will transition to the newly established role of President of BuzzFeed AI. The company has recently intensified its investment in AI. Earlier this year, the company announced plans to spin off a company that has been developing a range of social applications based on BuzzFeed’s AI experiments.
BuzzFeed also reported that first quarter losses widened and revenue declined.
The company recorded a loss of $15.1 million, or a loss of 40 cents per share, versus a loss of $12.7 million, or 33 cents per share, a year earlier.
Sales fell 12% to $31.6 million.
BuzzFeed stated that during the completion of the deal with Allen and as it continues to explore strategic opportunities, it will suspend publishing financial forecasts. The company plans to update its performance outlook in the coming months.
The company, once widely popular for its online quizzes and news, stated in a filing last week that it failed to pay a $5 million debt on time. The company extended the maturity date to May 18. It stated that if it cannot repay the debt by the new due date, the loan will be in default, which could lead to bankruptcy filing.
BuzzFeed also issued a going concern warning in March, stating that it lacked resources to meet its cash obligations.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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