BuzzFeed is not the first media brand of its vintage to adopt this approach. Vice Media, which also encapsulated the froth of digital media in the last decade, has pivoted from a web and text-based business to a producer of video content. The upside of such a strategy might be diminished, but so too are the risks.
Of course, embracing such a streaming-centric playbook will naturally entail a substantial restructuring. Allen has already warned that layoffs are on the horizon.
And while BuzzFeed has a long history of launching popular franchises, HuffPost has a less established record on that front. News is a more saturated ecosystem than original programming, and HuffPost might struggle to compete with its blue-chip peers in the space.
For Allen, the acquisition is a relatively low-stakes gambit. The deal stipulates that he, through his holding company Allen Family Digital, only has to pay $20 million for his 52% ownership stake today. The rest of the $100 million will be paid over a five-year time horizon.
This means Allen gets the BuzzFeed, Tasty, and HuffPost brands—and, more importantly, their YouTube footprints—for about as much money as Valnet paid for Polygon or Ziff Davis paid for Dwell, Domino, Business of Home, and PopSci.
The bottom lines of these companies have sagged in recent years, but they have name-brand recognition and YouTube followings in the tens of millions. If Allen can successfully reorient these companies into video businesses, expect to see more such acquisitions in the near future.
