Last March, media owners reacted to the economic fallout of the pandemic with furloughs, layoffs and other cost-cutting measures. This March, as the world enters the next phase of the pandemic, four notable brands made major announcements that signified more instability in the industry.
“I think these media companies are looking at the dollar signs, and it’s just not there,” said Joel Kaplan, an associate dean for professional graduate studies and professor of magazine, newspaper and digital journalism at Syracuse University. “They have probably six months before it really gets bad. Once people are vaccinated and go back to doing the things that they’re used to doing, I think it’s going to fall off the cliff again.”
‘A point of no return’
HuffPost was losing more money than BuzzFeed CEO Jonah Peretti, its cofounder and now new owner, could stomach.
“The most responsible thing we can do is to manage our costs and ensure BuzzFeed — and HuffPost — are set up to prosper long-term.” Peretti said. “That’s why we’ve made the difficult decision to restructure HuffPost to reach profitability more quickly. Our goal is for HuffPost to break even this year.”
“It’s really unfortunate, but it also can’t be shocking,” Rief said. “Part of M&A is trying to extract synergies. Oftentimes companies get acquired because they’re not going that well and there are key pieces [the buyer wants]. But they don’t want everything.”
“The amount of data large platform companies collect and control enables them to offer far more efficient advertising than any publisher, and the business of making online content profitable is rigged against anyone who wants to run even a sparsely resourced newsroom with experienced reporters,” Bell wrote in that 2019 Guardian piece.
“We’re reaching a point of no return,” Bassett told CNN Business in reference to the recent wave of layoffs. “There needs to a bigger, louder conversation and more public support behind holding Google and Facebook accountable and figuring out how to prop up journalism as an essential public service.”
“It is an understandable search for a new sustainable business model given the domination of advertising by Google and Facebook,” Bassett said. “Journalism as an industry is facing a huge financial crisis.”
But the owners of Medium and MEL, separately, did not see a financially secure future in their current journalism enterprises — or at least for MEL, Dollar Shave Club just did not want to be a part of it.
“Unfortunately, we have had to make the difficult decision to move forward without them so we can better focus on our consumer business,” a Dollar Shave Club spokesperson said in a statement. “We wish them all the best and are doing everything we can to support them through this transition. We are hopeful for the publication’s next chapter.”
“But it represents a weak outcome for Williams, who previously sold Blogger to Google and co-founded Twitter, which eventually went public and today has a market capitalization of more than $50 billion,” Newton wrote.
Competing with user-generated content is top of mind for Rief and his team at Morning Brew.
“You’re competing with basically every human on the planet,” Rief said. “Everyone can create content. Publishers have to figure out what makes you unique. Why are people going to open up a Morning Brew newsletter versus just go on Instagram or go on Twitter?”
The next chapter
Digital media companies are exploring their next chapter after years of raising round after round of venture capital.
It would make sense that to prepare for any SPAC deals, these media companies would cut costs through layoffs to improve their balance sheets. Layoffs are typical with consolidation, too.
Kaplan said he sees media industry as facing an “inexorable decline” that was partially offset — for some outlets — for a year when people were more reliant on news or simply bored at home during the pandemic.
“In 2019, [the industry] was going in that direction, down, down, down. Really, it got a year reprieve,” Kaplan said. “You can’t run against the curve. You can’t push against the tsunami that’s coming toward you.”