Yet another bad Spring for media

A year after mass layoffs, we find ourselves repeating this story.

A year ago, I was managing a team of media reporters that was covering one of the most brutal weeks of the media industry. 

Two weeks prior, the earth stood still as we all stood pushing up against the ocean of the coronavirus. Businesses around the world came to a grinding halt, closing stores and manufacturing plants and production lines. And when you have no product you also have nothing to market. So companies starting pulling their ad spend across the media landscape. 

And with no ad revenue, and no events revenue - because what company was going to put on an event and what person was going to sit in a stuffy ballroom with 800 other people - media companies started the bloodletting. 

At the end of March and through April, my team (and every other media reporter across the industry), confused from lack of direction from internal and external leadership about how to navigate a pandemic, exhausted from that lack of guidance as well as the fear of living in a pandemic, still managed to do their jobs reporting on the destruction of our industry. Hundreds, then thousands of layoffs and furloughs. It’s emotionally draining reaching out to people, some of whom are friends, all are peers, after they’ve lost their job.

From January to October, there were an estimated 28,000 media layoffs, with May hitting the high point of 8,000 lost jobs, according to a November Variety report.

As you may know, my number was called in April. I got my walking papers on April 17, a Friday. Three days prior, I wrote what would end up as my last story in that publication. That piece? It was about the media industry’s gray Tuesday, where hundreds of journalists were laid off. I tried to find some hope in that story, looking at outlets that were still hiring or rolling out initiatives. Even starting our own, a place that would aim to connect laid off workers with potential employers. (Side note: after I was laid off, that article got scrubbed and replaced with someone else’s byline.) That was the last time for 11 months that I felt hopeful.

The February cold, if not my personal 2020 freeze, thawed this March when I started my new role. I got a job; vaccines started to pick up; stimulus money hit the depleted account; there was light at the end of the tunnel. 

And then the last two weeks, there was a jolt back in time, back to last year when the coronavirus reared its hydra’s head. 

First, HuffPost, which was “bought” by BuzzFeed at the end of 2020 for a handshake and a player to be named later, laid off 70 staffers and closed a couple of offices at the beginning of March.

Once among the digital titans, it’s been passed along to buyers the way the New York Knicks pass the rock, often and not particularly well. AOL picked up the outlet in 2011 for $315 million, and then got shunted over to Verizon when the telephone company picked up the online portal and its content subsidiaries for $4.4 billion in 2015, only to go back to co-founder and BuzzFeed CEO Jonah Peretti’s hands last November. And with that, a decision was made.

CNN reported at the beginning of the month:

"Though BuzzFeed is a profitable company, we don't have the resources to support another two years of losses. 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."

This week, Medium announced it is once again pivoting its editorial philosophy, making itself the Ever Given of media, stuck in a content canal never to get out. 

After realizing that it could not be a sustainable media company without a revenue plan beyond prying open Ev Williams’ wallet, it announced that it would be offering journalists across its bevy of publications a buyout. This will be at least the third time Medium has realized that it can’t be a media company. Indeed, BuzzFeed reported in 2017 that Medium “tried and discarded at least five business models in as many years.” And now dozens of peoples’ lives are up-ended in the midst of a pandemic. 

Writing about his justification, Williams said:

The bet was that we could develop these brands, and they would develop loyal audiences that would grow the overall Medium subscriber base. What’s happened, though, is the Medium subscriber base has continued to grow, while our publication’s audiences haven’t. There are many potential reasons for this, which we could debate.

So he offers buyouts, and then decides to follow the Substack model of rewarding the journalistic ‘haves’: those with a built-in audience.

For the foreseeable future, we will focus that talent on supporting independent voices on our platform. This means identifying writers — both already on Medium and not — and offering them deals, support, editing, and feedback to help them tell great stories and find their audience.

Mel Magazine, which in my opinion, was publishing the best journalism through a telescopic lens about the absolute mess that is the human existence, with a microscopic lens on digital culture, announced it was closing its doors.

Owned by Dollar Shave Club, the razor company bought by Unilever for a cool billion bucks never made the outlet a media company. By which I mean there was no sales operation. Mel was the platonic ideal of branded content, started not as a means to sell Dollar Shave Club wares, but to write about topics that DSC believed was adjacent to its ~brand.

The reporters got to go gonzo without the threat of advertisers, which is why they were able to write about everything. And now six years after starting, it’s ending. And 20 people now are looking for work.

And stretching back to the end of 2020/beginning of 2021, the major television networks announced their own rounds of layoffs: WarnerMedia,Disney, NBCUniversal, ViacomCBS. 

So a year after the industry got chopped off at the knees like the Black Knight fighting King Arthur because of legitimate business challenges, why are we seeing a new wave of layoffs? 

One reason can be the obvious: these outlets (particularly Mel and Medium) didn’t have a media business plan. If you have no money coming in, at some point you need to stop the money from going out. Workers are expensive.

In HuffPost’s case, it’s a combination of redundancies, as I wrote when the deal was announced, and years of lackluster revenue. 

One of the questions going forward for all the digital darlings: when your journalism is a commodity (as in: strip away the byline and masthead, and you can’t differentiate [legacies like WSJ, NYT and WaPo have the same problem, but they’re buttressed by an alchemy these digital properties don’t have, a mix of 100+ year old brand, an influential audience and one willing to pay, and an institutional stewardship]), how do you attract ad and subscription dollars? 

Buyers routinely tell me that HuffPost and BuzzFeed are not on direct plans, instead choosing to spend less through programmatic channels. This matters. If advertisers are coming in through the programmatic back door at pennies on the dollar, they often have little incentive to come in through the front door and pay seven-figure deals. 

We’ve been writing about the shaky ground the media industry has been resting on for years. When I started this little newsletter, the first story I wrote was about how the pandemic has highlighted the house of cards we live in:

Over the last decade, media companies engaged in a race for scale. Get those clicks; get those pageviews; get that ad revenue. The metrics for digital media were always suspect. And now, when advertising budgets are scrapped and events are canceled, many of these digital darlings face an existential crisis. 

A year later, still true. Now, however, companies are looking at one last hail mary: the SPAC. 

Bloomberg reported two weeks ago:

BuzzFeed Inc., the digital-media outlet founded in 2006, is in talks to go public through a merger with 890 5th Avenue Partners Inc., a special purpose acquisition company, according to people with knowledge of the matter.

Once public, the company may use its currency to target future acquisitions, said one of the people, who requested anonymity because the talks are private. A transaction value couldn’t immediately be learned. As with any deal that hasn’t been finalized, it’s possible terms change or talks fall apart.

VC-backed media companies have three outs: raise more money; sell the company; go public. Now, we have a derivative of the last one; the SPAC. To quote my favorite line in Goodfellas:

"When there's nothing left, and you can't borrow another buck from the bank...you bust the joint out. You light a match."

Our industry faces many challenges, and we’ve yet to meet them head on because, when all’s said and done, the executives at top are just waiting to hit their retirement, get their golden parachute, and pass the baton to the next group of executives who will inevitably do the same. 

“The reality is this: the media business, whether that’s digital, linear or print, is declining,” said a former television executive requesting anonymity, as they did not receive a golden parachute and currently looking for work. “We’re reliant on two revenue streams, and both are plummeting. Cable TV will go from 90 million homes to 50 million in 5 years. As that plummets, their distribution plummets - how do you replace subscription? Ad declines are a reflection of audience. They have the greatest grift in the history of the world, 35 percent watch and 100 percent pay for it. When you think about digital and offer content experiences that mirror the consumer behavioral patterns, clearly there’s no fucking answer.”

And the result? A decimated industry. 

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The Grateful Dead, “Help > Slip > Franklin’s” (6/19/76)