Buzzfeed to Sell Complex for $100M?

January 5, 2024 by  Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss Buzzfeed’s planned sale of Complex, rumors of NTWRK emerging as a buyer, and my POV on the likely deal dynamics.

BTW our founder is hosting a NYC meetup for creator economy execs on Wed Jan 10. Fill out this form if you want to stop by.

 


Buzzfeed to Sell Complex for $100M?

 

There’s been little coverage of BuzzFeed’s sale of Complex Networks, and emerging buyers like NTWRK. 

But there are good learnings here. Let’s break it down…

 

🟠BUZZFEED SITUATION – SEP YTD

  • $150M debt due Dec ‘24

  • $42M cash

  • 28% drop in revenue

  • $78M net loss

 

✴️BUZZFEED ASAP NEEDS

  • Generate cash to pay debt + accrued interest

  • Grow revenue from core assets

  • Get profitable

 

✍️BUZZFEED PLAN

  • Sell Complex for $100M (excl some key franchises)

  • Refocus on core assets

  • Shut down non-core assets (like Buzzfeed News in 2023)

 

🤝DEAL RUMORS

  • Live commerce platform NTWRK emerging as buyer

  • Complex sales won’t include key franchises like First We Feast and Hot Ones

 

My POV here…

Buzzfeed is in bad shape. 

Lots of debt due Dec 24, has til May to get stock > $1 (currently 26 cents) or is delisted from NASDAQ which triggers debt being due, unsure if remaining assets after sales leaves viable company, and current leadership signals no confidence. 

On planned sale of Complex, The Information reports that NTWRK is in the mix. Deal logic = Complex media assets will drive traffic to NTWRK’s ecommerce biz and grow GMV, a key need for all social commerce co’s. 

I don’t believe NTWRK has $100M on balance sheet based on mkt performance of social commerce, or even would want to pay cash. Particularly for deal not including key assets like FwF and Hot Ones.

(But reminder that NTWRK founder Aaron Levant helped launch ComplexCon, so likely has a good POV for how to drive new growth and tie into NTWRK ecom biz).

Most likely is that NTWRK gets capital infusion from existing / new investors. In this mkt, I see a deal structure with some cash upfront, a small earnout (hard to structure since monetization strategy very different under NTWRK), and rest in NTWRK equity. 

But that doesn’t solve Buzzfeed’s problem of needing cash for debt payoff.

More likely…NTWRK is part of a PE-backed consortium of other media assets (publishers, MCNs, agencies) that see revenue and cost synergies across the Complex biz. And that maybe Complex is a foundational asset for a bigger rollup initiative, and then there are other assets lined up for acquisition once Complex deal is done, and the core execution team is in place. 

Further, that the old Complex founding / leadership team will get back together for another run. I’d love to see that, as I always thought them best in class! 

h/t Rich and Christian!

Further, I expect the buying consortium to demand FwF and Hot Ones. Those franchises don’t make sense under Buzzfeed, since their leadership signals inability to execute well. 

Which raises key questions…is Buzzfeed even a viable company? Or should it just sell its parts to the highest bidders, and return as much capital to shareholders / creditors as possible?

My answer is no, and yes.

 


I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, and commerce. From M&A and fundraising to consumer research and go-to-market planning.

DM me on LinkedIn or email me chris @ wearerockwater dot com

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