Two of the most high profile digital media firms are set to merge together with the acquisition of HuffPost bty the online news and lifestyle site Buzzfeed.
As part of the deal, seller Verizon Media will become a minority shareholder in Buzzfeed and will also make investments in the new combined entity.
A partnership for advertising and sharing content will also be engaged at by the two companies in a venture that the companies said “create new revenue opportunities”.
The two companies did not disclose the price of the deal.
The new company after the merger will be headed by Buzzfeed chief executive Jonah Peretti. HuffPost, known previously was Huffington Post, was co-founded in 2005 by Peretti together with the publisher Arianna Huffington. He also started Buzzfeed a year later.
During the president in the United States of George W Bush, HuffPost rose to prominence and was considered to be a platform for blogs from liberal s – many of whom contributed their articles for free.
Content like listicles and quizzes has made Buzzfeed famous as young audiences were drawn to the site. Reporters for its news site were also hired by it later on.
However, the market of online advertisements has been dominated by tech giants such as Facebook and Google and digital media companies have struggled to attract advertising dollars. Job cuts have been implemented by Buzzfeed and HuffPost in recent years. Its newsrooms in the UK and Australia were closed by Buzzfeed in may this year in addition to cutting salaries of employees.
The addition of HuffPost readers to its audience because of the new deal would help increase Buzzfeed’s heft, Peretti said, and added that it would also allow Buzzfeed to get access to and benefit from the ad network of Verizon.
Just like Buzzfeed sites, including Tasty and Buzzfeed News, the deal will also allow HuffPost to remain a standalone brand.
No comments were made by a spokeswoman for Buzzfeed over concerns of job losses because of the deal.
The United States based telecom giant Verizon is the owner of Verizon Media. Verizon is known mostly for its pay-TV and mobile phone service. HuffPost was acquired by it in 2015 as a part of its acquisition of AOL in a deal worth $4.4bn.
“While considering opportunities to work together, naturally, Jonah and I also discussed the property he co-founded, HuffPost,” said Verizon Media boss Guru Gowrappan.
“We quickly realised BuzzFeed’s strategy would complement HuffPost’s roadmap, injecting it with new energy and growing the brand into the future. We are deeply invested in the continued success of HuffPost and I couldn’t think of a better partner to take HuffPost to the next level.”
Digital media firms like BuzzFeed and HuffPost were fast growing entities just a few years ago.
Such companies followed a simple business model – creation of viral content targeted at the younger, online savvy audiences and thereby attracting online advertising revenue. But that model has not been as lucrative as they would have hoped.
Many advertisers found it quite awkward to place ads on digital news stories and those were considered to be less focused.
In contrast, incredibly bespoke targeting for ads is provided by Facebook and Google which have eaten into most of the digital ads.
(Adapted from BBC.com)