According to Fortune Magazine, internet darling Buzzfeed and media goliath Disney (DIS) broke off talks earlier this year of a deal for the latter to acquire the former. The report suggests Buzzfeed walked away when their $1 billion sale price was not met.
Buzzfeed founder Jonah Peretti has already cashed in on a similar deal when he was part of the sale of HuffingtonPost to AOL (AOL). He doesn’t need to negotiate. If he sets the price at $1 billion, that’s the price. For now.
The consequence of the purported Disney fallout is the loss of Buzzfeed's powerful and popular COO, Jon Steinberg. After four years with Buzzfeed he was vested in whatever equity he had in the company and after the Disney deal fell through it should surprise no one that he would leave.
With no successor in place and no one else publically sniffing around to buy them, it begs the question: What now for Buzzfeed?
There is plenty of chatter that Peretti wants to take his company public. “As a standalone public company it doesn’t seem like much,” says Yahoo Finance senior Columnist Mike Santoli. He cites revenues reportedly in the neighborhood of $120 million this year, seven years into Buzzfeed’s existence, and argues, “It doesn’t seem like this is a moonshot business.”
The exception would be, Santoli thinks, if there is some secret sauce buried deep inside Buzfeed and their code. Perhaps it’s a new ad serving technology or the ability to redefine what goes viral. Something like that could make them more viable as a standalone business.
On the surface “it seems like the rest of the world is clued in on it and is trying to compete on Buzzfeed’s terms,” Santoli says. “So I don’t really know where it goes from here in terms of a business. As a product it’s obviously established and it’s out there and it’s not going away.”
Similar sites, Gawker Media for example, have had success snapping up a collection of other sites to become a sort of web 2.0 conglomerate. That could be another potential way to make Buzzfeed more attractive in and of itself.
But as Yahoo Finance anchor Jeff Macke notes their best business opportunity may have just closed up the checkbook. “It’s a great looking part of Disney,” he says, “it’s a terrible freestanding business.”
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