What NBCUniversal’s Investment in BuzzFeed Says about Digital Media
With a pen stroke, media giant NBCUniversal dived deeper into new media’s digital waters—perhaps in a move to be more competitive—by investing $200 million in New York-based BuzzFeed. The deal shows how the industry is drastically changing.
Rumors had been circulating of an equity deal before Tuesday’s joint announcement by BuzzFeed and NBCUniversal, also based in New York. In addition to the investment, the two plan to explore strategic partnerships.
NBCUniversal—which owns the NBC network, cable channels that include Syfy, E!, and CNBC, and movie studio Universal Pictures—declined to comment further on why it ponied up so much cash to back a website known for click-attracting “social” content and entertainment. In recent years, BuzzFeed has matured a bit by adding long-form news, but there are still plenty of quizzes about pop culture and videos about animals doing odd things on the site.
There has been much ballyhooing of late about ad revenue in the television broadcast industry shrinking as the audience turns to digital outlets for content and entertainment. A look at some trends in media may shed light on why an already huge entity such as NBCUniversal, which generated more than $23 billion in revenue in 2013, is cozying up to a comparatively smaller, puckish player on the scene.
Back in May, Marc Ecko, founder of New York-based Complex Media, dished about some changes stirring up the media world. Older, siloed approaches to reaching the public do not make sense in this digital age, he said during Internet Week New York. As attention spans get shorter, and interests become more fragmented and jumbled, media companies—including magazines and television broadcasters—cannot afford to follow decades-old norms anymore.
Ecko started Complex to better reach potential customers of the apparel brand he had previously created, Ecko Unlimited, he said. “If I wanted to be in fashion, I had to go to GQ. If I wanted to buy [ads] in skating, I had to go to Thrasher. If I wanted to buy in hip hop, I had to go to Source,” he said. “Why weren’t these conversations being had together?”
Complex is a print and online media outlet that tries to reach a diverse youth and urban audience with content about movies, music, and other bits of pop culture. In 2013, Complex raised $25 million from Iconix Brand Group and has since gone on to acquire sites such as entertainment news provider Collider.
That is just one example of the media landscape shifting with the rise of new tastes and ways of getting content. The NBCUniversal-Buzzfeed deal can be seen as the old guard racing to catch up.
That race has been a windfall for new media companies. Last summer, Brooklyn-based Vice Media landed back-to-back investments that put some $500 million in its back pocket. The investors, Technology Crossover Ventures and cable channel operator A&E Networks, were just the latest to throw money at the company, which offers up a raw, edgy, youth-focused approach to media coverage and content. Back in 2013, media giant 21st Century Fox also got a piece of the action at Vice with its $70 million investment.
For all the clamor surrounding NBCUniversal and Buzzfeed, as well as other deals, this is not the first time traditional media has tried to latch on to shiny, newer companies. During the frothy peak of the dotcom bubble, AOL and Time Warner merged in 2000 in a megadeal intended to bring the media giant into the Internet age. That marriage soured after the bubble burst, and in 2009 AOL was spun off.
There is a different sort of momentum in the digital media space these days, perhaps driven by ad revenue generated from an audience increasingly attached to their mobile devices. In the spring, Verizon acquired AOL, along with its digital properties such as The Huffington Post and TechCrunch. Despite hints that Verizon intended to spin off AOL’s content divisions to focus on mobile advertising technology, the company said it plans to hold onto those businesses.
It is still too early to know what NBCUniversal and BuzzFeed—or any of the strange new bedfellows in media—will produce, but it seems more old dogs are eager to learn new digital tricks.