Mashable has been sold…and it’s a steal. Immediately after this, the company announced it was laying off 50 employees. The digital media publisher was acquired by Ziff Davis, a digital media subsidiary of J2, for less than $50.0 million. Just last year, Mashable was valued at $250.0 million.
The new owners are refocusing the company with an eye toward tech and tech-lifestyle content. This has resulted in about 50 job cuts.
The once-fast-growing digital publisher’s demise comes at a time when more and more online publishers, who rely on digital advertising, are faced with declining revenue. Online juggernauts like Google, parent company Alphabet Inc (NASDAQ:GOOG), and Facebook Inc (NASDAQ:FB) eat up the vast majority of global spending on digital advertising.
Mashable Lays Off 50 Employees as Ziff Davis Buys Online Media Web Site
Mashable announced it had laid off 30% of its workforce, or 50 employees, after selling itself to Ziff Davis for a paltry $50.0 million. That’s not the kind of figure that investors were hoping for. It’s just 20% of the spring 2016 valuation of $250.0 million.
Ziff Davis is a digital media company that operates four business units: technology, gaming, healthcare, and shopping. Its brands include PCMag, ExtremeTech, IGN, AskMen, Offers.com, and Salesify.
The sale price might have been a bit of a surprise but the actual sale of Mashable wasn’t. The company had been trying to sell itself or raise capital for months. In September, it was reported that Mashable was in talks with Germany’s ProSiebenSat.1. It had also been reported that Viacom Inc. was interested in Mashable, but that clearly didn’t pan out.
The struggling digital media website announced a big round of layoffs in April 2016 when it jettisoned 30 employees. This included its entire political reporting team plus most of its global news desk and half of its editorial video team.
At the time, Mashable said it was refocusing its efforts to TV and streaming video and spending “more time focusing on our core coverage – technology, web culture, science, social media, entertainment, business, and lifestyle, all told through the digital lens.”
The strategy initially worked. In 2016, revenue increased 36% to $42.0 million, but it also reported a net loss of $10.0 million. In 2017, Mashable was hoping to report revenue of $50.0 million and try to break even.
But that didn’t happen. Mashable’s failed bid to secure additional funding this year is being blamed, in part, on continued losses. This ultimately led to its fire sale to Ziff Davis for just $50.0 million and 50 job cuts.
Ziff Davis is planning on focusing the online news site toward tech and tech-lifestyle content. This is what Mashable was originally focused on when Pete Cashmore launched it as a blog from his home in Aberdeenshire, Scotland.
Digital Media Companies Struggle as Facebook & Google Continue to Dominate Ad Market
Mashable isn’t the only ad-supported digital media company to face financial pressure and the heat from Google and Facebook. Layoffs at digital media companies have become the norm as revenues fall. Meanwhile, ad revenues at Google and Facebook are thriving, with the two companies accounting for a combined 63% of digital ad dollars.
Last week, BuzzFeed announced it was laying off around 100 people, or six percent of its workforce as the company said it will likely miss its revenue goals for 2017. According to The Wall Street Journal, BuzzFeed’s revenue tumbled 15%-20% short of its $350.9 million revenue target.
In mid-November, Verizon Communications Inc. (NYSE:VZ) announced significant layoffs at Oath, Inc. The company laid off 56o employees or around four percent of its workforce. These cuts are in addition to the 2,100 Verizon laid off in June when it acquired Yahoo!
This past summer, Vice Media laid off about two percent of its 3,000 workforce. This translated into about 60 employees. The cuts came after Vice announced $450.0 million in private equity funding from TPG. This gives the Brooklyn-based Vice an estimated valuation of $5.7 billion.
As we have seen though, the digital media landscape can be fickle. And now online ad giants are facing the same kind of ad-revenue struggles their traditional print media peers faced.
The gutting of jobs due to lost ad revenue at newspapers across the U.S. have totaled tens of thousands. The same kind of bloodletting is now happening to multiple digital media companies. The latest round of layoffs at Mashable, Buzzfeed, Oath, and Vice will be met by more industry layoffs in 2018.
“Ziff Davis has bought Mashable at a fire sale price and plans to lay off 50 people,” Recode, December 5, 2017.
“Today I Sent This Note to The Mashable Team,” LinkedIn, April 7, 2016.
“Mashable Tests Notion that ‘Pivot to Video’ Leads to Digital-Media Riches,” The Wall Street Journal, September 24, 2017.
“Latest round of Verizon layoffs at Oath affects <4% of staff globally,” TechCrunch, November 16, 2017.
“Vice Media Laying Off 2% of Staff Amid International, Video Expansion,” Variety, July 21, 2017.