Business

The board of supervisors picked by Florida Gov. Ron DeSantis to oversee Walt Disney World’s operations voted to sue Disney.
The vote came after Disney sued DeSantis and the board members, alleging a campaign of political retaliation by the governor over the company’s criticism of a controversial bill.
DeSantis is considered a leading potential Republican candidate for the 2024 presidential race.

Florida Gov. Ron DeSantis responds to a question during a press conference at the headquarters of the former Reedy Creek Improvement District that a newly appointed board now calls the Central Florida Tourism Oversight District, in Lake Buena Vista, Florida, Monday, April 17, 2023. 
Joe Burbank | Orlando Sentinel | Getty Images

The board of supervisors picked by Florida Gov. Ron DeSantis to oversee Walt Disney World’s operations voted Monday to sue Disney in response to the company’s recent federal lawsuit alleging a campaign of political retaliation by the governor.
The panel, which challenged the company’s long-standing self-governing status when it replaced a Disney-backed board weeks earlier, unanimously voted to authorize a lawsuit in state court.

“This district will seek justice in state court here in central Florida where both it and Disney reside and do business,” board chair Martin Garcia said at a Monday morning meeting, where the legal fight was the sole topic of business. “Yes, we’ll see justice in our own backyard.”
Disney sued DeSantis and the oversight panel last Wednesday in U.S. district court in Tallahassee, Florida. The company asked to effectively restore its control over the special tax district that has allowed it to self-govern its Orlando-area parks’ operations since the 1960s.
The litigation escalated a fight that began more than a year earlier, when the entertainment giant criticized a Florida bill limiting talk of sexual orientation and gender identity in classrooms.
The bill, dubbed “Don’t Say Gay” by its opponents, was passed by the state’s GOP-held legislature and signed by DeSantis in March 2022. Within weeks, the governor and his allies started targeting Disney’s special governance district, which at the time was called the Reedy Creek Improvement District.
Disney filed its lawsuit on the same day that the governor’s board members voted to undo a development deal that the company struck right before the DeSantis choices took over — essentially throttling the new board’s power.

“In essence, Disney is asking a federal court in Tallahassee to wrestle back the hands of time to 1967,” Garcia said of Disney’s lawsuit during Monday’s meeting.
“For us to be stuck in an urban-planning design of 1967 — does that make sense to anybody?” Garcia said, arguing that his board is just trying to modernize the district.
A Disney spokesman declined to comment on the board’s vote.
But Disney’s civil complaint alleged that the state’s actions amount to “as clear a case of retaliation as this Court is ever likely to see.” The company noted the state’s issues with the district only began after the fight over the classroom bill.
“There is no room for disagreement about what happened here: Disney expressed its opinion on state legislation and was then punished by the State for doing so,” Disney’s lawsuit said.
Disney filed the complaint while DeSantis was overseas on a political trip that appeared to be laying more groundwork for a possible run for the 2024 Republican presidential nomination.
DeSantis, who is expected to announce his presidential plans after the Florida state legislature ends in early May, is considered a top contender against former President Donald Trump.
But the extended row against Disney, one of Florida’s top employers, has recently begun to generate criticism from some of DeSantis’ fellow Republicans. More

Lordstown said in a Monday filing that Foxconn has threatened to walk away from a crucial funding deal.
Foxconn argued that the deal has been breached because Lordstown got a delisting notice from NASDAQ.
Lordstown said if the deal doesn’t happen, it may go bankrupt.

Signage outside Lordstown Motors Corp. headquarters in Lordstown, Ohio, on Saturday, May 15, 2021.
Dustin Franz | Bloomberg | Getty Images

Electric vehicle startup Lordstown Motors disclosed on Monday that a funding deal with Foxconn is in jeopardy – and that it may go bankrupt if the deal doesn’t happen. Lordstown’s shares fell sharply on the news and closed down over 23% on the day.
Lordstown said in a Monday regulatory filing that it received a letter from Foxconn on April 21 alleging that the startup was in breach of an investment deal because its stock had fallen under $1 per share for 30 consecutive trading days, triggering a delisting notice from NASDAQ.

The embattled startup struck a deal to sell its Ohio factory to the Taiwanese contract-manufacturing giant last year. Following that deal, which closed in May 2022, the two companies agreed to a second deal in which Foxconn would invest up to $170 million in Lordstown, amounting to a 19.3% stake.
Foxconn paid the first $52.7 million due under that deal last year, but the remainder – and the deal itself – is now in jeopardy.
Under the terms of the deal, Foxconn is supposed to invest $47.3 million within 10 days of regulatory approval by the Committee on Foreign Investment in the United States. That approval was secured on April 25, Lordstown said, meaning that Foxconn is obliged to make that investment by May 8.
Lordstown said it’s concerned that further investment won’t come in before that deadline, and that Foxconn doesn’t seem to be making a good faith effort to complete an EV plan that is one of the deal’s milestones.
The two companies had agreed to finalize a plan to jointly develop a new EV by May 7, after which Foxconn is obliged to invest an additional $70 million. According to Lordstown, that plan hasn’t been finalized because Foxconn isn’t making “commercially reasonable efforts” to finish it.

In a statement to CNBC, Lordstown said that Foxconn’s actions are “completely unwarranted” and have resulted in “material — and what is becoming irreparable — harm to the company.”
Lordstown warned in the filing that it may be forced to file for bankruptcy protection if the Foxconn deal falls through. The company still had $221.7 million on hand as of the end of 2022, but it lost over $100 million in the fourth quarter.
Foxconn didn’t immediately respond to a request for comment. More

An advocacy group backed by Facebook received a $34 million donation as it campaigned against antitrust legislation.
A person who works with the group, American Edge, confirmed to CNBC that the donation came from Facebook.
New documents show that the advocacy group had a massive fundraising haul during the key time period as lawmakers on Capitol Hill were attempting to take on tech giants.

Facebook Chairman and CEO Mark Zuckerberg.
Erin Scott | Reuters

An advocacy group backed by Facebook received a $34 million donation from an anonymous donor as it waged a battle against antitrust legislation that would have more tightly regulated the tech industry.
A person who works with the group, American Edge Project, told CNBC that the $34 million was from Facebook. This person declined to be named in order to speak freely about the group’s finances.

related investing news

5 hours ago

The nonprofit raised the massive amount almost two years ago, according to the organization’s latest 990 tax forms. The documents reflect the nonprofit’s finances starting on Nov. 1, 2020, and carrying into Oct. 31, 2021. These disclosures are the most recent tax records available for public viewing and do not list names of the group’s donors.
A Meta spokesman declined to comment and referred CNBC to American Edge instead.
Doug Kelly, American Edge’s CEO, told CNBC in a statement that “the threats to America’s technological edge have a profound impact on our national security and economic well being and we’re leading the charge to make sure everyone is aware.”
The new documents show the tech advocacy group scored its biggest fundraising haul yet when bipartisan lawmakers on Capitol Hill were attempting to take on tech giants, including through antitrust legislation that didn’t pass Congress and a hearing in March 2021 featuring tech CEOs such as Facebook’s Mark Zuckerberg. Facebook changed its name to Meta in late 2021.
The American Edge Project launched its first pro-tech industry ad in 2020. The group’s previous 990 forms, from 2019 through late 2020, showed it raised all of its money from a single anonymous $4 million donation during that period. Facebook confirmed in 2020 to The Washington Post that it was contributing to the group. The person who works with American Edge told CNBC that the $4 million was also entirely from Facebook.

American Edge launched a wave of TV and digital ads from late 2020 through 2021, taking on antitrust proposals. A TV spot funded by the group suggested that small-business innovation could be affected if such legislation made its way through Congress.
In June 2021, the House Judiciary Committee passed a package of sweeping tech antitrust reforms. The measures proposed new rules on the largest online platforms, like requiring them to have capabilities for users to easily transfer their data to other services, shifting the burden of proof in merger cases onto dominant tech platforms, blocking platforms from operating businesses with conflicts of interest and from advantaging their own products on platforms they run.
The Senate later introduced a version of one of the bills, the American Innovation and Choice Online Act, in October 2021, which aimed to bar self-preferencing on dominant tech services. That bill advanced out of the Senate Judiciary Committee in January 2022.
Taken together, the bills were poised to create a much more uncertain legal environment for Facebook and its peers, including by making it harder to acquire firms that could help their businesses grow.
Almost all of these bills did not get a full House or Senate vote after Big Tech companies and their industry groups opposed the pieces of legislation, saying they would impose unfair restrictions and result in negative effects for consumers. For example, Chamber of Progress, backed by Apple, Amazon, Google and Meta, has warned that the Senate bill would significantly alter Amazon Prime’s offerings like two-day shipping and make it harder to offer low-cost basics from its first-party brand, for fear of being charged with illegal self-preferencing.
American Edge spent over $5 million between TV and digital ads in 2021, according to data from AdImpact. It spent over $10 million on TV ads last year, AdImpact says. The group went into 2022 with over $13 million in net assets, according to its 990 forms.
The $34 million donation also came as American Edge announced it was adding former Rep. Greg Walden, R-Ore., and former Sen. Heidi Heitkamp, D-N.D., as advisory board co-chairs to “lead the coalition’s efforts on internet openness, accessibility and free expression,” according to the press release. Walden is still listed on the group’s website as a leader of an advisory board, while Heitkamp is no longer listed.
A 2022 report by the watchdog Tech Transparency Project says Facebook isn’t just a “contributor” to American Edge, as the company confirmed to The Washington Post, but potentially its “sole funder.” The Tech Transparency Project receives funding from the George Soros-backed Open Society Foundations, Craig Newmark Philanthropies, Bohemian Foundation and Omidyar Network, according to its website.
American Edge’s website lists Facebook as a member of their supportive coalition. Other listed members include Bear Hill Advisors, the Center for Individual Freedom, NetChoice, the Connected Commerce Council, the National Black Chamber of Commerce and the National Small Business Association.
Facebook itself has spent over $58 million since the start of 2020 on federal lobbying, according to data compiled by the nonpartisan OpenSecrets.
Beyond the $34 million donation, the only other contribution listed on the tax disclosure was an another anonymous donation – of $25,000. The multimillion-dollar contribution allowed American Edge to spend just over $19 million on what the forms refer to as media placement and strategic services.
The 990 forms, which were signed and filed by the group in 2022, also show that powerful consulting firms that work for American Edge also received over $3 million combined from the organization. Cavalry LLC, a firm founded by former strategists of Senate Minority Leader Mitch McConnell, R-Ky., was paid $1.1 million by American Edge from November 2020 through October 2021. The Washington Post reported that John Ashbrook, a founding partner at Cavalry and a former McConnell advisor, is helping guide the group.
Global Strategy Group, a political and corporate consulting firm that was founded by three Democratic strategists, received $910,000 from American Edge over that same time period. GSG has a history of working with Big Tech. Amazon previously employed the group while the company fought unionization efforts. Amazon itself has donated to a similar group while that nonprofit took on tech-related legislation.
The Washington Post reported that Jim Papa, a partner at Global Strategy Group who was an aide to former President Barack Obama, was also helping the organization. Papa says on his GSG profile page that among his current and former clients is FWD.us, a fellow 501(c)(4) nonprofit that was co-founded by Zuckerberg and actively lobbies on immigration-related issues.
A GSG representative did not return requests for comment. More

American Airlines and the pilots’ union are negotiating a new contract.
More than 99% of pilots who voted approved of allowing the union to call a potential strike, a step other airlines’ pilots have recently taken.

Pilots talk as they look at the tail of an American Airlines aircraft at Dallas-Ft Worth International Airport.
Mike Stone | Reuters

American Airlines pilots have voted overwhelmingly to allow their labor union to call a strike while the carrier said talks for a new contract are getting close to a conclusion.
Pilot strikes are rare and would require permission from the federal National Mediation Board. The vote doesn’t mean a decision to call a strike would happen immediately.

More than 96% of American’s pilots participated in the vote and 99% of them voted to allow the union to call a strike, the Allied Pilots Association said Monday.
The APA called the strike authorization vote in March as talks for a new deal dragged on. American Airlines CEO Robert Isom had said the airline was ready to raise pay to match rival Delta Air Lines, whose pilots approved a four-year deal earlier this year with 34% raises and other improvements.
“Today marks a proud milestone in our pilot group’s unity and resolve and an important step on our path to securing the contract we have earned and deserve — one that prevents management from operating at a discount to our competitors and includes our ‘must have’ quality-of-life priorities,” APA president Capt. Ed Sicher wrote to pilots Monday.
A spokeswoman for American Airlines said the carrier believes a deal is “within reach” and that a “handful” of issues are left to complete.
“The finish line is in sight,” she said in a statement. “We understand that a strike authorization vote is one of the important ways pilots express their desire to get a deal done and we respect the message of voting results.”

Including higher 401(k) contributions, at the end of a potential four-year deal at American, a captain flying narrow-body planes would make $475,000 at the top of the scale while the most senior captains of wide-body planes would make $590,000 per year, based on a recent contract proposal.
Pilot contract talks have been difficult throughout the industry, including at American, United Airlines and Southwest Airlines, as pilots seek not only increases in pay but quality-of-life improvements such as better, more predictable schedules as travel demand improves following the pandemic. More

The crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic, according to JPMorgan Chase CEO Jamie Dimon.
JPMorgan emerged as the winner of a weekend auction for First Republic after regulators decided that time had run out on a private sector solution.
“There are only so many banks that were offsides this way,” Dimon told analysts in a call shortly after the deal was announced.

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023.
Marco Bello | Bloomberg | Getty Images

The crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic, according to JPMorgan Chase CEO Jamie Dimon.
JPMorgan emerged as the winner of a weekend auction for First Republic after regulators decided that time had run out on a private sector solution. The Federal Deposit Insurance Corporation seized the bank and New York-based JPMorgan announced early Monday that it was acquiring nearly all of the deposits and most of the assets of First Republic.

“There are only so many banks that were offsides this way,” Dimon told analysts in a call shortly after the deal was announced.
“There may be another smaller one, but this pretty much resolves them all,” Dimon said. “This part of the crisis is over.”
Shares of regional banks including PacWest and Citizens Financial slumped in premarket trading.

This story is developing. Please check back for updates. More

The FAA has launched nearly 170 new flight routes along the congested eastern U.S.
The new routes are mostly above 18,000 feet, when aircraft are cruising, and aim to reduce crowding on popular paths.
The FAA continues to deal with a staffing shortage that has also prompted airlines to scale back summer schedules in the New York area.

A United Airlines plane taxis at Newark Liberty International Airport, in Newark, New Jersey, on Jan. 11, 2023.
Kena Betancur | AFP | Getty Images

The Federal Aviation Administration has launched nearly 170 new flight routes that are shorter and faster, aiming to cut down on congestion in the eastern U.S.
It’s part of a seven-year effort from the FAA and airlines to redraw high-altitude route maps for planes, the agency said Monday.

The FAA launched the 169 new routes last week, and is abandoning older ones, which were longer and zigzagged more. Those longer routes were designed for planes relying on ground-based radar and not the GPS that modern aircraft use. The new ones will be more direct.
The new paths are mostly above 18,000 feet, when aircraft are cruising, and aim to reduce crowding on popular routes. Some of the new routes are over the Atlantic Ocean and the Gulf of Mexico.
“The change helps prevent delays by giving the agency more capacity to direct traffic to specific routes based on the aircraft’s destination,” the FAA said in a release. “When weather occurs, controllers will also have more flexibility. Finally, fewer converging points and more simple flows enhance safety.”
The FAA estimated that the new routes would reduce about 6,000 minutes of travel time a year.

Arrows pointing outwards

The change comes just before the summer travel season, which airline executives expect to be busy. Pressure from the airline industry has mounted on the FAA to address congestion and delays, though airline staffing issues have also played a role in exacerbating disruptions.

Last year, 1.7 million flights, more than 20% of those operated by U.S. airlines, were delayed, up from 1.5 million, or roughly 16% of flights, in 2019, before the pandemic, according to flight-tracking site FlightAware. So far this year, 22% of U.S.-airline operated flights have been delayed, according to the site’s data.
Some of the new routes are for flights to and from Florida, where airlines face obstacles such as frequent thunderstorms, military activity and space launches. Last month, the FAA said it would take airline flight disruptions into account when approving rocket launches.
“American has long been a proponent of unlocking additional high-altitude routes along the East Coast and we are optimistic they will have significant benefits for our customers and team members,” American Airlines COO David Seymour said in an e-mailed statement.
Separately, several airlines including JetBlue Airways and United Airlines are reducing flights in the New York City and Washington, D.C., areas because of the FAA’s shortage of air traffic controllers, part of a plan to reduce disruptions. More

Attorneys general from 23 states, Washington D.C., and two U.S. territories called on Medicare to cover Alzheimer’s treatments without restrictions.
Medicare severely restricts access to a promising new antibody treatment called Leqembi, which costs $26,500 per year.
Members of Congress have also called on Medicare to provide full coverage.

The Alzheimer’s drug LEQEMBI is seen in this undated handout image obtained by Reuters on January 20, 2023.
Eisai | via Reuters

Democratic and Republican attorneys general in nearly half of U.S. states are calling on Medicare to provide unrestricted coverage of antibody treatments for Alzheimer’s disease, according to a letter released Monday.
The push by attorneys general from 23 states, Washington D.C., and two U.S. territories adds to mounting pressure on the federal Centers for Medicare and Medicaid Services to end a controversial policy that severely restricts access to new drugs like Eisai’s and Biogen’s Leqembi.

related investing news

Twice-monthly infusions of Leqembi have shown promise in slowing progression of early Alzheimer’s to more advanced stages of the mind-wasting disease. Medicare’s decision to restrict coverage means only wealthy seniors can afford to pay $26,500 per year out of pocket.
“We ask that CMS provide unrestricted Medicare coverage for FDA-approved Alzheimer’s treatments, consistent with its decades-long practice of covering FDA-approved prescription drugs for Medicare beneficiaries,” the attorneys general, led by Oklahoma’s Gentner Drummond, told CMS Administrator Chiquita Brooks-LaSure and Health Secretary Xavier Becerra.
The attorneys general acknowledged that Leqembi is associated with certain side effects, such as brain swelling and bleeding, but they said families and their doctors can assess these risks against the benefit of patients being able to recognize their loved ones for a longer period.
In a nation with deep political divisions, the push to provide broad access to Alzheimer’s treatments is one of the few issues both sides of the aisle can rally around. More than 70 House lawmakers and 18 senators called on Medicare to provide unrestricted coverage of Alzheimer’s treatments in February.
The push by members of Congress and state attorneys general comes after Medicare rejected a request by the Alzheimer’s Association to cover Leqembi without any conditions.

“After careful review of the request and supporting documentation, we are making this decision because, as of the date of this letter, there is not yet evidence meeting the criteria for reconsideration,” CMS said in February.

CNBC Health & Science

Read CNBC’s latest global health coverage:

Unlike Medicare, the Veterans Health Administration agreed to cover leqembi for veterans aged 65 and older who meet certain eligibility criteria.
Leqembi received expedited approval from the Food and Drug Administration in January. Under its current policy, Medicare will only cover antibody treatments that receive expedited approval for patients participating in clinical trials. Eisai’s trial has concluded, which means the overwhelming majority of seniors do not have access to the drug.
The attorneys general said the decision puts older Americans living in rural areas at a disadvantage, because clinical trials are typically hosted in larger cities far from small towns.
“It is an enormous physical and financial burden for Medicare beneficiaries to travel to thew few research institutions that host trials,” the attorneys general said. “Patients, families and caregivers in rural areas should have the same opportunity to access treatment.”
The language of the letter is similar to the letters sent by House lawmakers and senators to Medicare in February.
Medicare has agreed to provide broader coverage of Leqembi if the treatment receives full FDA approval on July 6. But the program for seniors will still require patients to participate in so-called “registries” that collect data about the treatment. Brooks-LaSure promised Congress last week that these registries will not restrict access to the treatment.
But Robert Egge, the Alzheimer’s Association chief policy officer, told CNBC that the registries will restrict access despite what Medicare has promised. He said the association is not aware of any substantive work that has been done to set up the registries.
Brooks-LaSure said private sector entities can start setting up the registries now.
The attorneys general said Alzheimer’s disease and other forms of dementia cost the U.S. $321 billion in 2022, which is a substantial financial burden on federal health insurance programs. Medicare and Medicaid picked up an estimated 67% of the health-care costs or $239 billion for the disease in 2021, the attorneys general said.
“Unless a treatment to slow, stop or prevent the disease is approved and accessible to people, Alzheimer’s is projected to reach a total cost of $1 trillion by 2050,” the attorneys general said.
The letter was signed by the attorneys general from Arizona, Arkansas, Connecticut, D.C., Florida, Idaho, Indiana, Maine, Michigan, New Hampshire, New Jersey, New Mexico, North Dakota, Northern Mariana Islands, Minnesota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, South Carolina, Texas, Utah, Vermont, Virginia and West Virginia. More

CNBC spoke with BuzzFeed CEO Jonah Peretti in an exclusive interview.
Peretti said he’s confident in his leadership abilities and hopes the company’s changes in focus will increase share value.
BuzzFeed shares have been trading below $1 for more than a week.

Jonah Peretti, founder and CEO of BuzzFeed, attends his company’s public debut outside the Nasdaq in Times Square in New York City, Dec. 6, 2021.
Brendan McDermid | Reuters

Corporate stories have ebbs and flows, ups and downs.
To this point, BuzzFeed’s journey as a public company has been a bottomless pit. Co-founder and Chief Executive Jonah Peretti may be running out of time to alter his company’s trajectory.

The digital media company known for its listicles and quizzes is in crisis mode. Its stock has fallen 95% since the company went public at $10 a share in December 2021. The shares closed Friday at nearly 54 cents, giving the company a market valuation of about $86 million.
If a company trades for 30 consecutive business days below the $1 mark, Nasdaq will send a deficiency notice to the company, giving it 180 more days to top $1 or risk getting delisted. BuzzFeed has traded below $1 for six days in a row as of Friday’s close.
There are loopholes and conditions. BuzzFeed could do a reverse stock split to artificially boost its share value and stay in compliance — a move last year executed by insurance firm Hippo after it had an average closing price of less than $1 over a consecutive 30-day trading period. Hippo continues to survive as a listed company.
Peretti’s plan is to boost shares back over $1 by persuading investors he’s prepared to run a more profitable company. That’s what led him to shut down BuzzFeed’s Pulitzer-winning but money-losing newsroom last week and lay off 180 employees, or 15% of the company’s staff.
“I’m trying to set us up with a better future and align with major trends,” Peretti said in an exclusive interview with CNBC. “If I do that well, my leadership will be a success. If not, it won’t be.”

BuzzFeed reported a net loss of $201 million for 2022 (including a non-cash goodwill impairment charge of $102.3 million) after turning a $26 million profit in 2021. The company’s investor day is May 11. Peretti will try to convince shareholders his vision should be trusted.
It’s fair to question Peretti’s decision-making in not shutting down BuzzFeed News earlier, he acknowledged. CNBC reported in March last year that investors asked him to shut it down.
Still, he has no plans to step down as CEO or sell the company despite the company’s 95% loss in value, he said.
“I’d be more concerned with my leadership if I didn’t see where the market was heading,” he said.

Peretti’s strategy

Peretti hopes incorporating more artificial intelligence into the company’s content will both boost engagement and save the company on cost. In the past two months, BuzzFeed AI-powered quizzes have led to a 40% spike in how long a user has participated compared with human-generated quizzes, Peretti wrote in a BuzzFeed blog post Thursday.
“Formats that were developed before the AI-revolution, and many of the formats and conventions of the media industry will need to be updated and adapted, or begin to feel stale and outdated,” Peretti wrote in the post. “This is why we’ve been investing in AI-powered content and launching new formats like Infinity Quizzes and Chatbot games.”
Some of Peretti’s predictions seem counterintuitive when considering what the next version of the internet might entail. He wrote that he expects news homepages to have a resurgence as destinations as social media companies such as Facebook, TikTok and Twitter turn their back on news for more general entertainment. That’s why he’s confident in the future of BuzzFeed brand HuffPost, which surged in popularity during the mid-2000s with its creative splash headlines.
“In fact on Monday this week, HuffPost hit 16 million page views — a record high since joining BuzzFeed, Inc. — a sign this prediction is already coming true,” Peretti wrote.
Peretti said he believes BuzzFeed can operate profitably by “covering trends, making shopping more playful, creating new interactive AI formats, and helping creators connect with our audience.”
This, too, could be wishful thinking if digital audiences move beyond old methods of internet usage and toward augmented reality and gaming, where BuzzFeed has no current strategy.

A dream burst

BuzzFeed’s announcement in January that it would begin using AI to help generate quizzes gave BuzzFeed a brief surge in value, with shares jumping 120%.
But for the most part, BuzzFeed shares have been all chute and no ladder.
BuzzFeed went public via a special purpose acquisition company, or SPAC, to great fanfare on Dec. 6, 2021. For a moment on that day, shares surged from $10 to more than $14. BuzzFeed’s valuation briefly surged past $1.5 billion — more than three times the amount Disney offered to buy it a decade earlier, as described in an excerpt from a new book by former BuzzFeed News editor-in-chief Ben Smith.
In those early hours of day one trading, an entire industry began thinking about its future differently. If BuzzFeed could find a receptive audience among public investors, companies such as Vice, Vox Media, Group Nine, and Bustle Digital Group — all of whom had venture capital backers who wanted to make a return on their investment — could either go public themselves or take publicly traded equity as part of an industrywide rollup.
Then, the market turned. BuzzFeed ended the day down 11%. The next day, shares fell again. By the end of BuzzFeed’s first week of trading, shares were down 39%.
“I just bought a f—ton of BuzzFeed shares at $6,” Bustle Digital Group CEO Bryan Goldberg told CNBC at the end of that first week. “If it goes lower, I’ll really back up the truck.”
BuzzFeed shares did go lower. And lower. By June, shares were below $2. The advertising market started to sag as interest rates rose and company valuations suffered. Shares first fell below $1 last month. (Goldberg said he didn’t actually buy shares until they were closer to $1 and then sold them during February’s AI pop).
With their fates tied to BuzzFeed’s performance, digital media companies have abandoned the rollup dream and the go-public experiment. Vice announced this week it’s restructuring its global news operation, including laying off 100 employees. The company has been searching for a buyer for more than a year. Vox Media sold a 20% stake to privately held Penske Media in February for a $100 million capital infusion. Vox and Group Nine merged last year.
Instead of being the flag bearer for the digital media industry, BuzzFeed now looks like it’s trapped on an island, forced to publicly flail while onlookers shake their heads. When it went public, BuzzFeed promised surging revenue, estimating $654 million by the end of 2022, $833 million by the end of 2023 and $1.1 billion by the end of 2024.
BuzzFeed’s actual annual revenue for 2022 was $437 million. The predictions for 2023 and 2024 currently look like pipe dreams.
Peretti may have only one more chance to turn his company’s fate.
“This feels like an inflection point,” he said.
WATCH: CNBC’s full interview with BuzzFeed CEO Jonah Peretti in 2021 on market debut More