1. Welcome to SportsJournalists.com, a friendly forum for discussing all things sports and journalism.

    Your voice is missing! You will need to register for a free account to get access to the following site features:
    • Reply to discussions and create your own threads.
    • Access to private conversations with other members.
    • Fewer ads.

    We hope to see you as a part of our community soon!

RIP BuzzFeed News

Discussion in 'Journalism topics only' started by dixiehack, Apr 20, 2023.

  1. justgladtobehere

    justgladtobehere Well-Known Member

    This story reminds me of the movie Shattered Glass. One aspect was how Forbes online (maybe some other legacy company) broke the story. The idea was that online media was the new thing and revolutionary. Well...
     
    Liut likes this.
  2. Azrael

    Azrael Well-Known Member

  3. Azrael

    Azrael Well-Known Member

  4. The Big Ragu

    The Big Ragu Moderator Staff Member

    Another distorted debt markets, "free money" story that created huge misallocations of capital.

    The company raised billions of dollars because the cost of money was artificially suppressed for so long. That despite it never having actually proven itself as a business that MADE MONEY (what a novel idea). ... what would have been a prerequisite to attract capital in an unmanipulated, free market.

    The company had a peak bubble valuation (at the height of the Fed-driven insanity) of close to $6 billion. It's absurd. It was a cash burning machine. Shane Smith turned away an offer of $3.5 billion from Disney while bubble world was still in effect. I am sure he wishes he had taken it.

    All of those equity investors have long ago taken write downs on what they put into the company. A company that never proved itself, and burned through cash like it was nothing, should never have attracted that kind of investment in the first place. But that is what the Fed gave us. It ended up reliant on debt financing when the hype wore off and there was no more stupid venture capital money left. Today, we are no longer in a zero interest rate environment that rewards failure, because one consequence of all of the free money that allowed this company to last this long in the first place, is the consumer price inflation they now feel forced to try to combat, and that has required making the cost of money more expensive. In real terms (the cost of money relative to inflation), money is still very cheap, but even nominal interest rates at the level they are now, makes it so that companies like this that have been living on borrowing, can't service their existing debt, and refinance at higher cost as it is coming due. And they don't have viable businesses. It's game over.

    The insanity that led to Vice Media and Buzzfeed in the first place went on for so long that there is a generation of people who don't seem to understand how absurd that environment was. Sadly, there are some serious wake up calls still to come at some point.
     
    cake in the rain likes this.
  5. wicked

    wicked Well-Known Member

    Blaming the Fed means you're letting the companies that tossed their money away off the hook.

    The Fed sets policy. It may be misguided, as you say. I'll take your word on it, because I know zero about the markets and you are a smart guy.

    But each of these businesses are run by rational actors. You don't get to the top by being a Whitlock-level moron. No one anywhere put a gun to these executives' heads and told them to invest in a house of cards. If they wanted to make bad investments, it's the free market, they do what they want.
     
    2muchcoffeeman likes this.
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    I am not blaming the Fed for those companies failing. They failed because they were companies that lost a lot of money. It's that simple.

    The question I am addressing is. ... Why did companies that never proved their concepts (i.e. -- show that they were viable and could earn money) ever get their hands on that capital in the first place?

    And my point is that those companies never would have never existed in the first place (at the sizes people got to know them) without the distortions to the debt markets we have been living with. That "policy" you are talking about has given us epic malinvestment that wouldn't have existed if the debt markets that set the cost of money (the most important price there is) had been freely traded rather than being price fixed by a czar intent on enabling a giant debt binge (and a lot of malinvestment on the back of it). Vice Media and Buzzfeed are prime examples of that malinvestment. Without money having been made free -- so that nobody was valuing it the way they would have if there was a cost -- they would have never attracted the billions of dollars of capital (and then debt financing) that they blew through in the first place. The whole conversation about what went wrong would be moot. Companies like those would have started small, and been forced to prove their concepts (by earning money. ... what a concept!) before they were ever able to scale up.
     
    Last edited: Apr 27, 2023
    cake in the rain likes this.
  7. SixToe

    SixToe Well-Known Member

    I realize I'm of a different generation, though like many today I get my news and entertainment online almost 100 percent of the time.

    (See that generational thing? I can't use a percent symbol. Still spelling it out LIKE IT SHOULD BE DONE :D)

    But I never warmed up to Buzzfeed or Vice as serious entities. I know they have reporters and/or content producers who did serious work, and garnered accolades. But they never clicked with me. It always was, to me, clickbait bullshit sites that at some point said, "Hey, no, really, seriously, we're trying to be real and good and serious and trust us!" And I just couldn't.

    Again, you win a Poolitzer or two and have some serious online work, that's very cool. I just never could get over the fact it was like finding a little fruit cup section amid the shitty yet satisfying gas station food.
     
    wicked, I Should Coco and maumann like this.
Draft saved Draft deleted

Share This Page