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BuzzFeed has started its redundancies, but it is also talking about a merger

On Friday, BuzzFeed started 15 percent of its employees – about 200 employees. Its next move can be a merger with Group Nine, another big digital publisher.

Speculation about a relationship between the two companies has bubbled in the media industry for several months, and sources familiar with both companies say the two have discussed a merger. The two companies are not close to an agreement and can eventually find different partners. If there is a merger, sources say, it doesn't happen immediately.

A BuzzFeed rep refused to comment; I have asked Group Nine for comment.

There is some logic on a deal, as both BuzzFeed and Group Nine specialize in creating relatively inexpensive, high volume video designed to travel the internet using platforms such as Facebook and Google. Last year, BuzzFeed, CEO Jonah Peretti, harvested the idea of ​​merging large digital publishers together so that they can get better terms from Facebook and other distributors.

BuzzFeed and Group Nine also share a link via digital investor Ken Lerer. Lerer, who together with Peretti was co-founder of HuffPost, is the leader of BuzzFed's board; his son Ben Lerer runs Group Nine. Group Nine was created in 201[ads1]6, when cable TV giant Discovery contributed money and some assets to a joint venture with three companies linked to the Lerer family: Thrillist, a lifestyle publisher aimed at young men; Dodo, an area dedicated to animals and people who love them; and NowThis, a news publisher for video.

Any agreement would require companies' range of supporters to reach a valuation agreement. Most striking, it would require Discovery, which owns the greatest interest in Group Nine, to synchronize with competing TV giant Comcast *, which has put $ 400 million into BuzzFeed and is the publisher's biggest baker.

Last year, Discovery's investors heard the Verdier's 42 percent in Group Nine at $ 212 million, representing a value of $ 500 million for the entire company. In 2016, BuzzFeed increased $ 200 million from NBC Universal to a $ 1.7 billion valuation. It is quite possible that the number will fall in today's market, after some years where other digital publishers have folded, sold at fire retail prices, or seen their valuations slashed .

Both Peretti and Ben Lerer built businesses that would thrive in the social media world, especially using Facebook. But while Facebook spent several years with media companies, it is now clear that Facebook (along with Google) will continue to dominate the internet marketing market and will not share that wealth with publishers. (The new path to publishers: We help you sell subscriptions which is a business we are not in.)

In response, Peretti has tried to find new revenue streams and now he is cutting costs. Once done, he can try to loosen up.

* Comcast is an investor in Vox Media, which owns this site.

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