By Alexandra Steigrad
Verizon has been quietly scrambling to unload HuffPost as it grapples with continued losses at the left-leaning news and culture website, The Post has learned.
The telecom giant — which acquired the site formerly known as the Huffington Post as part of its $4.4 billion purchase of AOL in 2015 — has approached multiple digital-media companies during the past few months in a bid to get the property off its books as losses accelerate due to the coronavirus , according to sources close to the situation.
Verizon /zigman2/quotes/204980236/composite VZ -1.29% has pitched the property to prospective buyers including Thrillist-owner Group Nine Media, Rolling Stone publisher Penske Media Corp., Bustle Digital Media and J2 Global, insiders said. Those media outlets declined to comment.
Vox Media, which owns New York Magazine and operates news and political site Vox as well as tech news sites Recode and The Verge, is among the media outlets to have held talks to acquire HuffPost. Some sources have described those talks as “serious,” but sources close to Vox, while acknowledging they have taken a look, say they are not interested in buying the property.
Even Group Nine — whose CEO is Ben Lerer, the son of Huffington Post co-founder Ken Lerer — took a pass, according to a source close to the situation.
“This thing loses so much money,” a digital media executive with knowledge of the financials said. “It’s such a mess, I wouldn’t touch it with a 10-foot pole. I don’t think there’s any way you can make money.”
People briefed on the talks said Verizon, headed by CEO Hans Vestberg, appears to be seeking to offload HuffPost to a buyer willing to take a knife to the site’s high operating expenses — a potentially daunting process that would require going head-to-head with the site’s union and enacting “massive layoffs,” sources said.
While HuffPost brings in between $45 million to $50 million a year in revenue, its annual expenses are between $60 million and $70 million, two sources said. And with advertising slammed by the pandemic, it will likely bring in $40 million this year, the sources said.
Verizon is looking to maintain a minority stake while the buyer “does the dirty work” of cutting costs and dealing with severance packages, one source opined.
He estimated that roughly one-third to a half of HuffPost’s staff would need to be cut to enable any buyer to “break even” on the deal. According to the company’s masthead, HuffPost has roughly 200 employees. HuffPost’s editorial staff is unionized with the Writer’s Guild of America East.
Other challenges include a “toxic culture” among staffers that’s plagued by “distrust in the organization” and “in-fighting” over how “left” the publication should be, one source said.
“Who wants to buy ads on the thing? Nobody. If Verizon can’t make money on it, who can?,” the source said. “And, you have to fire half the people? There goes the traffic. The brand means nothing anymore and it’s ultra-partisan.”
Founded by Arianna Huffington in 2005, HuffPost began as a counterpart to conservative sites like Drudge Report. In 2016, Lydia Polgreen took the reins as top editor from Huffington, who left to build a wellness and lifestyle company, Thrive Global. In March, Polgreen left to head up content for Spotify’s podcasting company, Gimlet Media. The company has yet to name Polgreen’s replacement.
Verizon didn’t respond to requests for comment on Monday.