Byron Allen cuts HuffPost jobs weeks after buying a $91 million Aspen estate

Byron Allen is cutting more than a dozen jobs at HuffPost, weeks after the media entrepreneur bought a $91.3 million estate in Aspen and less than two months after taking control of the outlet's parent company, BuzzFeed.

The layoffs were disclosed in an all-staff memo circulated on Friday by editor-in-chief Whitney Snyder, according to the newsletter Status, which first reported the cuts. The specific roles affected were not immediately clear. HuffPost executive editor Kate Palmer is also leaving the publication, ending a tenure that began in 2012 when she joined as a national editor.

The cuts come during a broad cost-reduction drive across Allen's media holdings, which have absorbed significant debt through a run of acquisitions.

A structured takeover of a fading brand

Allen acquired a majority stake in BuzzFeed earlier this year through his affiliate Allen Family Digital and installed himself as chief executive. The deal was widely reported as a $120 million investment, with the purchase of 40 million newly issued shares at $3 each giving him about 52 percent of the company.

The structure was less expensive than that figure suggests. Allen Family Digital paid $20 million in cash at closing, with the remaining $100 million in the form of a promissory note due five years later at 5 percent annual interest. The company received $20 million immediately.

BuzzFeed was in a weak position when the deal was struck. It had issued a going-concern warning in March, missed a debt repayment deadline, and reported first-quarter revenue of $31.6 million, down 12 percent year on year, with a widening net loss. Its share price had fallen more than 96 percent in the five years since it went public. The company was once valued at $1.7 billion.

HuffPost has changed hands repeatedly. Arianna Huffington sold it to AOL for $315 million in 2011. AOL passed to Verizon, which spun the outlet into a separate company that BuzzFeed acquired in 2020.

Allen's plan for the business

Allen has said he intends to rebuild BuzzFeed into a streaming-focused media company capable of rivalling YouTube, with much of its content flowing into his streaming service, Local Now. Jonah Peretti, BuzzFeed's founder, said at the time of the deal that Allen planned significant changes including cost reductions and the creation of BuzzFeed Studios.

The reductions at HuffPost fit a pattern across Allen Media Group. The company is selling its broadcast television stations to pay down debt, having invested more than $1 billion acquiring 28 stations across 21 markets over six years. It has already sold ten of them to Gray Media for $171 million. S&P Global has maintained a junk rating on the group, and CNBC reported last year that it had fallen as much as 90 days behind on payments to its network partners.

A fortune that is hard to pin down

Allen founded the business that became Allen Media Group in 1993, working at one point from a payphone after he could no longer afford a business line. His model was consistent from the start: produce or acquire content cheaply, hand it to affiliates through time-buy deals, and keep the advertising revenue. He used the same approach in April, when CBS agreed to a time-buy arrangement placing his series Comics Unleashed in the 11:35 p.m. slot vacated by the end of The Late Show with Stephen Colbert.

His wealth is difficult to state precisely because Allen Media Group is private. Bloomberg has estimated his net worth at about $735 million, while other widely cited figures place it near $1 billion. The company itself was independently valued at more than $4.5 billion in October 2022, and his equity in that asset base is the main driver of his fortune. His signature deal was the $300 million purchase of The Weather Channel's television network in 2018.

The personal spending has continued alongside the corporate retrenchment. Allen paid $100 million for a Malibu clifftop mansion in 2022 and $91.3 million for the Red Mountain estate in Aspen in May, the purchase that now sits awkwardly against the job cuts at a publication he is trimming to service debt.