The two hooked up Monday, when NBCUniversal, owned by
The deal goes well beyond the two companies. It's the latest manifestation of a media upheaval that is upending entertainment as we know it.
Cord cutting, streaming services and online video, particularly on mobile devices, are changing the entertainment landscape. That's sparked a scramble to find tech-savvy upstarts with credibility among young viewers to offset shrinking audiences — and the capabilities in data analytics to quickly pinpoint what draws audiences and what doesn't.
The millennial audience is key. That generation shuns old-style media. Without the lucrative advertising dollars that follow them, traditional media companies will face hard times.
Eunice Shin, the Los Angeles director of Manatt Digital Media, a consulting and venture capital firm, said more legacy media companies will be looking to play catch-up in the digital space.
"Being well positioned with a savvy digital-first company like BuzzFeed makes NBCU look smart," Shin said. "Every major entertainment company should be doing the same thing. It's really hard for NBCU to go digital themselves and start from the ground up. It's against the grain of who they are. It makes sense to acquire or invest."
What's now a trend began modestly two years ago when Jeffrey Katzenberg's
The BuzzFeed deal comes a week after NBCUniversal announced a separate $200-million investment in Vox Media, another growing digital publisher, which owns Re/Code, the Verge and SB Nation.
NBCUniversal and BuzzFeed plan to collaborate on projects including television shows, movies, Olympics coverage and other "joint partnerships with ad agencies and brands," BuzzFeed Executive Chairman Kenneth Lerer said in a statement announcing the partnership Tuesday.
"It's a little bit of just a pure investment play but a lot more of the technology and content possibilities," said one NBC executive not authorized to discuss the deal publicly. "If we have real content partnerships we will learn about social media distribution from their end, and they want the [exposure] from old-fashioned TV distribution."
For example a BuzzFeed story could be shown on NBC's "Today" show, then be distributed across NBC's websites, and on BuzzFeed too. BuzzFeed's video could be included in advertising deals on NBCUniversal's younger-skewing cable networks such as
Demographics and digital advertising are driving the new partnerships. An estimated $7.8 billion will be spent on digital video advertising this year in the U.S., double the amount from two years ago, according to EMarketer. That number is expected to double again by 2019.
TV ad spending, although at a robust $70 billion this year, is growing only at about a 3% annual clip, EMarketer said. The TV audience is getting old: The median age of prime-time television audiences has risen from 46.3 to 50 in the last five years, according to a study by ad-buying firm Horizon Media.
Meanwhile, young viewers are looking elsewhere. Viewers in the key advertising demographic of 18 to 34 make up only 25.5% of the TV audience, down from 30.5% four years ago. Horizon said.
NBCUniversal's most popular shows, such as its morning mainstay "Today" and its programs on its cable channels E! and Bravo, draw viewers in their 30s, 40s and beyond.
By comparison, 54% of BuzzFeed's audience is 18 to 34 years old, according to tracking firm Comscore. That age group makes up 30% of the total Internet population.
BuzzFeed reaches "a massive, loyal audience and [has] proven to be among the most creative, popular and influential new media players," NBCUniversal Chief Executive Steve Burke said in a statement.
BuzzFeed founder and CEO Jonah Peretti told his staff in a memo Tuesday that the deal enabled BuzzFeed the freedom to try new things.
"The investment from NBCU and our rapidly growing revenue assures our financial independence, allowing us to grow and invest without pressure to chase short-term revenue or rush an IPO," he said.
A BuzzFeed spokesperson said the $200 million would be used for "expansion in international, video and cross-platform media."
Before NBCUniversal's investment, BuzzFeed had raised nearly $100 million in five rounds of funding, including $50 million last year from Silicon Valley venture capital powerhouse Andreessen Horowitz.
With Tuesday's announced investment, BuzzFeed is reportedly valued at about $1.5 billion.
Internal documents obtained by Gawker and published last week showed BuzzFeed making a $2.7-million profit in the first half of 2014. The company posted a net profit of $7 million in 2013, its first year of profitability.
A key reason: BuzzFeed's attractiveness to advertisers. The New York-based media property that blends listicles, quizzes and quirky videos with foreign reporting and investigative journalism is backed by powerful analytics that allow the company to see how its content spreads from one social media platform to the next.
That helps BuzzFeed understand what content plays well on Facebook versus YouTube or Vine over Instagram. Data like that are used to create shareable content, which advertisers pay a premium for because it means they're reaching an engaged audience.
"BuzzFeed can reach different people on different platforms depending on who our customer is," said John Lisko, executive communications director at the creative agency Saatchi & Saatchi.
BuzzFeed is already running a video studio that produces 75 original clips a week and 1.5 billion monthly views.
In a separate move, BuzzFeed said Tuesday that it had struck a joint venture deal with Yahoo Japan. The addition of the Japanese market means BuzzFeed will operate in nine countries outside the U.S., including Britain, Brazil, Mexico and France.
Times staff writers Stephen Battaglio in New York and Ryan Faughnder in Los Angeles contributed to this report.