Media mogul Byron Allen will pay $120 million to acquire a majority stake in digital media company BuzzFeed.
BuzzFeed stated on Monday that Allen plans to purchase 40 million shares at $3 per share. Allen's Allen Media Group owns The Weather Channel and several network-affiliated broadcast channels.
Upon completion of the transaction, Allen's affiliate, Allen Family Digital, will hold 52% of BuzzFeed's outstanding shares. The deal will be funded by $20 million in cash and a $100 million promissory note, which matures five years after closing and carries an annual interest rate of 5%.
BuzzFeed indicated the transaction is scheduled to close by the end of May.
Allen will also succeed BuzzFeed founder Jonah Peretti as Chief Executive Officer and Chairman.
This announcement from BuzzFeed comes less than a week after CBS stated Allen would take over Stephen Colbert's late-night time slot. Allen plans to host a program called "Comics Unleashed" in that slot.
Peretti stated that BuzzFeed plans significant adjustments ahead of Allen's arrival, including cost reductions. He also mentioned the company plans to merge BuzzFeed Studios and Tasty into a new, independent entity.
These moves aim to create more liquidity to focus on the core BuzzFeed brand and the news site HuffPost.
Allen said, "Our vision is to build on the iconic foundations of BuzzFeed and HuffPost by expanding into free streaming video, audio, and user-generated content."
Peretti will transition to the newly created role of President of BuzzFeed AI. The company has recently increased its investment in AI. Earlier this year, the company stated plans to spin off a company that has been developing a series of social apps based on AI experiments conducted by BuzzFeed.
Separately, BuzzFeed reported a widened loss and a decline in revenue for its first fiscal quarter.
The company's loss was $15.1 million, or 40 cents per share, compared to a loss of $12.7 million, or 33 cents per share, in the same period last year.
Sales decreased by 12% to $31.6 million.
BuzzFeed stated it will suspend providing financial guidance while completing the transaction with Allen and continuing to explore strategic opportunities. The company plans to update its performance outlook in the coming months.
The company, once widely popular for online quizzes and news, stated in a filing last week that it failed to repay $5 million in debt on time. The company extended the maturity date to May 18. It stated that if it remains unable to repay by that date, its loan will be in default, which could lead to a bankruptcy filing.
BuzzFeed also issued a going concern warning in March, stating it lacks the resources to meet its cash obligations.
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