BuzzFeed Nears Deal to Go Public Via SPAC, Eyeing Digital-Media Rollup

The merger deal would generate capital to pursue additional acquisitions, including Complex Networks, a digital publisher that specializes in streetwear, music and pop culture. BuzzFeed is vying for greater scale to better compete for online ad dollars with tech giants such as

Alphabet Inc.’s

Google,

Amazon.

com Inc. and

Facebook Inc.

The Information earlier reported on BuzzFeed’s plans to buy rivals, including Complex Networks, as a public company.

The deal to take BuzzFeed public marks a turning point for Mr. Peretti, a onetime schoolteacher who parlayed his affinity for stunts that went viral on the internet into a winding career as a digital-media entrepreneur. The 47-year-old executive helped found HuffPost alongside Arianna Huffington in 2005 and began work on BuzzFeed in a small workspace in New York’s Chinatown neighborhood in 2006.

Mr. Peretti hopes the moves to acquire Complex and other companies will give the combined entity enough scale to grow despite the increasing dominance of Google and Facebook over the digital advertising industry, the people said. BuzzFeed will also look to continue its growth in other areas including e-commerce and affiliate commerce—the practice of making money by selling products and referring potential customers to websites that sell products they might be interested in.

Even with the addition of Complex and other companies, there is no guarantee that BuzzFeed can further enlarge its share of the digital-ad sector. In recent years, most of the growth has gone to Google, Facebook and Amazon, and the Covid-19 pandemic only accelerated that trend. Those companies—known in the digital-media industry as the “triopoly”—increased their share of the U.S. digital-ad market from 80% in 2019 to a range approaching 90% in 2020, according to an analysis from ad agency GroupM.

Alliances among publishers have been tried before and haven’t generated the scale necessary to slow the triopoly’s accelerating growth. Pangaea, a consortium that aimed to give publishers additional scale in digital advertising, shut down last year, citing impacts from the pandemic.

BuzzFeed has had a long path to becoming a public company after confronting forces that have plagued all of digital media, including an unreliable market for advertising, competition from powerful rivals and investor skepticism.

BuzzFeed was flying high in 2015. Fresh off a $200 million investment from Comcast Corp.’s NBCUniversal that valued the startup at $1.5 billion, BuzzFeed beefed up its investments in film, television and news. Executives at traditional media companies including NBCUniversal,

Discovery Inc.

and Time Warner foresaw dwindling TV viewership and hoped their digital-media investments would help them attract new audiences.

But since then, the biggest media companies have largely focused on reaching younger viewers through video streaming. Discovery, NBCUniversal and ViacomCBS Inc. have all placed major bets on developing their own streaming services, giving priority to subscriber growth over new investments in new-media companies.

In 2017, BuzzFeed missed its revenue targets of about $350 million by some 15% to 20% and laid off about 100 employees in advertising sales and business operations. The company’s finances improved over the years as Mr. Peretti held down expenses and explored new revenue streams. In 2020, BuzzFeed turned a profit for the first time since 2014, The Wall Street Journal reported, in part by cutting about $30 million in expenses.

BuzzFeed has already begun to consolidate its rivals. In November, the company said it was buying HuffPost from

Verizon Communications Inc.

in a stock deal for an undisclosed amount. Earlier this month, BuzzFeed News won the Pulitzer Prize for international reporting for articles that revealed efforts by the Chinese government to detain Muslims.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com