BuzzFeed really needs a 'Hot Ones' deal

• BuzzFeed is trying to sell "Hot Ones," its hit video show.
• A deal would help BuzzFeed pay off some — but not all — of its $119 million debt obligation.
• This comes as Vivek Ramaswamy continues to scoop up BuzzFeed shares. He now owns 9% of the company.

BuzzFeed news item #1: BuzzFeed has been trying to sell Hot Ones, its hit viral video show, but has yet to make a deal.

BuzzFeed news item #2: Last week Vivek Ramaswamy, the failed presidential candidate who has been amassing a stake in the digital publisher, met with BuzzFeed CEO Jonah Peretti to explain his plans for the company.

Those two stories, which ran Monday morning in different publications, are most definitely related. If BuzzFeed is successful at selling First We Feast, the company that owns Hot Ones, then it will be in a better position to deal with Ramaswamy. And if it doesn't make a deal, then it's going to have a lot of problems, period.

The main connective tissue is that BuzzFeed has $119 million in debt hanging over its head, and in early December, anyone who owns that debt could force BuzzFeed to pay it back. And BuzzFeed doesn't have anywhere near that amount of money on hand.

So BuzzFeed is hoping to use the money it makes selling First We Feast/Hot Ones to pay down some of that debt. It's hard to believe someone won't end up buying it — it's a video brand that makes money and has tons of buzz (see this New York Times profile of Conan O'Brien, which spends a bit of time explaining what O'Brien's recent appearance on that show has done for his career).

But even if that sale does happen, it's very unlikely to generate enough cash for BuzzFeed to pay off its debt entirely. So the company will also likely need to find a new investor (difficult in today's climate) or renegotiate the debt (ditto), or both to get itself out of this self-inflicted jam.

Hovering over all of this is Ramaswamy, who has been steadily acquiring BuzzFeed shares and now owns 9% of the company.

As we've discussed before, Ramaswamy's equity stake doesn't really mean much, since BuzzFeed has a two-tier stock structure that gives CEO Peretti control of the company. Ramaswamy insists otherwise, noting the looming debt — but has yet to explain how that debt will give him leverage. (Generally in a bankruptcy, if things come to that, the people who control the debt have the power, not the people who have the equity.)

In the meantime, Ramaswamy used his Zoom call with Peretti last week to unveil the three directors he wants installed on BuzzFeed's board. All of them come from the conservative/Joe Rogan media spectrum: Chris Balfe, a media operator best known for his work with Glenn Beck, podcaster Patrick Bet-David, and Clay Travis, the media personality who founded OutKick Sports and sold it to Fox in 2021.

Here's BuzzFeed's on-the-record response, which you can interpret as a "thanks but no thanks": "As a shareholder of 8% with a vote of less than 3% we appreciate Vivek Ramaswamy's recommendations, and they will be sent to governance as per the formal process that he is no doubt aware of."

Next up on the formal calendar: Ramaswamy has called on BuzzFeed to add his slate of directors to the board by July 15. But the moves BuzzFeed is making behind the scenes — trying to find tens of millions of dollars — are the crucial ones for the company's future.