Shortly before media start-up The Messenger launched in 2023, its president said the firm planned to generate more than US$100 million (S$133 million) of revenue in 2024. It will need a major turn in fortune to get there.
The site generated about US$3 million in revenue in 2023, according to two people with knowledge of the company’s financial results. It has told potential investors it had only US$1.8 million in cash on hand at the end of December, after losing about US$38 million in 2023, putting it under severe financial strain.
The operating results of The Messenger – which until now have not been fully disclosed – underscore the difficulties facing the firm. The founders, who raised US$50 million to start the website, initially said their aim was to transform coverage of United States politics, culture and sports. But it has run into editorial and financial troubles.
This week, the company is laying off about two dozen employees, including those who covered national politics, science and technology. It is raising money from investors to maintain its operations in 2024. On Jan 2, Mr Richard Beckman, a founder who was a long-serving executive at magazine company Conde Nast, announced that he was leaving the company.
Ms Kimberly Bernhardt, a spokeswoman for The Messenger, pushed back on the idea that the company was under “dire” financial strain, adding that it booked as much revenue in January as it did in all of 2023.
Ms Bernhardt said the company had already raised more than US$10 million in its latest funding round. She added that the company was also “planning to introduce events and The Messenger TV” and that its finances would reach break-even later in 2024.
“The Messenger’s revenue will continue to increase and its expenses will continue to shrink over the course of the year,” she said.
The Messenger’s troubles highlight the difficulty of starting a new media firm reliant on digital advertising, which has been the main source of revenue for the company.
The site has struggled despite having long-time media executives as founders, including Mr Jimmy Finkelstein, whose career has included stints running The Hollywood Reporter; deep-pocketed backers such as Mr Josh Harris, the co-founder of private equity firm Apollo Global Management; and journalists with experience at premier publications.
The company has also run into some editorial problems since it launched. Mr Gregg Birnbaum, a widely respected politics editor, quit in May after a clash with an audience editor at the site. Some employees have chafed at demands to churn out stories based on articles published by their rivals.
But it has begun to gain traction with readers, according to figures from measurement firm Comscore. The company told potential investors that it attracted 24 million visitors in December, a 24 per cent increase over the previous month.
As at 2023, The Messenger was projecting just US$75 million in revenue in 2024, according to two people with knowledge of the company’s finances. About US$10 million of that projection is to come from the TV division that has not yet started.
The company’s annual costs exceeded US$40 million in 2023, the two people said. Many of those costs – more than US$8 million a year – come from lease obligations for its office buildings. The Messenger has offices in New York, Washington and West Palm Beach, Florida.
The valuation of the company for the funding round under way is unclear, according to the two people. Axios reported earlier on Jan 4 that the company was seeking to raise US$20 million.
Upon hearing the news of the newsroom layoffs, many of the company’s staff called for more transparency from Mr Finkelstein, demanding a meeting to discuss the firm’s financial state.
In an internal memo on Jan 3, Mr Finkelstein described the decision to lay off employees as tough.
“I understand this is hard, and I am genuinely sorry for those impacted.” NYTIMES
