Is Struggling Website The Messenger Really Worth Anything Close to $60 Million?
It’s been a rough start to 2024 for The Messenger, the digital media startup launched by Jimmy Finkelstein with sky-high ambitions of changing the news business.
Scale has always been the defining feature of The Messenger’s aspirations. When Finkelstein previewed its launch last year, the company said it would quickly boast a newsroom of 550 journalists (that’s the size of the Los Angeles Times), reach a staggering 100 million monthly readers (that’s more than the New York Times) and $100 million in revenue (that’s a lot).
It would do so, he explained, by relying on a surprisingly outdated model: flooding the zone with content in a bid to build traffic through Google search and social platforms. Industry insiders were skeptical. After all, SEO and social are no longer serious sources of traffic for many in the industry, which is why most new media startups like Puck and Punchbowl have sought to build a paid subscription base. What’s more, the idea that The Messenger would fill the void of “non-partisan news” ignored that there are already plenty of major non-partisan news outlets. To quote Puck’s Dylan Byers, writing on The Messenger’s model last week: “The whole thing sounded batshit crazy.”
Still, Finkelstein raised $50 million in funding. He went on a hiring spree, poaching big industry names by offering generous salaries. The Messenger reached a staff of 300 people. It published hundreds of stories on its first day. It reached an impressive 88 million pageviews by November, according to Comscore.
The problems with the model that critics foresaw appear to have caught up with The Messenger. Last week, its president Richard Beckman quit and two dozen staffers were laid off to cut costs. Semafor reported the company is set to run out of money by the end of January and is now considering a sale or even shutting down entirely. (The Messenger denied this.)
Regardless of its future, the New York Times reported the site is currently in “dire financial straits”:
The site generated about $3 million in revenue last year, according to two people with knowledge of the company’s financial results. And it has told potential investors that it had only $1.8 million in cash on hand at the end of December, after losing about $38 million last year, putting it under severe financial strain.
The situation is indeed dire. Mediaite obtained from a source The Messenger’s financials for a recent month. It boasted some eye-popping expenditures, including $142,500 on travel, meals, and entertainment. The Messenger spent the most on personnel ($4.1 million) and facilities ($241,295) — presumably its sprawling office in New York, and others in Washington D.C. and West Palm Beach. The Times reported The Messenger spent more than $8 million on office space last year. For some perspective: Semafor spent its first year in a decidedly more humble abode: a cramped space above Umberto’s Clam House in New York’s Little Italy.
A spokesperson for The Messenger denied those figures: “I can confirm that these numbers are completely incorrect and will also be incorrect when we close the December budget. We have no further comment.”
Now, Finkelstein is scrambling for cash. Axios reported last week that he met with a group of conservative investors at Donald Trump’s Mar-a-Lago resort to discuss an acquisition.
The group included Omeed Malik, the investor backing Tucker Carlson’s new media company, Republican operative Garrett Ventry, and George Farmer, the ex-CEO of struggling social platform Parler (and husband of omnipresent culture warrior Candace Owens).
A source familiar with the meeting confirmed that the group floated, as a starter number, $30 million to acquire at least 50.1% of The Messenger. Finkelstein said he would be interested in that kind of deal. While such an investment would value the company at a whopping $60 million, I’m told it’s unlikely to be the final number.
“I don’t think it’s worth that much,” the source said. “It’s probably worth anywhere from like $15 [million] to $30 [million] to buy and have majority stake in.”
Certainly, $60 million for a media startup with an outdated model that has blown through $38 million in less than a year, has less than $2 million in cash on hand, and a newsroom of 300 people with significant salaries would be generous, to say the least.
Media companies are typically valued at 2.5-5x their revenues. If the Times’ reporting on The Messenger’s finances is accurate, the company is a long way from being worth $60 million. Not to mention the daunting odds that a company built like The Messenger will ever be able to turn a profit. A newsroom of its size and cost simply can’t be supported by digital ads; you can expect more layoffs no matter who takes control of the company.
I’m told the Mar-a-Lago group is only interested in a deal with Finkelstein if they can seize operational control. The deal remains on the table, but the future of The Messenger and its large newsroom isn’t bright. Even if rescued by a fresh round of investors, The Messenger’s struggles are far from over.
