The Messenger is shutting down because it was Harvey Weinstein-y
The Messenger, a digital news startup that launched with $50 million in funding last May, plans to shut down operations, a source familiar with the situation told Axios Wednesday.
Why it matters: It’s one of the biggest media failures of the internet era. Worse, the demise was foreseeable — and foreseen.
Details: The Messenger CEO and founder Jimmy Finkelstein came close to raising the cash necessary to keep the business afloat for several more months, sources told Axios, but ultimately failed to close a deal.
- The company, which was losing tens of millions of dollars, only brought in around $3 million in revenue last year, according to financial documents seen by Axios.
- Liberal Media Bloodbath Continues With More Layoffs At NowThis, The Intercept
- It originally projected $100 million in revenue for 2024 — a figure that onlookers doubted from the start, particularly given the industry’s current disarray.
- In a staff memo, Finkelstein blamed the economic headwinds facing the media industry. “Unfortunately, as a new company, we encountered even more significant challenges than others and could not survive those headwinds.”
Catch up quick: The Messenger was founded by Finkelstein in 2023, two years after he sold The Hill — a Beltway-based print and digital publication co-founded by Finkelstein’s father in 1994 — to Nexstar for $130 million.
- Finkelstein had previously co-founded a media holding group that purchased outlets like Adweek, Billboard and The Hollywood Reporter from Nielsen in 2009.
- The Messenger hired 300 people across a few short months and paid them above market wage.
The big picture: The Messenger was built on the flawed premise that a big, generic news audience has value. It doesn’t anymore.
- Social media giants — eager to get out of the news business — no longer distribute traffic for free to news sites, forcing most news companies to rely on search traffic, which takes time to grow, or buying visitors.
- The deprecation of third-party tracking cookies has put a premium on monetizing smaller, more loyal audiences with first-party data.
- A broader slowdown in the ad market has made subscriptions a critical revenue stream in addition to advertising.
- The Messenger sold mostly automated digital ads at scale using third-party data. It also sold event sponsorships.
Be smart: The writing was on the wall.
- For months, reports from The Daily Beast, Semafor and others detailed cultural and business challenges plaguing the failed news startup, including its former president telling employees the outlet was running out of cash last October.
What to watch: The Messenger was built on the idea that consumers would flock to centrist news across topics ranging from politics to entertainment and sports.
- While the site garnered a sizable amount of traffic, proving some audience interest, it was unable to support its sizable newsroom on the revenue it generated.
Full memo from Finkelstein to staff:
I am personally devastated to share that we have made the painfully hard decision to shut down The Messenger, effective immediately. Over the past few weeks, literally until earlier today, we exhausted every option available and have endeavored to raise sufficient capital to reach profitability. Unfortunately, we have been unable to do so, which is why we haven’t shared the news with you until now. This is truly the last thing I wanted, and I am deeply sorry.
The Messenger started with an incredibly important mission – to deliver balanced and accurate journalism at a time when Americans’ trust in media is at a record low – and I am proud of what we achieved. Our editorial team created and delivered an outstanding product that generated unprecedented traffic in seven months. ComScore recently announced that we reached 88 million page views in November. Under the right circumstances, I know we could have made a significant difference in today’s fragmented media landscape and country.
The industry has faced extraordinary challenges this past year. The economic headwinds have left many media companies fighting for survival. Unfortunately, as a new company, we encountered even more significant challenges than others and could not survive those headwinds. I am grateful to you and the partners who believed in our mission and came on board over the past seven months, but the reality is that we needed more capital to move forward successfully.
We understand that this announcement will immediately raise several questions, and our team is committed to providing timely information during this period. Our Chief People Office is available for any questions we have not addressed in the FAQs.
Again, I want to apologize for being unable to find a way through. Thank you for your unwavering dedication and hard work. I wish everyone well in their future endeavors.
Money-bleeding start-up The Messenger — the news site that launched to great fanfare last May — was expected to shut down Wednesday, according to a source close to the situation.
“The site will go dark,” an insider at the publication told The Post, adding that none of the roughly 300 staffers will get severance.
Co-founder and CEO Jimmy Finkelstein, who launched the site in May after raising $50 million, had been scrambling to secure funding this week as employees braced to hear whether the company would avert disaster, as The Post previously reported.
A rep for the Messenger did not comment.
“This will go down as one of the biggest busts of all time,” a media expert said. “The Messenger will be remembered as the Titanic of publishing disasters.”
Finkelstein had big dreams of turning the Messenger into a major centrist news outlet that would include hiring around 550 journalists within a year and compete with the likes of The Los Angeles Times.
He paid top dollar to lure away talent from major publications, including The Post, Politico and NBC News.
“What ultimately killed The Messenger was lack of message — and arrogance,” the media industry expert said. “Hundreds of people left great jobs with the promise of creating something better — which turned out to be a big lie.”
Another insider merely added: “It’s shocking how bad Jimmy handled this.”
Finkelstein and the site’s president Richard Beckman crowed to The New York Times last March that the site would garner more than 100 million monthly readers and bring in $100 million in revenue in 2024.
But the company had a bumpy start, burning through cash at a fast clip and spending roughtly $39 million on hiring, CNBC reported.
Earlier this month, The Messenger shot down reports that it was considering shutting down over cash shortfalls, laid off two-dozen employees to stem costs, as it ended 2023 with a net loss of $43 million.
Sources told The Post that the site lured in just 12.5 million unique visitors in November as Beckman — an exec known for aggressively drumming up advertising revenue, sounded the alarm bells to employees that the site was running out of money.