Shortly before the launch last year of media startup The Messenger, its president said the company expected to generate more than $100 million in revenue in 2024. To achieve that, it will need ‘greater fortune.
The site generated about $3 million in revenue last year, according to two people with knowledge of the company’s financial results. And he told potential investors that he had just $1.8 million in cash at the end of December, after losing about $38 million last year, which put him in serious trouble financial.
The Messenger’s operating results, which until now had not been fully disclosed, highlight the challenges the company faces. The founders, who raised $50 million to launch the website, initially said their goal was to transform coverage of American politics, culture and sports. But it encountered editorial and financial difficulties.
This week, the company is laying off about two dozen employees, including those who worked on national policy and science and technology. It is raising funds from investors to maintain its operations throughout this year. On Tuesday, Richard Beckman, founder and longtime executive of magazine company Condé Nast, announced he was leaving the company.
Kimberly Bernhardt, a spokeswoman for The Messenger, pushed back on the suggestion that the company was facing “dire” financial difficulties, adding that The Messenger had as much revenue in January as it did all of last year.
Ms Bernhardt said the company had already raised more than $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 this year.
“The Messenger’s revenues will continue to increase and its expenses will continue to decrease over the course of the year,” she said.
The problems faced by The Messenger highlight the difficulty of starting a media business dependent on digital advertising, which is the company’s main source of revenue.
The site has struggled despite having longtime media executives among its founders, including Jimmy Finkelstein, whose career included positions running the Hollywood Reporter; deep-pocketed backers including Josh Harris, co-founder of private equity firm Apollo Global Management; and journalists with experience at leading publications.
The company also encountered some editorial problems. Gregg Birnbaum, a well-respected political editor, resigned in May after a clash with a ratings editor at the site. Some staff members were angered by the demand to produce articles based on articles published by their rivals.
But it has started to gain traction with readers, according to figures from the measurement company Comscore. The Messenger told potential investors that it attracted 24 million visitors in December, an increase of 24 percent from the previous month.
Last year, The Messenger projected just $75 million in revenue in 2024, according to the two people with knowledge of the company’s finances. About $10 million of that showing will come from the TV division, which has yet to get off the ground.
The company’s costs exceeded $40 million last year, the two sources said. A large portion of those costs – more than $8 million – came from lease obligations on its office buildings. The Messenger has offices in New York, Washington and West Palm Beach, Florida.
The company’s valuation for the current funding round is unclear, according to the two people. Axios reported earlier Thursday that the company was looking to raise $20 million.
Upon hearing news of the editorial layoffs, many company employees demanded more transparency from Mr. Finkelstein on the internal messaging system Slack, demanding an employee meeting to discuss the company’s financial situation.
In an internal memo released Wednesday, Mr. Finkelstein called the decision to lay off employees “difficult.”
“I understand this is difficult and I am sincerely sorry to those affected,” he wrote.