- He needed public funds. Then funds from a private person outside the media, increased costs with the transfer from Montreal to New York.
- In 2021 Vice Media Group already had 5 main business areas:
- Vice.com (digital content), Vice Studios (film and television production), Vice TV (Viceland), Vice News, and Virtue (creative services agency).
rise and fall
Vice Media aired its news shows on HBO, and its documentary series won an Emmy Award.
They also broadcast ‘Vice News Tonight’, a nightly roundup of global news for their audience (which has never been in the ‘red circle’).
In June 2019, the relationship between HBO and Vice Media ended badly.
In August 2019, the Vice Media adjustment plan beganwhich was progressive and indefinite.
In May 2023, Vice Media Group declared its preventive bankruptcy (Chapter 11 of the Bankruptcy Law, and looking for a buyer).
The fall of Vice is another setback for investors in online media such as BuzzFeed, Vox Media and Group Nine.
Financial Times -which also suffered financial misadventures and the need to adjust to changing times, which included its sale in 2015 to the Japanese group Nikkei Inc.– spread an article Anna Nicolaou and Sujeet Indap from which some conclusions can be drawn from the Vice Media Group case:
#1. When private equity investors poured nearly $500 million into Vice Media in 2017, co-founder Shane Smith hinted that the money would help his digital media company achieve a public listing that “It would look very sexy.” (…) The cash injection led by the private equity group TPG and its then-partner Sixth Street was aimed at propelling the company towards an initial public offering (N. de la R.: going public) or a multi-million dollar sale.” TPG’s $450 million stake has been cut to 0. Vice’s overall valuation is below $300 million. market value of The New York Times and more than 22 times what Jeff Bezos paid for The Washington Post in 2013, did TPG think they were all fools?).
#2. A digital medium should never accept an investment fund as an investor because they are different cultures, objectives and businesses. Rupert Murdoch’s 21st Century Fox once invested $70 million in Vice. Also Bob Iger, from Disney, Sir Martin Sorrell and others, came to invest in Vice Media Group, up to a total of US$ 1,500 million in the days of ‘free money‘ (2010/2020). Today, James Murdoch, Rupert’s son, blames TPG for Vice’s disappearance. TPG only wanted to ‘get in and out’ (invest, value and sell) but never cared about the media. It should be remembered that, with few exceptions, the financial market operator lacks a general culture, is not interested in the medium term and is disinterested in mass communication. TPG was successful in recovering bankrupt airlines, banks, and companies such as Burger King and J Crew. TPG made big bets on Uber, Airbnb and Spotify. However, the media is a different business. TPG fits the phrase of Christina Onassis shortly before death: “I am so poor that I only have money.”
#3. You have to be careful with the mix of audiences and cultures. Shane Smith said, when announcing the creation of his own cable news channel, that he would be a hybrid of “MTV, ESPN and CNN” for millennials. It is a good phrase for marketing but a serious ignorance of the public of a news channel and who their advertisers are. However, they almost succeed in the attempt, although at the last moment Disney did not agree to buy it.
Let’s go to the end of the Financial Times text:
“(…) The sales process coincided with a market-wide revaluation of media and technology companies and a slowdown in the advertising market. As the Federal Reserve raised interest rates, Wall Street became angry with companies that were unprofitable, or only marginally so.
That’s exactly what happened last week when Vice filed for bankruptcy, with Fortress reaching a preliminary agreement to trade $225 million in debt for ownership of the company.
Falling into administration is a humbling moment for Smith, who spent years wallowing in old media. In 2016, he said that the media business was on the verge of a “bloodbath” and that “we’ll be sitting there laughing out loud,” while predicting that Vice could soon be worth $50 billion.
Fortress is open to keeping Smith in some capacity, according to a person familiar with the matter. Fortress executives speak highly of Vice’s television and studio news units, as well as the Virtue ad agency. They are less interested in Vice’s online publishing business, where they will seek to cut costs. But Fortress has no current plans to shut down Vice News, according to people familiar with the situation. (…)
Company insiders insist Vice’s cost structure has improved markedly with input from private equity investors, even if revenue hasn’t picked up. What was once a complicated set of disparate media segments has been streamlined and the template cut in half.
Experts and investors are hopeful that another bidder will enter the room. They believe the bankruptcy process will rid Vice of its maze of financial liabilities, emerging leaner and more attractive to acquirers.
“There is no better salesperson than Shane. . . and that (current) valuation could not be lower”, says a person close to the board of directors. “Buying something cheap cures many ills.”
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