Vice, the brash digital media disruptor that has lured giants like Disney and Fox into investing, is preparing to file for bankruptcy, according to two people familiar with its operations.
An application could be made in the coming weeks, according to three people familiar with the matter.
The company is looking for a buyer to avoid declaring bankruptcy and could still find one. But that possibility is getting slimmer, said one of the people familiar with the possibility of bankruptcy.
A bankruptcy filing would be a dark coda for the tumultuous tale of Vice, a new media intruder who sought to replace the media establishment before persuading it to invest hundreds of millions of dollars. After a funding round from private equity firm TPG, Vice was valued at $5.7 billion. But today, in most accounts, it’s worth a meager amount.
In the event of bankruptcy, Fortress Investment Group, Vice’s biggest creditor, could end up controlling the company, one of the people said. Vice continued to operate as normal, conducting an auction in which he sold the company over a period of 45 days, with Fortress taking the pole position as the most likely buyer.
Unlike Vice’s other investors, including Disney and Fox, Fortress has senior debt, which means it will be paid first upon sale. Disney and Fox have already written off their investments but are not making a profit, the person said.
“Vice Media Group has engaged in a comprehensive assessment of strategic options and plans,” Vice said in a statement Monday. “The company, its board and stakeholders remain focused on finding the best path forward for the company.”
Vice started as a punk magazine in Montreal over 20 years ago. Over the years, we’ve grown into a film studio, advertising agency, glamorous shows on HBO, and a global media company with offices in capital cities around the world. After investing hundreds of millions of dollars in Vice, Disney considered buying the company for more than $3 billion in 2015, according to two people familiar with the conversation.
The deal never materialized, and Vice ultimately succumbed to the bear market of digital media companies. The company has been trying to turn a profit for years, but has consistently failed, losing money and repeatedly laying off employees.
Last week, Vice told employees it was shutting down Vice World News, a global reporting initiative covering global conflict and human rights violations. The closure of the World News business is in line with Vice’s roots in gonzo journalism, established when co-founder Shane Smith reported from dangerous places like North Korea, as part of the division’s aggressive reporting. It was a blow to the employees who were watching.
Vice has been looking for a buyer in recent months and has been dealing with management turnover. The company’s former chief executive, Nancy Dubuck, retired this year after nearly five years at the company. Jesse, his global president of the company’s news and entertainment division, said Angelo had also resigned.
