Vice Media Files for Bankruptcy
Vice Media filed for bankruptcy on Monday, ending a year of descent from new media darling to a cautionary tale of the problems facing the digital publishing industry.
Bankruptcy will not disrupt the day-to-day operations of Vice’s business. In addition to its flagship website, these businesses include ad agency Virtue, Pulse Films division and Refinery29, a women’s site acquired by Vice in 2019.
Vice’s lending group, which includes Fortress Investment Group and Soros Fund Management, is in a leading position to buy the company out of bankruptcy. The group has submitted a bid of $225 million, which will be financed by existing loans to the company. It will also assume a “material liability” from Vice after the transaction closes.
Then comes the sales process. Lenders have secured a $20 million loan to keep Vice operating, after which a group that includes Fortress and Soros plans to buy Vice if no better bids emerge.
Still, the dreams that deputy executives once had of debuting on the stock market and selling at eye-popping valuations have been swept aside. The company was once valued at $5.7 billion.
Hundreds of millions of dollars of investment from big media companies like Disney and shrewd financial investors like TPG were rendered worthless by bankruptcy, cementing Vice’s place as one of the most notable bad bets in the media industry. make it firm.
Vice and its investors, like peers in the digital media industry such as BuzzFeed and Vox Media, are betting heavily on the emerging power of social media networks such as Facebook and Instagram, and how these social media networks will become more mobile. We hope to bring a high wave of young readers. Advertisers were coveted.
Despite attracting millions of readers, the media startups struggled to squeeze any profit out of it, with the majority of digital ad dollars going to the big tech platforms. Last month, BuzzFeed closed its Pulitzer Prize-winning news division of the same name after going public at a fraction of its original valuation, and earlier this year Vox Media funded it at roughly half its 2015 valuation. procured.
“There is definitely a common thread in the challenges facing media organizations, and Vice is no exception,” said S. Mitra Kalita, founder and publisher of Queens-based community journalism firm Epicentre New York. speaks. “We now know that it is not sustainable to connect only brand growth and audiences to social media.”
Lenders such as Fortress are looking to recoup their investments, so the bankruptcy filing will give the company some relief from a burdensome debt burden.vice media raised $250 million in loans It struggled to turn a profit and was acquired by Fortress and Soros Fund Management in 2019. The loan has been in default for months.
“Financiers came in and said, ‘We’re done funding the losses. I mean,'” he said. Wilk Auslander Office. “It’s not uncommon for a lender to come in and say to the debtor, the borrower, ‘You’re going to bankrupt this, you’re going to file a motion for sale, we’re going to make the first bid.'” ”
Fortress said he sees sassy co-founder Shane Smith, who has become synonymous with the company’s POV journalism from exotic locations and oversaw a culture of transgressive sexual harassment allegations, continuing his role at Vice. an official said. matter. Vice co-CEOs Hozefa Lokhandwala and Bruce Dixon will also remain.
Dixon and Lokandwala said in a statement that the bankruptcy sale would ultimately “strengthen the company.”
“We look forward to completing the sale process in the next two to three months and writing a healthy and successful next chapter for Vice.”
The bankruptcy is a humbling moment for Vice, which a decade ago seemed destined to sell for dizzying sums or make its public-market debut. In the 2010s, Vice raised billions of dollars from traditional media companies, which were attacked for growing complacent. Disregarding the courtesy of major news outlets, the company delivered “you’re there” messages from North Korea and Liberia, blaming advertisers for their ability to reach young millennials who were seeking alternatives to rival companies. and sold to investors.
But when the harsh realities of digital publishing caught up with Vice, things took an unexpected turn. In 2017, the company Raised The deal, codenamed “Project Venus,” saw $400 million from private equity firm TPG, valuing the company at $5.7 billion. But the infusion of cash would have left Vice with financial obligations if it failed to meet aggressive revenue targets, ultimately turning it into an albatross for the company. Later that year, the New York Times and other media outlets published investigations into allegations of sexual harassment at the company, creating a crisis of confidence in Vice’s management.
Smith named himself chief executive officer of the company, overseeing a vast Brooklyn-based media empire and longtime A&E television exec Nancy Dubuck, who led hits like “Duck Dynasty.” appointed Mr. Investors expect Dubuck to sell her company or take her stock public, and she has made numerous attempts.
The latest sales process took place this winter and attracted interest from multiple potential suitors. Antenna Group, a Greek media company that previously had deals with Vice, had expressed interest in a deal, but the deal never materialized. Mr. Duback left in February after failing to find a buyer and failing to achieve his long-held goal of making Vice profitable on a consistent basis.
Last month, things got even worse. The company laid off workers after Antenna stopped paying Vice for a production contract worth hundreds of millions of dollars. The job cuts also include employees at the company’s global reporting arm, Vice World News, making it clear that these efforts are no longer financially viable.
Alex Detrick, a spokesman for Antenna and former chief communications officer for Vice under Mr. Smith, declined to comment.
Epicentre New York City’s Ms. Karita, who is also co-founder of URL Media, a network of black- and brown-owned media outlets that share content and advertising, said Vice’s bankruptcy prompted the founders to go beyond mere business. He said it reminded him of developing different kinds of businesses. advertisement.
“I think even those of us who are now running profitable media start-ups are thinking more carefully about growth and allowing us to continually define our audience and the value we represent to them. ‘,’ said Karita.