Vice Media, the youth-focused digital media and broadcasting company that includes popular websites such as Vice News and Motherboard, filed for bankruptcy on May 15, according to The New York Times. Vice had been struggling financially for several years, and on May 1, The New York Times reported that a bankruptcy file was near.
According to The New York Times, daily operations of Vice’s businesses, including its flagship website, the ad agency Virtue, the production and talent management firm Pulse Films, and the women-focused site Refinery29, would not be disrupted.
According to the article, Vice’s lenders, who include Fortress Investment Group and Soros Fund Management, have secured a $20 million loan to continue operating the company.
This collection of lenders has made a $225 million bid, and if no one else makes a larger bid within the specified time frame, they will acquire Vice. According to the New York Times, the bid will be covered by the company’s current loans, and the lenders will also assume Vice’s “significant liabilities.”
Vice Media received a $250 million loan from Fortress and Soros in 2019, and the company has been in arrears for several months. The New York Times reported on May 1 that “Disney [which, along with Fox, had invested in Vice], which has already written down its investments, is not getting a return.”
Details will be revealed in the following days and weeks, but according to a May 15 New York Times report, Fortress, the anticipated new owner, anticipates a continuing position at Vice for co-founder Shane Smith, as well as co-chief executives Hozefa Lokhandwala and Bruce Dixon.
Dixon and Lokhandwala said in a statement that the bankruptcy sale will “strengthen the company” in the long run. “We look forward to completing the sale process within the next two to three months and charting a healthy and successful next chapter at Vice,” the company said in a statement.
Vice began in 1994 as the Voice of Montreal, a journal established in Montreal, Canada, and was renamed Vice two years later. Vice relocated its headquarters to New York City in 1999 and, over the next few years, swiftly expanded into digital media with a particular edgy, outspoken style aimed at younger audiences.
From around 2012, Vice raised enormous quantities of money from established media corporations that bought into its young pop culture pitch, with a concentration on news and current events presented in an aggressive “gonzo” style. When private equity firm TPG invested $400 million in Vice in 2017, the company was estimated to be worth $5.7 billion.
The large inflow of cash came with financial obligations, and Vice was forced to reach the aggressive profit expectations established by its backers. Vice and its investors, like its digital-media contemporaries BuzzFeed and Vox Media, “bet big on the rising power of social media networks like Facebook and Instagram, anticipating they would deliver a tide of young, upwardly mobile readers that advertisers craved,” according to the NYT story.
Despite their legions of customers, however, the new media companies failed to generate enough earnings to be viable because the majority of advertising revenue went to the major Internet companies. Its financial difficulties were made public in May 2019, when Vice announced that it had raised a $250 million debt from George Soros and others.
Vice had faced stinging criticism of its working culture for several years prior, with multiple allegations of sexual harassment, and its co-founders admitted the firm had failed to “create a safe and inclusive workplace.”
According to the New York Times, the Vice debacle is a “cautionary tale of the problems confronting the digital publishing industry.” “There are definitely commonalities in the hardships media organisations have been facing, and Vice is no exception,” said S Mitra Kalita, founder and publisher of the New York City-based community journalism enterprise Epicenter-NYC. We now know that a brand’s reliance on social media for growth and viewership is unsustainable.”
According to the story, Kalita stated that Vice’s bankruptcy served as a warning to founders to diversify their businesses beyond advertising.