Vice Media files for bankruptcy after wave of layoffs

[Savonarola]

Vice Media files for bankruptcy after wave of layoffs

Online media company, once valued at $5.7bn, seeks bankruptcy protection after it scrambled to find buyer.

15 May 2023
Vice Media has filed for bankruptcy protection, the latest digital media company to falter after a meteoric rise.

Vice said on Monday that it has agreed to sell its assets to a consortium of lenders – Fortress Investment Group, Soros Fund Management and Monroe Capital – in exchange for $225m in credit. Other parties will also be able to submit bids.

The Chapter 11 bankruptcy filing was announced weeks after the company announced it would cancel its flagship Vice News Tonight programme and lay off employees. The layoffs were expected to impact more than 100 employees in the 1,500-person workforce, The Wall Street Journal reported. The company also said it would end its Vice World News brand, making Vice News its only brand worldwide.

Bankruptcies filed under Chapter 11 of the United States Bankruptcy Code are meant to protect an indebted company from its creditors to facilitate its sale or reorganisation into a profitable enterprise.

Monday's filing comes during a wave of media layoffs and closures – including job cuts at the Gannett newspaper-publishing chain, National Public Radio and The Washington Post. In April, BuzzFeed Inc announced that its Pulitzer Prize-winning digital media outlet BuzzFeed News was being shut down as part of a cost-cutting drive by its corporate parent.

The current uncertain economic situation and plummeting digital advertising sales have also cut into the profitability of major tech companies from Google to Facebook.

Vice Media's roots date back to 1994 with the launch of Vice's original punk magazine in Montreal. Vice soon moved to New York and built itself into a global media company.

The current uncertain economic situation and plummeting digital advertising sales have also cut into the profitability of major tech companies from Google to Facebook.

Vice Media's roots date back to 1994 with the launch of Vice's original punk magazine in Montreal. Vice soon moved to New York and built itself into a global media company.

Over the years, Vice developed a reputation for in-your-face journalism that covered daring stories around the world. The media company's assets also include film and TV production, an in-house marketing agency, and brands such as Refinery 29 and Unbothered.

The media company has struggled to turn around profits in recent years. As it faced a financial crunch, Vice secured $30m in debt financing from Fortress Investment Group in February, The Wall Street Journal reported.

In 2017, Vice was valued at $5.7bn. Most experts estimate the company is now worth just a fraction of that, The New York Times reported this month.

Co-CEOs Bruce Dixon and Hozefa Lokhandwala said the sale process will strengthen the company and position it for long-term growth, "thereby safeguarding the kind of authentic journalism and content creation that makes VICE such a trusted brand for young people and such a valued partner to brands, agencies and platforms".

I wasn't surprised by Buzzfeed News going under; not to take anything away from their journalism, but it didn't fit well with their core business.  Vice's niche journalism is their core business and, while I'm not a regular reader, is one that I thought would always have a market.  I'm curious if anyone has any insight to this; is this something specific to Vice or more part of a digital news industry trend.

[Barrister]

I wasn't surprised by Buzzfeed News going under; not to take anything away from their journalism, but it didn't fit well with their core business.  Vice's niche journalism is their core business and, while I'm not a regular reader, is one that I thought would always have a market.  I'm curious if anyone has any insight to this; is this something specific to Vice or more part of a digital news industry trend.

It is at least in part specific to Vice.

I read somewhere (can't find it now) that Vice really over-expanded during it's glory days into some quite far-flung locations and non-core businesses.  As well Vice's unique "voice" could repell as many as it would attract.  I've also seen it speculated that "voice" which attracted millenials repells the even younger Gen Z.

But it's also just the fact that online advertising rates are declining, which is industry-wide.

[Sheilbh]

I quite liked this piece by a former Vice war reporter:
https://unherd.com/2023/05/my-part-in-vices-downfall/

With Vice in particular - it's the same old media story. The stuff that drew a lot of interest was their foreign reporting in really difficult places (that's certainly what I remember). It costs a lot of money. They weren't making any, did a deal with HBO and, like so many media companies, cut spending on the content that engaged with their viewers and never really recovered financially. In part it's also possibly because post-Trump (and maybe little bit post-Brexit) news became insular. In Vice's hey-day they were doing reports on ISIS' courts, the Arab Spring, the conflict in Congo. I think a lot of time and reporting energy was instead turned inwards especially to "left behind" areas looking to explain the West to itself. It was cheaper, safer and, also, part of a cycle for the media as participants and observers.

Also I think it's the common story about disrupters with big incumbents - the big media companies adapted. The aesthetic and style of Vice is far more mainstream and widespread now (and with the budget of big companies behind it) - as is a slightly more irreverent voice than used to be the case especially in the US. Now all media companies will be looking at multiple channels and speaking with many voices - especially on a big scandal. You'll have journalists on Twitter, live blogs, videos and articles - all with a slightly different register.

But I think it's also a wider industry trend. There seems to be a bit of a bell-curve for new media that very niche, very small can do well but mid-size either get gobbled up by the NYT/News International/Bezos or they ultimately fail (exception being trade press/media with corporate subscriptions). Magazines can do better (I think lower costs plus often it's about building an international audience online for your "voice"). I seem to remember about 8-10 years ago that News International were looking at acquiring Vice - I suspect that would have been the best possible ending for them.

The bit of the media that I think is probably worst hit by this trend is local media. In a way that I think is possibly dangerous from a good governance or democratic perspective. Even big media companies that own loads of local outlets and could cross-subsidise find it incredibly difficult to get them making money in a way that sustains actual reporting.

With a few exceptions often with unique business models like the Guardian, the choices for media all boils down to some balancing of online advertising and paywalls. Online advertising is not in a good place - the entire sector is incredibly shady (from a publisher's perspective). And paywalls risk removing you from the conversation and require a high level of reader loyalty that can be difficult to acquire.

[The Minsky Moment]

No great insight either but basically same take as BB.  I.e. part of it probably has something to do with the fact that it is very hard generally to make money in the media business.  The traditional revenue models are breaking down and newer emerging models aren't driving enough profit yet.  The businesses that seem function right now are the big cable news networks that still attract enough audience share to generate traditional big ad money and much smaller niche players.  Vice seemed to be doing well when they were in the latter category - when they started to bulk up and expand, they became a "tweener" - taking on the cost base of a bigger player but without the reliable revenue stream to support it.

[celedhring]

FWIW, I have a friend that works for the NYT, and according to her "they are doing really well" (I just looked up their financials and that seems to be the case). Which makes sense, they are a global brand with very good reputation. According to her several years ago they began cutting the more local NYC content - which pissed off their traditional customer base - but expanded their US and international coverage.

[Sheilbh]

Yeah it is similar in the UK. Many established small-ish magazines are doing very well by building an international audience, The Guardian is living within its means and gets a huge amount of revenue from international supporters - I think News International and Daily Mail Group also doing quite well (with MailOnline partly by building an international audience).

There's real problems in media but it is a bit feast and famine. And I think the tables are starting to turn in a way that should help publishers in regards to advertising 

[Grey Fox]

Hopefully, we (Canada) won't back down.

[The Minsky Moment]

For NYT the fine print is that they managed boost revenue by increasing digital subscriptions quite a bit, but the revenue $/subcriber declined.  The latter because digital ad revenue is declining and because of the need to aggressively discount digital subs. 

This may be a viable economic model, however: (1) there are limits to the number of people willing to pay out digital sub fees, and (2) it only works for higher end properties that have a deep reach and can justify the cost.  And there is a zero sum - the market of people willing to pay significant $$ for regular news subs is only so big and only so many players can be effective.

The hype driver for Vice was not a strong revenue model but its ability to appeal to a more youthful demographic that traditionally did not pay for conventional news sources.  It doesn't seem like they were able to convert that interest into cash.

[Sheilbh]

For NYT the fine print is that they managed boost revenue by increasing digital subscriptions quite a bit, but the revenue $/subcriber declined.  The latter because digital ad revenue is declining and because of the need to aggressively discount digital subs. 

This may be a viable economic model, however: (1) there are limits to the number of people willing to pay out digital sub fees, and (2) it only works for higher end properties that have a deep reach and can justify the cost.  And there is a zero sum - the market of people willing to pay significant $$ for regular news subs is only so big and only so many players can be effective.

I think all of that is true. But working in a news publisher with a brand who has paying digital subs, there is a sustainable business model there. We are - for some organisations - very far away from the fears of 10-15 years ago. In general lots of media organisations are able to invest in either their tech or their journalism which are the two sides of any publisher now.

But as you say there's a limited market that can afford/is willing to pay for a subscription - and there are lots of important news organisations that can't make that model work. As I say I think especially local news, perhaps specialist news for specific communities and maybe new or innovative media. From a wider social perspective I think that's really important and I'm not sure what we do about - the best I can think ofis  the Aussie model (which Canada is copying) of mandated collective barganing with the platforms that has been had a huge financial impact on local and indigenous media (who are now expanding again).

The hype driver for Vice was not a strong revenue model but its ability to appeal to a more youthful demographic that traditionally did not pay for conventional news sources.  It doesn't seem like they were able to convert that interest into cash.

Also the type of content. They had 100 journalists at one point all over the world and doing undercovered stories like Venezuela, Congo, Liberia - with some serious reporting as well as the more schlocky stuff.

I don't knkow how Vice ever intended to make money given that from memory there was never a paywall and all their videos were on YouTube (which doesn't earn a great a return compared to the cost of having a journalist in Syria). Maybe more as a production company than anything else?

[Barrister]

There's also the

No great insight either but basically same take as BB.  I.e. part of it probably has something to do with the fact that it is very hard generally to make money in the media business.  The traditional revenue models are breaking down and newer emerging models aren't driving enough profit yet.  The businesses that seem function right now are the big cable news networks that still attract enough audience share to generate traditional big ad money and much smaller niche players.  Vice seemed to be doing well when they were in the latter category - when they started to bulk up and expand, they became a "tweener" - taking on the cost base of a bigger player but without the reliable revenue stream to support it.

The smaller niche players - like Substack?

It's an interesting model.  A writer/journalist/whomever trusts Substack to do all the back-end work in exchange for a 10%(?) cut, so then there's virtually no expense - the writer only has themselves to pay.

Problem with that is you get a lot of opinion, or at least derivative reporting, and very little original work.

[Admiral Yi]

Huffpost seems to have disappeared.  Their business model AFAICT was reporters working for free and their slimy boss picking up any ad revenue.  No loss.

[Sheilbh]

Huffpost seems to have disappeared.  Their business model AFAICT was reporters working for free and their slimy boss picking up any ad revenue.  No loss.

They still exist - I think they're owned by Buzzfeed now. But they were, for a while, owned by Oath (now Yahoo!) so reporters working for free plus some incredibly shady/dodgy uses of data for behavioural advertising.