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Vice Media seeks bankruptcy protection as part of sale to money lenders
By Chris Cooke | Published on Tuesday 16 May 2023
Vice Media Group has filed for bankruptcy protection in the US as part of plans to sell the company to a group of money lenders, including Fortress Investment Group and Soros Fund Management.
According to a statement, those lenders have agreed to provide $225 million in credit and to take on “significant liabilities” in return for the media firm’s assets. However, the deal is contingent upon a provision that the company remains open to higher bids from other parties.
Vice, of course, expanded significantly from the mid-2000s to the mid-2010s after successfully turning what began as an alternative print magazine into a digital media powerhouse.
It adapted well to a world where media owners have to connect with audiences – and especially younger audiences – via third-party platforms like YouTube as much as on their own websites. And it also became a pioneer of what was, for a time, called branded content, involving brands in its output via an in-house marketing agency.
However, it was never entirely clear how Vice’s advertising and brand partnership operations were going to fully fund what became such an extensive network of websites, programmes and projects, and that period of rapid expansion and acquisition was followed by some significant downsizing.
In recent years, the number of standalone brands operated under the Vice banner has decreased, leading to reductions in the company’s workforce. And just last month there were cutbacks in the firm’s news output resulting in a new round of redundancies.
There were other challenges for Vice too. By reaching a significant portion of its audience via third party platforms, it was always going to face problems when those platforms – which were also competitors in the digital advertising market – changed their priorities and algorithms.
Meanwhile, with the youth demographic it was targeting, Vice increasingly faced competition from the huge community of online creators building their own media empires via YouTube, Instagram and, more recently, TikTok.
Which is presumably why, despite having been valued at $5.7 billion in 2017, a positive spin is being put on the newly announced $225 million deal. Co-CEOs Bruce Dixon and Hozefa Lokhandwala said yesterday that the “sale process will strengthen the company and position Vice for long-term growth”.
They added that the deal that has been negotiated will safeguard “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”, because it will allow the company to operate “without the legacy liabilities that have been burdening our business”.
As part of the deal, the lenders will also provide more than $20 million in cash and additional financing to ensure Vice’s continued operation during the sale process, which is expected to conclude within the next two to three months.
