Just over a decade ago Rupert Murdoch endorsed what appeared to be a glittering future for Vice, firing off a tweet after an impromptu visit to the media upstart’s Brooklyn offices and a drink in a nearby bar with the outspoken co-founder Shane Smith.
“Who’s heard of VICE media?” the Australian media mogul posted from his car on the way home from the 2012 visit, which resulted in a $70m (£55m) investment. “Wild, interesting effort to interest millennials who don’t read or watch established media. Global success.”
Who's heard of VICE media? Wild, interesting effort to interest millenials who don't read or watch established media. Global success.
— Rupert Murdoch (@rupertmurdoch) October 13, 2012
A year later, Disney had a secret $650m offer to buy fellow digital high-flyer BuzzFeed spurned, despite its then president reportedly getting on his knees to beg the founder, Jonah Peretti, to take the money. They were just two of the “old media” titans scrambling to buy into a generation of new players who appeared to have cracked the code for attracting the youth audiences abandoning traditional outlets in their droves.
“Vice and BuzzFeed really had that secret sauce for a while, where the intersection of media platform, technology and content engaged with young people,” says one former Vice staffer. “That attracted eye-watering investments and valuations: for maybe five years there was a real moment in the sun, but the ascent proved to be like Icarus and now everyone is burnt.”
Earlier this week it was reported that Vice, which was valued at as much as $5.7bn in 2017 having rejected a potentially $3bn-plus deal with Disney two years earlier, was close to filing for bankruptcy. On Friday, it emerged that Vice Media is nearing a deal to be bought out of bankruptcy by senior lenders in a process that would wipe out existing shareholders including Murdoch’s son, James.
The news, which came after the company failed to convince as many as five potential suitors that it was worth being bought for $1.5bn, followed BuzzFeed shutting down what remained of its once high-flying news department last month and making 180 staff redundant.
The financially stretched company, which won a Pulitzer prize for international reporting in 2021 and was once a bona fide force in UK political coverage, has just a $75m market valuation after an ill-received flotation two years ago.
Much of the blame for that tumble has been placed on the overwhelming dominance of the giant tech firms: Google and Meta have vacuumed up the web advertising that was the bedrock of BuzzFeed’s economic model, and now account for 50% of global digital ad revenues and two-thirds of the UK market. Meanwhile changes to Facebook’s algorithm de-prioritising news have hammered viewing figures.
When announcing the closure of BuzzFeed’s US news operation – the UK and Australia were shut in 2020 – Peretti accused the “big platforms” of a failure to support “premium, free journalism purpose-built for social media”.
“That is part of it but I still think we would still be in the same place today anyway,” says Joseph Teasdale, of analysts Enders. “The fact is BuzzFeed has been scrambling for a business model: the social web it was built for has gone away. It is the end of the road for a certain model of online journalism. For years companies like Vice and BuzzFeed were valued like tech companies; everyone was looking for something like the next Facebook, but they weren’t it.”
The market has proved brutal for many fellow digital success stories that boomed during the 2010s, while changing media habits have seen the rise of video services such as TikTok and YouTube.
On the same day BuzzFeed closed its news operation and cut 15% of staff, Insider, the Axel Springer-owned news site formerly known as Business Insider, announced it was to cut 10% of its global workforce to “remain healthy and competitive”.
In February Vox Media, which owns brands including the Verge, Vox and New York Magazine, struck a $100m deal with Penske Media Corporation less than a month after making 7% of staff redundant. The deal means the owner of titles including Rolling Stone, Variety and Billboard is Vox Media’s biggest shareholder.
The changes follow years of consolidation in the sector, with Vice acquiring female-focused Refinery29 in 2019 and the once-mighty HuffPost, or HuffPo, absorbed into BuzzFeed in a stock deal in 2020.
Vice has said it runs a far more diversified business than many of the digital ad-focused peers it is grouped with, having expanded into areas including running a TV channel and selling shows and films to broadcasters and streaming companies.
Credits include early reputation-setting content such as the Vice News special My Journey Inside the Islamic State and a film crew accompanying the former NBA star Dennis Rodman on a “sports diplomacy” trip to North Korea.
More recent Vice fare has ranged from Sean Penn’s documentary Superpower, about Ukraine’s president, Volodymyr Zelenskiy, and the Netflix documentary Fyre to series such as American Gladiators for ESPN and Gangs of London for Sky.
However, while its US TV channel has proved strong in other markets, carriage deals have been wound up, including in the UK where Vice closed its channel on Sky in 2021. “They tethered to a fading media,” says one observer. “Ultimately, TV was the wrong place to be for a youth brand.”
Backers such as Disney, which backed Vice with $400m, have long since written off the value of their investment as worthless.
In 2018, Smith, the charismatic loose cannon who built Vice from a punk magazine in Montreal into a multibillion-dollar media empire, stepped down as chief executive after apologising for allowing a “boys’ club” culture that allowed sexual harassment to flourish.
“Shane was an impressive salesman and he got a who’s who of old media to invest,” says a female former employee. “But there was a reason Vice was successful, and whatever people think of Shane he was incredible, a visionary and he galvanised people. And we lost that.”
Under Nancy Dubuc, the respected TV executive who abruptly departed the company in February after five years as chief executive, the company has sharpened focus. Overheads have been halved and gross margins doubled, with hundreds of staff cut in a drive to boost profitability and become “less ad dependent”.
The streamlining of its operation also included the quiet sale of the company’s trendy pub in east London, the Old Blue Last, a symbol of its hipster roots – “it used to be a brothel before we acquired it” – that had become lossmaking.
Nevertheless, market conditions remain tough, with Vice missing its $700m revenue target for last year by about $100m, according to the Wall Street Journal. Plans to float on the stock market via a special purpose acquisition company fell through two years ago.
“Many in media are rubbing their hands because they have wanted to see this day for Vice,” says the second former employee. “For a time there was a belief we could get back to the dizzy valuations, of rebuilding and being bought. But it reached a point that, if you had said to me: ‘Where is Vice going to be in a year?’ I couldn’t tell you, that was the problem. I lost faith.”
