Vice Media Approaches Sale to Lenders at a Steep Discount from $5.7B Peak Valuation: WSJ

Vice Media, a once-thriving New York-based media outlet, is reportedly near an acquisition deal worth $400 million with Soros Fund Management, Fortress Investment Group, and other lenders. Following financial struggles and rumors of bankruptcy, Vice’s valuation has plummeted from $5.7 billion in 2017 to its current valuation in this deal. The acquisition would result in the majority of Vice’s shareholders being eliminated and other firms’ debts being impaired, according to sources cited by The Wall Street Journal.

Vice Media began as a countercultural magazine in 1994 in Montreal, Canada, and then transformed into a digital media company with various subsidiaries and ventures worldwide. It aimed to be a one-stop-shop for millennials and young people seeking news, culture, and entertainment content. With over 3,000 employees globally, the company expanded into cable television, movies, and branded content.

The turning point for Vice came in 2017 when former CEO Shane Smith made a deal with private equity firms TPG Capital and TSG Consumer Partners valuing the company at $5.7 billion. However, the inflated valuation led to sky-high expectations and ultimately exposed the company’s financial position, corporate culture troubles, and controversial past.

Headquartered in Brooklyn, Vice later found itself at odds with the media landscape’s changes following the rise of the #MeToo movement. Alongside its male-centric content, the company faced internal challenges due to its aggressive corporate culture. In 2018, the newspaper revealed the company had secretly reached settlements in four sexual harassment and defamation cases, which impacted its reputation, advertising deals, and leadership.

The ongoing difficulties faced by the company led CEO Nancy Dubuc to investigate a potential bankruptcy filing to resolve its financial issues. Following the ouster of co-founder Gavin McInnes and former CEO Shane Smith, Vice announced plans to cut 15% of its workforce to manage costs.

In addition to Soros Fund Management and Fortress Investment Group, the deal would reportedly involve participation from 7 Global Capital, Jamestown L.P., and current shareholders TPG Growth II Management and TSG Consumer Partners. Once finalized, the deal would help resolve the company’s financials and give it a fresh start.

In a rapidly changing media landscape, Vice Media has experienced difficulty maintaining its viability as a profitable media outlet. The company had an ambitious global expansion plan, but it quickly unraveled and resulted in financial struggles that have culminated in its current predicament.

One of the main reasons behind the company’s troubles is its inability to capitalize on technological advancements and changing media consumption habits. Users are increasingly consuming content on mobile devices rather than traditional cable or laptop platforms, and Vice has not fully optimized its content for this transition.

Furthermore, the company has been grappling with the ongoing trend of a diminished appetite for news and entertainment content, prompting advertisers to direct their spending elsewhere. This shift has severely impacted Vice’s ad and branded content business.

Amid these challenges, Vice Media did make some advancements in diversifying its content to cater to the different needs of progressively more fragmented audiences. The company diversified its offerings by launching VICELAND, an extensive television network, and acquired a majority stake in Refinery29, a female-focused media brand.

These moves were meant to broaden Vice’s reach as an advertiser and expand its demographic base. However, these acquisitions have not been sufficient to counterbalance the negative impact of the company’s past actions and corporate culture issues. This led to Vice’s position in the market slipping, resulting in the need for a turnaround strategy.

The potential $400 million deal involving Soros Fund Management, Fortress Investment Group, and other lenders could be the turning point Vice Media needs to rejuvenate the company, regain trust and credibility, and overcome its current financial strife.

In a market increasingly saturated with competitors, Vice Media needs to redouble its efforts and regain its unique voice as a countercultural media outlet. The company’s future success will depend on its ability to respond to the evolving media landscape and engage with its diverse, global audience.

Should the deal be finalized, it could provide Vice Media with the leverage it needs to pull itself back from the brink and reshape itself into a stronger, more resilient organization that can once again claim a significant space in the media market.


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