Vice Media Files For Bankruptcy
On Monday, Vice Media Group (VMG) filed for Chapter 11 bankruptcy protection in the Southern District of New York to facilitate its sale to a group of its lenders.
- On Monday, Vice Media Group (VMG) filed for Chapter 11 bankruptcy protection in the Southern District of New York to facilitate its sale to a group of its lenders.1
- A consortium of lenders, including Fortress Investment Group and Soros Fund Management, agreed to provide $20M to help fund VMG's operations during bankruptcy.2
- If VMG doesn't get "higher or better" bids in the course of the sale process, which is expected to conclude in the next two to three months, Vice's creditors could buy it for $225M.3
- Six years ago, VMG was considered to be worth $5.7B. According to court documents, the New York-based digital media firm lists its assets and liabilities in the range of $500M to $1B.4
- The bankruptcy filing comes after VMG — whose holdings include Vice News, Motherboard, and Refinery29 — canceled its popular TV program "Vice News Tonight" last month and announced lay-offs across its global news business as part of "a broader restructuring."5
- In April, BuzzFeed.com also announced that it was shutting down its Pulitzer Prize-winning division BuzzFeed News, and that it intended to lay off 15% of its workforce amid a slump in advertising revenue.6
Sources: 1CNN, 2BBC News, 3New York Times, 4Bloomberg, 5ITN, and 6CNBCTV18.
- Narrative A, as provided by New York Times. VMG, like other digital media outlets, believed it would generate substantial online ad revenues by attracting millions of young readers through social media networks; unfortunately, a bulk of its profits went to tech giants. Vice's bankruptcy is a symptom of both recent and longer-term downward trends in the economy at large and the media industry specifically. It is a reminder that a business tethered to social media for its growth must develop multiple streams of profit beyond just advertising.
- Narrative B, as provided by American Spectator. Though Vice and the media industry may paint the company's bankruptcy as a consequence of economic pressures, in fact, this is the result of Vice's incompetent and greedy leadership. Vice's downfall was inevitable, as one of its founders, Shane Smith, was a conman who convinced investors that VMG was the future of news and entertainment. Smith made money hand over fist while employees were mistreated. Vice was doomed to fail.