Vice was valued at $5.7 billion just six years ago, with a view to a possible IPO. Now, the leading media company has filed for Chapter 11 bankruptcy.
The company’s backers – Fortress Investment Group, Soros Fund Management and Monroe Capital – have agreed to buy the company for $225 million. That’s only about 4% of the company’s 2017 valuation. Vice also has the right to sell to a higher bidder.
“This accelerated, court-supervised sale process will strengthen the company and position VICE for long-term growth,” said Bruce Dixon and Hozefa Lokhandwala, VICE’s co-CEOs, in a statement. press release. “We will have new ownership, a simplified capital structure and the ability to operate without the old obligations that have burdened our business.”
This unfortunate turn of events for Vice has only darkened the storm cloud over the digital media industry. In the past month alone, the Pulitzer Prize-winning BuzzFeed News was shut down as part of layoffs that affected 15% of the company. MTV News also just shut down as part of budget cuts that affected 25% of employees at its parent company, Paramount. As for Vice itself, the company recently canceled its “Vice News Tonight” TV show, as well as vertical programs like Vice World News, Vice Audio, and Waypoint.
However, Vice’s financial problems are not a true reflection of the media business in general. A combination of poor management choices in the “pivot-to-video” era, as well as the company’s overall “boy’s club” working environment, created a perfect storm for Vice’s decline. The company made serious management mistakes and is said to have fostered a culture of sexual harassment. When these allegations were made public, founder and CEO Shane Smith resigned, though he claimed to be unaware that President Andrew Creighton allegedly paid an employee to settle a sexual harassment claim; Smith’s successor, Nancy Dubuc, abruptly stepped down in February amid the company’s financial turmoil. Meanwhile, vice co-founder Gavin McInnes, who left the company in 2008, founded the Proud Boys, a far-right group.
According to Vice’s financial reporting, the company has approximately $834 million in debt. During the sale process — which the company says will take several months — Vice will gain access to more than $20 million in funding from its backers to continue operations.