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Inside the demise of Vice, from turning away a $3.5 billion Disney offer to a 'painful' downward spiral that has the media giant scrambling for a buyer

The Vice logo melting
Vice is scrambling for a buyer as financial problems mount for the once booming media venture. Rebecca Zisser/Insider

  • Disney discussed acquiring Vice in 2016 for around $3.5 billion, but cofounder Shane Smith wasn't sold.
  • He built a youth-focused media giant that's now flailing financially and scrambling to find a buyer.
  • Vice's demise is "a story about companies who gorge on private equity," an ex-company insider said.

Seven years ago, Vice's cofounder Shane Smith was standing at the white-hot center of the media business and at an important financial crossroads. After two investments from Disney worth a total of $400 million, talks in 2016 had turned into a prospective acquisition of the rapidly growing, edgy, and youth-oriented news and lifestyle venture. 

Disney ran the numbers and, though it didn't get as far as a formal offer, there were discussions pegging Vice's valuation at around $3.5 billion, according to multiple people familiar with those conversations. A spokesperson for Disney declined to comment. 

Smith believed Vice had more room to grow, and some board members — including its investor James Murdoch — supported that view. Others pushed Smith to take the offer.

The talks fizzled, Disney backed off, and Smith set off for California to drum up other interest in Vice Media. He returned to his company's Brooklyn headquarters with the kind of headline numbers he was seeking. In 2017, just before the US pay-TV business began to fall off a cliff — and when a digital-media upstart could still compete with Facebook and Google — Vice scored a $450 million investment from the private-equity firm TPG, in a deal that valued the firm at an eye-popping $5.7 billion. 

It was all downhill — slowly at first and then precipitously — from there. In March 2018, Smith handed the CEO reins to the longtime A&E executive Nancy Dubuc, whose mission, in part, was to find a buyer before the start of guaranteed-dividend payouts to TPG in 2020. By 2019, Disney had taken two write-downs, which totaled more than $500 million, on its Vice investments. 

In 2020, Vice began to face the onerous terms of that rich TPG deal, though it had managed by then to renegotiate the payments to favor stock over cash, The Wall Street Journal reported at the time. Dubuc told Insider in 2021 that she had a plan for profitability in 2022, but Vice missed its $700 million revenue target last year by $100 million. 

Today, Vice Media is scrambling for a buyer, Dubuc is out, vendors have filed court proceedings for nonpayment of bills as high as $10 million, and the company's valuation has plummeted, leaving investors shivering at the size of their losses. Vice previously told Insider that it is "considering ... options with respect to further challenging some of the amounts awarded" to vendors.

Vice France shut down at the end of February, putting 30 staffers out of work, and layoffs are a constant, with more video editors' jobs cut last week, according to a person familiar with the company.

Earlier this month, the Black-owned media collective Group Black made a bid to acquire Vice, The Wall Street Journal reported. The offer: about $400 million.

Insider spoke with 10 people familiar with Vice's internal workings — sources at the top and the bottom of the organization, as well as outsiders who had dealings with the company — to understand how the high-flying media disruptor fell so far, so fast. 

"Vice has transformed its business in recent years to position the company for long-term growth and success," a company spokesperson told Insider. "There's a robust process underway and a lot of interest in the company which reflects the unique power and value of the Vice brand."

An executive exodus, vendors threatening to stop work, and narrowing options for a sale

Dubuc marked her mid-February exit with an abrupt email to staff wishing them well. One person who spoke with Insider said the CEO, who had banked on a payout from a Vice sale, held talks about extending her agreement but that the two parties failed to agree on terms. Dubuc, through a spokesperson, declined to comment. 

Others have exited in Dubuc's wake, including Jesse Angelo, Vice's president of news and entertainment, and media-industry executives told Insider they'd heard from other high-level players at the company who wanted out. 

The company is now run by two co-CEOs — Bruce Dixon, its former chief financial officer, and Hozefa Lokhandwala, the former chief strategy officer — at the direction of Fortress Investment Group, which infused Vice with $30 million in debt financing in February. (Fortress was also part of a $250 million debt raise in 2019, alongside George Soros, 23 Capital, and Monroe Capital.)

Vice Media Group co-CEOs Bruce Dixon, left, and Hozefa Lokhandwala.
Vice Media Group co-CEOs Bruce Dixon, left, and Hozefa Lokhandwala. Vice Media Group

One former Vice insider familiar with the current situation told Insider that staffers were warning vendors they needed to threaten to stop work in order to get paid.

"The last six months were painful," this person said, adding that Dubuc would tell staff the company "needed to hit the numbers, and then we can pay the bills."

A separate person close to the company said Dubuc was a tough boss but that her message was simple: Vice could expand once goals were met. 

Ad-platform relationships with the likes of Facebook, Google, Snap, and TikTok would consistently get to the point of shutoff, the former insider said. Another staffer told Insider his company credit card had temporarily stopped working, echoing reports elsewhere of a severe cash crunch. 

Vice's future is expected to be resolved in the next two months as shareholders and employees face a few scenarios: a sale to another company, a breakup of the assets, or a bankruptcy. Along with the Group Black bid, which Vice declined to confirm to Insider, other bids have been received, The Wall Street Journal reported. 

Antenna Group, a Vice investor and a broadcaster that has over-the-air-TV operations in Greece, withheld a $30 million payment to Vice for licensing its brand and programming overseas, one media operator said. Antenna, which previously explored a bid for Vice, is still a prospective buyer, this person said, speculating that it likely won't want to pay a multiple on Vice revenue from Antenna's own coffers.

This same person, who's familiar with deal talks, told Insider that Smith has held talks with Antenna about a shared bid in the same range as Group Black's offer. "Sell for $6 billion and buy it back for $400 million," this person joked, referring to Vice's 2017 valuation. 

How a new company for 'millennials who don't read' caught Rupert Murdoch's eye

Vice began its meteoric media rise with a burst of brash optimism. Fresh off the subprime-mortgage-induced Great Recession, Smith got busy planning for a huge expansion of his mischievous media business, which created the online music home Noisey and went on to make food series such as "Fuck, That's Delicious."

From launching Vice as a scrappy counterculture magazine in Montreal in 1994, Smith had bootstrapped his way up the media food chain on sheer chutzpah, fueling deals by 2012 totaling $175 million in revenue.

His sales pitch was simple. Vice was the gateway to hard-to-reach youth audiences, with its finger on the pulse of youth culture from fashion and music to weed and war reporting. Vice drew multimillion-dollar brand deals from GE, Bank of America, and Intel — which alone made a $35 million multiyear commitment in 2011 to help the company launch Noisey and other projects.

It wasn't long before Smith was whipping up hysteria among media moguls. The company's first outside investors, in 2011, were the MTV founder and former Viacom CEO Tom Freston, the media-investment firm Raine Group, and the ad holding company WPP. 

Together, they spent $50 million at a valuation of $200 million for a 25% stake, The Wall Street Journal reported. Ari Emanuel, the high-powered chief of WME (now Endeavor), agreed to represent the upstart. Just a few months later, Rupert Murdoch tweeted, "Who's heard of Vice Media? Wild, interesting effort to interest millennials who don't read or watch established media. Global success." 

By 2013, Murdoch's Fox was in, writing a $70 million check for a 5% stake.

"I want us to be the next MTV, ESPN, and CNN rolled into one," Smith told the Financial Times at the time. 

Smith wanted a cable presence and had lengthy discussions with Time Warner about its CNN sibling, HLN, but Time Warner balked at the numbers being thrown around. Then Smith's attention shifted to the Disney-backed A&E, which invested $250 million in 2014 for a 10% stake in Vice (Jay Hoag's TCV did likewise at the same time) and, in 2015, contributed around half of the H2 channel for Vice to rebrand as its own. It's now known as Vice TV.

shane smith nancy dubuc vice media
Shane Smith and Nancy Dubuc attend the Vice NewFronts in 2019. Craig Barritt/Getty Images for VICE Media

Smith became a magnet for anyone who wanted to have fun in the business. He attended 2015's CES in Las Vegas, where he won $1 million at the blackjack table and, The New York Times reported, treated Vice investors to a $300,000 meal. Later that year, Vice was named "company of the year" by Inc. magazine, and in 2016, Smith was crowned "media person of the year" at the Cannes Lions International Festival of Creativity. In a YouTube interview with Cannes organizers, Smith said: "We are fucking shit up. We are the revolutionary guys."

And Vice had the goods. The company picked up Emmys and Peabody awards and created truly differentiated news coverage, reaching a high point with an embedded reporter who followed the Charlottesville, Virginia, racial riot to its awful conclusion. 

Amid that heady period came the revved-up interest from Disney and Smith's demurral, as he was certain his company's trajectory was still up, up, up. The TPG investment that followed in 2017 put Vice at a valuation that was double that of The New York Times at the time.

The figure left Bloomberg headline writers incredulous: "How on earth is Vice worth $5.7 billion?"

"They had grown so fast. They pushed for mass international expansion," a third former Vice insider said. "It was very impressive. Shane's idea of wanting to be everywhere and do everything was the problem. It started to be so complex and so big they couldn't rein it in."

A new CEO faced cultural challenges and financial pitfalls

The social-justice movement that started gathering steam in late 2017 should have been Vice's sweet spot given the company's diverse workforce and its hold on youth audiences, but the company's "bro culture" had fostered a tough environment for some women. 

In December 2017, The New York Times published a report on multiple allegations of sexual harassment at the company. Vice's president at the time, Andrew Creighton, was put on leave after The Times reported on a $135,000 settlement in 2016 to a woman who had accused him of harassment. He was cleared of that allegation — which had been "found to lack merit" by an independent law firm in 2016, according to a company memo reported by The Times — but departed the company at the end of 2018. Another executive, Mike Germano, was likewise placed on leave in January 2018, and was later let go.

Brought on that March with a mandate to reset this troubled culture, Dubuc also had big ambitions for Vice's content. She got on famously with Smith, who described the two of them as a modern-day "Bonnie and Clyde" — the famed Depression-era bank robbers. "We'll take all your money," he quipped to The Times.

Dubuc focused on Vice's programming and drove investment in that direction but — according to some — didn't spend enough time getting to grips with the digital side of the business. Smith, meanwhile, stepped back from day-to-day operations to focus more on the financial side as Vice struggled to meet TPG's tough revenue targets.

Dubuc brought in a lot of new management when she arrived, but what she and they found was an employee base of inexperienced young people managed by senior executives who were not always a fit for their roles, according to the first insider — the person who described the company's recent months as "painful" — and a second former Vice executive.

"Everyone was fighting for a fiefdom," the first insider said, adding that a variety of management consultants came in and made recommendations to improve operations — but the implementation was lacking.

A year into Dubuc's tenure, the company acquired Refinery29, a female-focused venture that helped draw a more diverse audience. Refinery29 quickly lost key staff and was not well integrated into Vice Media, the two former staffers said.

"They smashed into our machine, and that was already broken," the first insider said.

Refinery's international digital-ad revenue dropped from $90 million in 2019 to $50 million in 2022, this person said.

The pressure on sales staff was enormous. The first insider said investors' attitudes were focused not on building a long-term business but on, "Hey, what's the return on this situation? Everything was hyper short term." Indeed, investors often argued among themselves about the best direction for Vice, several people close to the company said. 

As the pandemic hit, Vice's economic model, along with many other companies', fell apart. Production on filmed content ground to a halt, and live events had to be paused as Dubuc's business plans gathered dust. When the pandemic ebbed, the cost of news operations and TV production — which were Dubuc's focus and were mostly low-margin businesses at the best of times — had jumped.

Despite averaging revenue of between $600 million and $700 million over the years, according to reports and a person familiar with the books, Vice struggled for profit even while it had some good businesses. Pulse Films, which it acquired in 2022 after taking a controlling stake in 2016, has created revenue streams with shows for Netflix and Amazon. While profitability was elusive, losses at least shrank under Dubuc's tenure, the person close to the company said.

C-suite officers came and went, with some spending barely a year on the job. One top executive who was passed over for the CEO role was paid a substantial sum after they said Dubuc's hiring over them constituted constructive dismissal, according to the two former insiders. A former TPG executive, Kerem Bolukbasi, was appointed to oversee finances for a year before leaving the company. He was replaced as chief financial officer by a Fidelity Investments executive, Ramin Arani.

Distribution deals and major ad partnerships, which had once poured in, were dramatically reduced as some advertisers turned to social-media companies such as Snap and TikTok in the chase for young audiences. Investors, particularly TPG, which in the past year has increased its control of Vice, pressed for better performance.

'We still believe in the Vice voice and what it could be, but it was just mismanaged'

Several people pointed to Vice's deal with TPG as the crux of its challenges. The pact set specific revenue targets for Vice — and when it didn't meet them, TPG's stake in the company grew.

"They got themselves in a difficult situation," the media operator familiar with deal talks said, adding that TPG's terms bit into other investors' stakes. "Everyone's lost money but Fortress." The person close to the company who addressed Dubuc's management style contested this idea.

Smith's personal wealth certainly grew as his company did; his divorce agreement laid out his multiple homes and cars. Semafor reported that Smith sold $100 million of his own shares in Vice when A&E and TCV together invested $500 million in 2014.

To be sure, it was Smith's and his board's decision to take on the TPG deal, and that investment supercharged Vice's growth and supported its international expansion. But two former senior insiders said the PE firm showed little expertise in running a creative enterprise and scrutinized everything the company did through a banker's lens.

"This is the downside," said a former top Vice executive. "If private equity is in charge of a creative enterprise — look out."

A separate person familiar with conversations with TPG said the private-equity firm never demanded cash from Vice, though it could have under the terms of their deal. And TPG, which had once been widely assumed to be protected from loss, expects to get only about 65% of its money back, another person familiar with the sale process said.

Investors kept hope alive in recent years for an exit. In 2021, Vice tried to execute a $3 billion public offering via a special-purpose acquisition company, but by the time the company was ready to move ahead, the market had cooled and the idea was scrapped. 

Vice always struggled to turn a profit, missing its revenue target by $100 million in several years. Even without revenue challenges, the company's extraordinarily complex capital structure — myriad investors, a debt-heavy business — would make it difficult to sell. 

"We still believe in the Vice voice and what it could be, but it was just mismanaged. That's a sad feeling," the first insider said. "We put so much energy and love into this brand, and consumers appreciate that." 

The platform, the former senior executive said, has made a contribution to pushing news reporting in a new direction, blazing a trail to something authentically fresh.

"It's all potential I hope doesn't go unrealized," this person said. "Vice is a great brand, with talented people and a different business than BuzzFeed and Vox, and it deserved to be valued differently than them."

Lucia Moses contributed reporting.

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