NEW YORK: Vice Media filed for bankruptcy on Monday, The New York Times reported. The bankruptcy will not interrupt daily operations for Vice’s businesses, which, in addition to its flagship website include the ad agency Virtue, the Pulse Films division and Refinery29, and a women-focused site acquired by Vice in 2019.
A group of Vice’s lenders, including Fortress Investment Group and Soros Fund Management, is in the leading position to acquire the company out of bankruptcy. The group has submitted a bid of $225 million, which will be covered by its existing loans to the company. It will also take over “significant liabilities” from Vice after any deal closes, the daily newspaper said on Monday.
A sale process follows next. The lenders have secured a $20 million loan to continue operating Vice and then, if a better bid does not emerge, the group that includes Fortress and Soros will acquire Vice, NYT reported.
Still, the dreams that Vice executives once had of a stock market debut or a sale at an eye-popping valuation have been wiped away, NYT said, adding, “The company was considered to be worth $5.7 billion at one point.”
Investments from media titans like Disney and shrewd financial investors like TPG, which spent hundreds of millions of dollars, will be rendered worthless by the bankruptcy, cementing Vice’s status among the most notable bad bets in the media industry, the daily newspaper said.
Like some of its peers in the digital media industry, including BuzzFeed and Vox Media, Vice and its investors bet big on the rising power of social media networks like Facebook and Instagram, anticipating they will deliver a tide of young, upwardly mobile readers that advertisers craved.
Though readers came by the millions, new media companies had trouble wringing profits from them, and the bulk of digital ad dollars went to the major tech platforms, according to NYT. Last month, BuzzFeed shut down its namesake Pulitzer Prize-winning news division after going public at a fraction of its earlier valuation, and Vox Media earlier this year raised money at roughly half its 2015 valuation.
“There are definitely commonalities in the hardships media organisations have been facing and Vice is no exception”, said S Mitra Kalita, the founder and publisher of Epicenter-NYC, a community journalism company based in Queens. “We now know that a brand tethered to social media for its growth and audience alone is not sustainable”, (ANI)