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As Vice Media, the reckless company that once had ambitions to replace aging news giants, files for bankruptcy protection, with $834 million in debt obligations, its finances come into focus.
While its largest creditors include Fortress Investment Group (with a claim of $474.6 million), several media companies are listed as the largest unsecured creditors who are not insiders, as indicated by their filing in the United States Bankruptcy Court for the Southern District of New York in Monday. The deposit estimates there are more than 5,000 creditors. Given that Vice lists $350 million in assets, many creditors are likely to incur a loss during Chapter 11 proceedings.
Among them, CNN Productions is listed as having a claim of $3,798,333, HBO is listed as having a claim of $1,763,157, and A&E Networks is listed as having a claim of $937,500, per file. Also among the creditors are technology firms Wipro, Amazon Web Services, advertising agency Horizon Media, Greek media giant Antenna TV and image giant Getty Images. The announcement also gives a window into the broad constellation of limited liability companies that make up Vice Media’s holdings, from the studios and unit Pulse Films to its joint venture partnerships globally.
Like many other growth companies in the media and technology sectors, Vice Our cash flow has been negative over the past several years,” wrote Frank A. Bomitty, a consultant named Vice Media’s head of restructuring, in a filing announcement. “As a result, Vice It relied on outside financing, raising debt and equity capital to fuel its rapid growth and fund expenses in certain parts of its business. Although these fundraising efforts helped with the financing ViceIts growth eventually placed the burden of an extraordinarily complex and highly leveraged capital structure on the company.”
The move follows more than a year of uncertainty for the beleaguered media giant, which co-CEOs Bruce Dixon and Josefa Lokhandwala have spearheaded in 2023 following the departures of Chairman Nancy Dubuque and Global President Jesse Angelo. “We will have new ownership, a streamlined capital structure and the ability to operate without the old commitments that have been weighing down our business,” Dixon and Lokhandwala stated when announcing the registration.
Since canceling plans for an IPO, Vice Media has sought several suitors as it undergoes a series of cost-cutting actions and layoffs that culminated in the cancellation of its flagship offering. Vice News Tonight in late april. Bomitti also confirmed that the company will “reduce its news-related workforce during May and June 2023.”
Vice hopes to emerge from the bankruptcy process in two or three months, strike a deal to sell itself to a group of buyers, including Fortress Investment Group, Soros Fund Management and Monroe Capital, in exchange for a $225 million credit offer and assume the obligations. Meanwhile, its lenders are financing Vice with $20 million during the bankruptcy process.
Founded in Montreal in 1994 as a gritty, intentionally offensive print magazine that changed its name to Vice two years later, the company has grown into a sprawling Brooklyn-based global media conglomerate with several web segments and a large video production division. The brand has been built through the selling skill of co-founder Shane Smith, as it unveiled Vice Broadcasting Systems TV as its first major foray into digital video production in 2007.
But the time of rapid expansion and growth came after a few years. In April 2011, he added MTV Vice Founder Tom Freston to his board of directors, recruited media merchant bank The Raine Group to help land deals and signed a partnership with WME to represent him in Hollywood. Smith described the partnership as “an unholy alliance that ensures no other media company stands a chance against Vice’s relentless onslaught”.
The partnership kicked off a decade of rapid growth and investments from traditional media conglomerates interested in financing what was seen, by Smith’s astounding pitch, as a company that could uniquely cater to youth audiences. “Who has heard of VICE media?” Rupert Murdoch wrote on Twitter in October 2012. “A wild, intriguing effort to interest millennials who don’t read or watch mainstream media. A worldwide success.”
In August 2013, Murdoch’s 21st Century Fox paid $70 million for a 5% stake in Vice, valuing the company at $1.4 billion. A year later, A&E Networks paid $250 million for a 10% stake, valuing the company at $2.5 billion. Soon after, venture capital fund Crossover Ventures spent $250 million on a 10% stake in Vice.
During a period of rapid growth, Vice scored points of attention with its video efforts, including a 2013 episode of the HBO series that featured Dennis Rodman going to North Korea, cameras in tow, to play basketball with dictator Kim Jong-un. In 2015, President Obama went with Smith to a federal prison for a special focus on the criminal justice system. And Vice News Tonight The documentary crew was on the ground during the 2017 Unite the Right in Charlottesville, offering more insight into the white supremacist march than other national news organizations.
This rapid growth also came with reports of its founder’s transgressions. To pick one of many examples, in February 2015, Bloomberg reported that Smith spent $300,000 to “feast” Las Vegas at Bellagio Prime Steakhouse. (a spokesperson said THR At the time Smith “North” won $300,000 while playing blackjack, and those winnings were spent on dinner.)
In November 2015, Vice unveiled plans for a major linear television venture with Viceland, a television news brand that will replace A+E Networks’ H2 channel and will be distributed to 70 million homes. Writer and director Spike Jonze has been named to oversee production and show creativity for the emerging effort.
After Viceland’s plans were revealed, Disney made two investments of $200 million each in late 2015, valuing the company at over $4 billion. (Disney later reduced its investment in Vice to $157 million in 2018 and $353 million in 2019.) TPG in 2017 in a funding round that valued the company at $5.7 billion.
But Viceland, contrary to the vision of replacing established news clients like CNN or MTV, never really took off as a linear television channel. “During the past decade, Vice It expanded significantly, acquiring complementary businesses and breaking into new markets, which led to the need to access additional capital. “This rapid growth and the resulting funding activity ultimately contributed to the liquidity challenges the company has faced over the past five years.”
Smith stepped down as CEO in 2018, with A+E Networks’ Dubuque taking over the top job as the media company deemed allegations of a toxic corporate culture. In one of Dubuc’s first major moves, Vice Media acquired digital lifestyle publisher Refinery29 in 2019 in an effort to expand the company’s online readership. (Vice’s main site saw 19.9 million visitors in March, and Refinery29 had 5.2 million visitors, according to Comscore data. By the same token, BuzzFeed reached 36.6 million visitors while the aggregator reached 10.5 million monthly visitors in March.)
For years, vice executives talked about the company’s ambitions to go public, but the plans to go public were eventually scrapped. After exploring plans to go public via a special purpose acquisition company, or SPAC, during a deal-making frenzy, Vice scuttled the effort. In September 2021, Vice announced that it had raised $135 million from a round of investors including James Murdoch’s Lupa Systems, TPG, and TCV, as well as Sixth Street and Antenna Group.
Then I started looking for buyers, which didn’t work out. In the spring of 2022, Vice Management has begun working with PJT Partners LP (“PJT”) and LionTree LLC (“LionTree”) to assist it in exploring a sale that will increase value in the interest of creditors and other stakeholders,” the company received indications of interest from several potential clients, and two bids for a transaction the entire company, and reached advanced stages of negotiation and documentation with one of these bidders. In the end, despite the long and drawn-out process, the company was unable to close a deal with any of the bidders.”
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