Finance

Vice Media joins streaming gold rush in new bid for profitability

Vice Media, the youth-focused news and entertainment group, has launched a free-to-watch online television channel to capitalise on the boom in streaming as it makes a new push to achieve the steady profitability that has eluded it.

The channel, a live feed of nonfiction shows such as Needles & Pins, a docu-series about tattoo culture, becomes available on the Roku online TV platform in the US from Tuesday, just as the company markets itself to potential investors ahead of a planned stock market listing.

As investors’ ardour for digital publishers has cooled, Vice executives have repositioned their company as an entertainment group and television production studio — a sector that has been swimming in money as streaming services like Netflix shop for programming. 

“We’re laser focused on growth, and as we see this exploding ecosystem,” said Jesse Angelo, the former New York Post chief executive who runs Vice’s news and entertainment business. “We are going to take advantage.”

Once heralded as the future of publishing during a digital advertising boom, a generation of venture-capital backed companies like Vice have struggled to establish a sustainable business model.

Angelo rejected the comparison of Vice to groups like BuzzFeed that came to prominence around the same time.

“There is a misunderstanding in that we are lumped in as a digital media company, when in fact, [Vice is] a gigantic TV production company,” he told the Financial Times.

“Through the pandemic [in] the last 12 months . . . we’ve created 60 or 70 television productions.” 

Under chief executive Nancy Dubuc, the former chief executive of A&E Networks who took over from founder Shane Smith in 2018, Vice has been revisiting its business model while aiming to keep its reputation for edgy content and sway with millennials.

Dubuc has tightened costs and laid off hundreds of staff, while using $250m in debt raised in 2019 to invest in promising business lines, such as its in-house advertising agency and Vice Studios, its production arm. 

She has ramped up Vice Studios’ output for a range of streamers and broadcasters, co-producing projects such as Netflix’s Fyre Fest documentary and more recently selling programming to Discovery Plus.

Vice’s streaming channel will be focused on unscripted programming across news, food and culture, said Kate Ward, a former executive for Elisabeth Murdoch’s Shine Group who leads Vice Studios.

“We’re meeting the audience where they are,” she said, citing the “unprecedented demand for content” and growth in the market for free, advertising-supported streaming services.

While streaming video was pioneered by Netflix, which does not broadcast advertisements, companies such as Fox and Viacom have experimented with free streaming channels reliant on advertising. Fox expects its Tubi streaming service to generate $300m in advertising revenue this fiscal year.

Vice Media lost money last year but turned a profit in the fourth quarter of 2020 and the first quarter of 2021, according to people familiar with its finances. Dubuc is confident that the group will be profitable for 2021, these people said. 

Vice, whose investors include the private equity group TPG and media giant Disney, is targeting a $3bn valuation, a steep decline from its most recent fundraising, through a merger with special purpose acquisition vehicle 7GC & Co Holdings.

People familiar with the plan said it had this week begun pitching the deal to institutional investors it needed to come on board as shareholders. The Wall Street Journal reported on Vice’s Spac plans earlier this week.

Vice began as a punk magazine in Montreal and soared to a $5.6bn valuation in 2017. It expanded into TV through deals with HBO and international broadcasters, and launched a cable channel, called Viceland, that Smith had declared would “bring millennials back to TV”.

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