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Vice versa

5 September 2014 By Jeffrey Goldfarb

Vice Media likes to seem anarchic, but it is making a virtue of some industry orthodoxies. The Brooklyn-based bad boy of news and entertainment is now valued at $2.5 billion. The sources of Vice’s money and the way it was raised, though, suggest old-school traits alongside the iconoclasm.

A gonzo style of journalism has enabled Vice to get younger people interested in global current events. The draws include stunts such as dispatching retired basketball misfit Dennis Rodman to North Korea as well as documentary-format reports on Ukraine and Syria. Vice’s fashion site includes headlines like “This stab-proof clothing aims to keep Medellin safe,” while its foodie endeavor explains how “Gaza’s Christians are brewing illegal wine in defiance of Hamas.”

With traditional TV outlets like CNN, Fox News and MSNBC catering to audiences with a median age of at least 60, Vice’s fountain of youth is alluring. Time Warner the parent company of CNN, already broadcasts a Vice series on HBO, its cable network. Last year, Rupert Murdoch’s Twenty-First Century Fox bought a 5 percent stake for $70 million.

The latest fundraising shows that Vice also values its elders. One $250 million investment from Technology Crossover Ventures will help Vice improve its mobile presence. Another $250 million, however, comes from A&E Networks, a Disney-Hearst joint venture that owns the niche History and Lifetime networks. While web programming may be the future, traditional TV is still where the money is – and Vice wants a channel of its own.

The amount of new cash is also a hint that Vice doesn’t belong entirely in the newfangled technology realm. Snapchat, for instance, recently sold a wafer-thin $20 million stake to establish a $10 billion price tag for the whole business – a common Silicon Valley alchemy of late. Vice’s owners, by contrast, surrendered a fifth of the company to bolster its coffers.

In another departure from tech norms, Vice expects about $500 million of revenue this year. Founder Shane Smith said in March his company had 34 percent “profit margins.” If he meant EBITDA, that would imply the Vice enterprise is now valued at about 15 times that proxy for operating cash flow – a healthy but not outrageous premium to traditional broadcasters. Being at the vanguard of an industry can mean adhering to some of its conventions.


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