Digital Media Update - June 2023

Key Themes: Falling Digital Media Stars

• Once called the future of news, Vice Media filed for bankruptcy on May 15, 2023.  Founded in 1994, Vice Media was valued at $5.7 billion in July 2017.  The company is expected to be acquired for $225 million by a group of firms led by Soros Fund Management and Fortress Investment Group as of May 15, 2023. 
• At its zenith, Vice Media attracted investors ranging from 21st Century Fox to private equity firms such as TPG.  According to The Wall Street Journal backers such as TPG and James Murdoch’s investment firm lost most of their investment in Vice.
• Vice’s travails come on the heels of former digital media darling BuzzFeed, who announced the shuttering of their News and layoffs to 15% of their staff, including their Chief Revenue Officer and Chief Operating Officer.  BuzzFeed had previously gone public in 2021 through a special-purpose acquisition company but has struggled financially since. 

Causes of Vice & BuzzFeed News’ Declines

• One can point to multiple causes for Vice’s decline, including their outstanding debt of $834 million coupled with rising interest rates.  The core problem, though, was that both Vice and BuzzFeed failed to zero in on a profitable business plan.  According to The Wall Street Journal Vice missed an $805 million revenue target by more than $100 million back in 2017.  Vice and Buzzfeed never appeared to hit their stride financially, with their revenue streams constantly at the mercy from Facebook and Google, who could stop promoting news stories on a whim by switching algorithm weightings.
• To add further pressure, Gen Z transitioned to short form video content housed on platforms such as Snapchat and TikTok.  As traffic diverted to other platforms due to algorithmic changes and shifting audience tastes, Vice’s primary advertising business declined.  According to ComScore, Vice’s digital traffic in the US was 20 million monthly unique visitors in March 2023, which represented half of their traffic from March 2019.
• BuzzFeed’s CEO Jonah Peretti explained their decision to shutter the News division in a note to employees:  “I made the decision to overinvest in BuzzFeed News because I love their work and mission so much…This made me slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.”