Media Fortune Fame & Folly

‘SPAC rescue for Vice Media’

Vice Media is expected effectively to go public with plans to merge with the special purpose acquisition company (SPAC) 7GC & Co Holdings, according to The Information.

The apparent confirmation comes after Vice had been touted as joining other SPACs (sometimes described as “blank check companies”), including that led by Group Nine Media, owner of NowThis, PopSugar, Thrillist and The Dodo.

Sometime Vice rival BuzzFeed is likely to partner with another SPAC, 890 Fifth Ave Partners. Last week, the UK’s Daily Mail-backed Cazoo online car retailer joined a SPAC at a valuation of $7bn including debt – almost treble its $2.6bn valuation in a funding round in October 2020. The SPAC boom continues apace.

The Information says: “… media firms see the SPAC craze as a way to realize a higher valuation in the public markets than might have been possible otherwise. But lately there have been signs that SPAC deal making has slowed. Both BuzzFeed and Vice are expected to strike deals at a discount to their peak valuations from several years ago. Vice is expected to see a big reduction from its $5.7bn peak valuation. One SPAC had proposed a deal valuing Vice at about $2.5 bn. Vice’s challenge is that while CEO Nancy Dubuc has cut costs and reduced the firm’s losses, its revenue has been stagnant in recent years—falling slightly last year to $580m from $604m in 2019…”

The company owns a mix of old and new media assets, including: Vice News, TV channel Viceland, women’s site Refinery29, a documentary producer, and the Virtue advertising agency (which this week acquired the creative consultancy Pltfrmr).

The 27-year-old Vice Media had been eulogised by media industry leaders and investors including Rupert Murdoch, Martin Sorrell, Hearst and Disney.

Vice was inflated by the early growth of online video. It piled up advertising and sponsorship revenues from companies targeting young audiences which could no longer be reached effectively through TV. It seemed like the perfect media platform at the perfect time. It moved quickly to create news content and social commentary, and stepped up to reporting from North Korea, Iran and Russia, initially for the 2006 online TV series Vice Guide to Travel. The sideways, devil-may-care video commentary was followed by spikey political coverage from Afghanistan, India and Spain in an Emmy-winning series for US cable channel HBO. It was genuinely fresh, raw and exciting.

But the Vice potential was trashed by what might be mildly described as indiscipline in strategy, financial management, and corporate governance. The company was out of control. The snowballing problems and cash pressures led to Nancy Dubuc’s appointment, the step-back of founder Shane Smith in 2018, and the arrival of James Murdoch as a minority investor.

Jack Leeney, ex Morgan Stanley co-founder of 7GC, has been quoted saying the companies best suited for a SPAC merger were typically slightly sub-scale firms that would have been able to IPO a decade ago but now remain stuck as privately held and heavily VC backed: “The cool thing about a SPAC is it’s a huge financing event—you’ll get an infusion of cash, and investors will get liquidity. It’s the perfect route for the folks who have been on this hamster wheel of playing the private market thing for too long.”

A rescue (or last chance) for Vice.

The Information