Vice Raises $85 Million as SPAC Talks End, Smith Yields Control

Vice Media is raising over $85 million in fresh capital from existing investors, as talks to go public via a special purpose acquisition company have ended for now, according to people familiar with the situation. As part of the fundraising, Vice’s co-founder, Shane Smith, has agreed to give up his voting control, said the people. He remains chairman of the board.

The media firm had been hoping to raise money by going public through a merger with a SPAC backed by 7GC & Co., but a slowdown in the once-hot SPAC market has ended those discussions for now, one of the people said. The existing investors, which include James Murdoch’s Lupa Systems, TPG, TCV and Sixth Street Partners, agreed to invest in Vice to help it get to profitability. The valuation of the latest round couldn’t be learned. Vice raised money at a $5.7 billion valuation in 2017, but it has fallen significantly since then.

The Takeaway

Company is raising money from existing investors
Vice rejiggers board composition
Founder Shane Smith agrees to give up voting control

Although Vice has never been consistently profitable, CEO Nancy Dubuc has cut costs and thereby slashed its losses to around $20 million in 2020 from around $100 million in 2018. Still, the company regularly needs to raise cash. The current fundraising follows Vice’s raising of around $90 million last year, also from existing investors.

As part of the financing deal, Smith, who stepped down as CEO three years ago in favor of Dubuc, has agreed to give up voting control. Additionally, the company’s board is shrinking. While the details are still being worked out, the new board will include Smith, Dubuc, Murdoch as well as representatives from TPG, TCV and Sixth Street.

Vice will use some of the money it is raising to make payments to the founders of Pulse, the growing U.K.-based studio business behind Vice’s “Gangs of London.” Vice acquired a majority stake in the company in 2016, according to the people, and as part of that deal has to make another payment to maintain control.

Meanwhile, Vice has been taking steps to further cut costs. Last week, it announced a reorganization resulting in about 17 layoffs, about seven of them from Refinery29, which the company acquired in 2019, according to a person familiar with the situation. Vice has over 2200 employees globally.

Under Dubuc, who came to Vice from A&E Networks, Vice has focused on expanding its video production business, which makes shows that run on streaming services and TV networks, such as an upcoming “American Gladiators” documentary series to air on ESPN and true-crime show “Indian Predator” for Netflix. Vice has told investors that growth in that part of its business will help lift overall revenue next year to north of $750 million, from around $580 million last year and $604 million in 2019.

But that plan faces challenges. The TV production business in general isn’t a high-margin business. And neither are Vice’s two other major business lines, its advertising agency, Virtue, and its digital media outlets, including Refinery29. Meanwhile its Vice cable channel is steadily losing viewers as more people opt to watch shows and movies on streaming services.

Aside from the production business, news operations at Vice have also shown a growth in revenue, according to people familiar with the situation. Vice is planning to focus more on news as well as production. None of the layoffs last week came from the news side.

Jessica Toonkel is a New York-based reporter for The Information covering media and how the industry is being disrupted by technology. Before that, she spent seven years at Reuters covering a range of topics including media, mergers and acquisitions and financial services. She can be found on Twitter @jtoonkel.