Vice Media Group filed for bankruptcy in preparation to be acquired by a consortium headed by Fortress Investment Group, Soros Fund Management and Fortress Investment Group.
After struggling to keep pace with the consumer shift toward short-form videos, the media conglomerate filed for Chapter 11 bankruptcy.
When it received investment from private equity firms in 2017, Vice was valued around $5.7 billion. The group that owns Motherboard, Refinery 29 and other brands has reached out to a variety of parties in order to reach a deal for a rescue. However, it is now under the control of its largest creditor Fortress.
Fortress extended to Vice a credit line of $30 million in February for the purpose of helping with supplier payments.
During the restructuring, all of the company’s media outlets “will continue to produce and deliver award winning content”. Vice’s lender consortium has provided new financing, including an emergency cash infusion of $20 million.
Vice stated in a press release that it expects this funding, along with the cash generated by its ongoing operations, to be sufficient for the business’s financing throughout the entire sale process.
After younger audiences began to shift their attention away from Twitter or Facebook and towards short-form videos on platforms like TikTok, media brands focusing on millennial audiences struggled to retain the allure that they once held.
TikTok is the most downloaded social media app in 2018. It has now more than one billion users. The content of the app is centered on videos lasting around 20 seconds, and it is not suitable for news content.
In a period of international political turmoil, traditional media outlets have benefitted from the adoption of subscription models. They also benefited from consumer demand for trustworthy content.
Buzzfeed also announced that it would be closing its newsroom due to its inability to fund its operations. Jonah Peretti told his staff that “big platforms would not provide the distribution and financial support needed to support premium, FREE journalism specifically designed for social media”.