Once worth billions of dollars, the companies are struggling to move forward
Vice, Vox and BuzzFeed — the cohort of brassy startups whose leaders loudly declared themselves the future of publishing a little over a decade ago — are all struggling.
BuzzFeed, which managed to go public through a SPAC deal in December, has seen its shares plummet, its stock only recently lifted through an announcement to lower content costs by using AI. Vice lost its CEO Nancy Dubuc on Friday, not long after it reportedly raised $30 million in debt to shore up its financial position as vendors went unpaid, with some suing the company. Ad Vox sold off a big stake in the company at a fraction of its previous worth this month.
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Click Here Already a subscriber? LoginAnxious to tap in to younger audiences and new ideas, venture capitalists and media giants bankrolled the likes of BuzzFeed, Vox Media and Vice Media, lifting their putative valuations into the billions of dollars.
“Vice for a long time was the darling of a new type of internet publisher, representing a unique voice and targeting an audience that was unreachable by traditional media, and that’s why folks like Disney invested in them,” said Jared Lake, senior vice president of media investments at Ocean Media, whose media buying agency has done business with all three publishers over the years. “And for a while they were untouchable. And then the bottom fell out of the ad-supported market.”
The fundamental bet of Vice and its internet-born brethren, that new forms of distribution and content production enabled by the internet would transform media economics in a way that they were uniquely poised to capture, simply didn’t materialize.
Instead, Alphabet and Meta captured most of the shift of advertising dollars from traditional media to the internet. Video production proved expensive, even as audiences shifted to cheap, short clips shared on apps like Snapchat and TikTok. More recently, Lake pointed out, the growth of connected TV inventory, fueled by Hollywood’s embrace of ad-supported streaming, has drained brand spending away from premium publishers.
And the pursuit of growth through acquisitions proved difficult: All the companies pursued deals to bulk up, but none achieved the necessary scale to compete effectively with tech giants and traditional media companies.
The darlings of the Valley
There was a time when Silicon Valley was in love with these companies. Buzzfeed CEO Jonah Peretti raised $15.5 million from venture investors including NEA, RRE and Hearst in 2012. “The baton has been passed from print to the traditional web and now from the traditional web to social,” he said in a statement at the time. “The entire industry is shifting, and we intend to be the leader in social publishing.”
More VC dollars followed Peretti’s bombast, and investors chimed in with their own bold predictions. In a since-deleted 2014 blog post, Andreessen Horowitz partner Chris Dixon pointed out that “many of today’s great media companies were built on top of emerging technologies,” citing Time Inc.’s embrace of color printing and CBS’s foundation in radio.
“We’re presently in the midst of a major technological shift in which, increasingly, news and entertainment are being distributed on social networks and consumed on mobile devices,” Dixon wrote as he announced the VC firm was investing $50 million in BuzzFeed and he would join its board. “We believe BuzzFeed will emerge from this period as a preeminent media company.”
Jim Bankoff, a former AOL executive, had made similar promises about Vox Media in startlingly similar language. ”We want Vox to be the preeminent modern media publisher,” he told Forbes in 2012. “We look at what Condé Nast did in magazine publishing, and we can do that in digital publishing, meaning scale and quality and value.” Vox now styles itself “the Modern Media Company” on its website.
Vice Media co-founder Shane Smith called the company “the bellwether for the modern media age” in a 2018 memo to employees announcing the hiring of Dubuc, a former A&E Networks chief, as CEO.
A wave of investment
Modern media attracted money from other media that wanted to modernize. Disney invested $400 million in Vice. NBCUniversal put $200 million into Vox Media in 2015 and $400 million into BuzzFeed across two rounds in 2015 and 2016. At their peaks, Vice was reportedly worth as much as $5.7 billion, BuzzFeed $1.7 billion and Vox $1 billion.
The companies used that money to bulk up, going on hiring sprees and buying smaller media startups. Vice bought Refinery29. BuzzFeed bought HuffPost and Complex. Vox bought Recode, merged with the parent of New York magazine, and acquired a collection of sites including Thrillist and the Dodo.
But all three fell short of lofty growth projections. By 2019, Disney had written off its entire investment in Vice. Vox Media recently took a $100 million investment from Penske Media, which became its largest shareholder: The company was valued at $500 million in the deal, and other investors presumably saw their stakes diluted. BuzzFeed recently traded at a valuation of $221 million, with NBCUniversal parent Comcast opportunistically selling off millions of shares after the stock leapt above $2.
Bots, bits and bucks
The genesis of the BuzzFeed rally was the company’s January announcement that it would use AI to help generate content. Peretti defended the move as BuzzFeed’s attempt to “maximize the creativity of our writers, producers, and creators and our business.” Peretti once touted BuzzFeed News’ journalism as vital to the “company culture.” More recently, he’s invited creators into the BuzzFeed and HuffPost newsrooms to create videos that “riffs off” his journalists’ reporting.
“Together, we can build the future of media,” Peretti wrote in a BuzzFeed post, prompting one to wonder what he and BuzzFeed had been doing over the past 11 years if not that.
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The need for radical reinvention might be overstated, just as the rhetoric that launched these ventures was overheated. “Even today, they’re still very viable publishers” who know how to create content for their audiences, said Lake. “The challenge they’re running into is the business model.”
Vox Media may be the best positioned among the troubled group. The Information reported that the company was profitable on annual revenue of between $600 million and $650 million. Bankoff, ironically, is struggling with disappointing returns from distributing content through Facebook and YouTube, after warning other media moguls of becoming dependent on social media for distribution.
Vice’s Smith, whose venture is showing signs of financial distress, was more open about what may have been the media futurists’ real plan all along.
“We are a modern-day Bonnie and Clyde and we are going to take all your money,” he said in 2018 as he discussed Dubuc’s hire. That’s one new media prediction that came true.
Owen Thomas