Vice Files for Bankruptcy as Economic Downturn Bites Media Landscape
Key takeaways
- Vice Media Group has filed for bankruptcy and will be sold to lenders for $225 million unless another buyer comes along
- The move follows Buzzfeed News and MTV News both shutting down
- Investors should take a diversified portfolio approach to avoid disaster when companies fail
Another media company has been felled with news that Vice Media Group has filed for Chapter 11 bankruptcy. It’s not the end of the brand altogether, as it will be sold to lenders unless another buyer materializes. But it’s not a vote of confidence for the industry where outlets are dropping like flies. We’ve got the details below.
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Vice’s final days
Media outlet Vice, which rose to prominence in the 2010s as a millennial-focused news and pop culture resource, has filed for Chapter 11 bankruptcy. The plan is for Vice Media Group to be sold to a group of its lenders: previously valued at a huge $5.7 billion in 2017, it could now be taken over for $225 million.
Vice has had $20 million of funding approved to stay operating during the proceedings and is open to offers from other companies. A statement from the company said it “expects to emerge as a financially healthy and stronger company in two to three months”.
A mix of flat finances for the last few years, expensive content production and a failed merger are some of the factors that led Vice to this position, but it’s sadly not the only media outlet that’s struggling.
The media landscape is shifting
Similarly to Vice, rival Buzzfeed shuts down its news division and cut a further 15% of its total workforce thanks to a decline in advertising revenue and poor financial performance. Buzzfeed’s share price is down 23.8% this year.
MTV News was also shut down by Paramount after over 36 years of production, with Paramount slashing 25% of jobs in a bid to cut costs. It had a poor earnings report, with earnings per share and revenue down on expectations. The stock slid 10% at the announcement.
Even though Vice was a private company, it’s a cautionary tale for investors to consider diversifying their portfolio to avoid overexposure in one sector or company. We could easily see other media companies fail if the macroeconomic headwinds continue to pressure finances, so investing in different asset classes and industries can help to offset when companies collapse.
The bottom line
The media landscape is looking pretty rocky at the moment, as we now have three different news outlets either gone or on the way out. Until inflationary pressures and high interest rates begin to come down again, we could sadly see more casualties before the year is out.
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