Vice News files for bankruptcy

Edgy online news giant Vice Media, once valued at an incredible $8.5 billion, has filed for bankruptcy.

Edgy online news giant Vice Media, once valued at an incredible $8.5 billion, has filed for bankruptcy.

Vice Media filed for bankruptcy on Monday, closing out a years-long decline for the edgy “punk rock” news giant once valued at an incredible $US5.7 billion ($8.5 billion).

The bankruptcy filing, which comes after weeks of rumours about the company’s future, sets up a group of Vice’s investors including Fortress Investment Group and Soros Fund Management to acquire the company for $US225 million ($336 million), The New York Times reports.

Daily operations will continue at Vice’s businesses including its main website, advertising agency Virtue, Pulse Films and female-focused site Refinery29, courtesy of a $US20 million ($30 million) loan from the lenders.

The takeover bid will be covered by the investor group’s existing loans to the company. Bankruptcy filings say Vice has outstanding debt of $US834 million ($1.2 billion), dwarfing its recently discussed sale price.

Vice made its name with daring reporting from conflict zones. Picture: Viceland

The bankruptcy means Vice’s high-profile investors including Disney and private-equity firm TPG will be wiped out, losing hundreds of millions of dollars.

In 2017, following a funding round TPG, Vice was valued at $US5.7 billion.

Fortress and Soros Fund Management are Vice’s biggest debt holders, having loaned the struggling company $US250 million ($373 million) in 2019, and are not seeking to salvage their investments.

Vice had been in default on that loan for months, according to The Times.

“It’s the lender coming in and saying, ‘I’m done funding the losses — if I’m going to fund the losses, I’m going to take control of the company,” Eric Snyder from law firm Wilk Auslander told the newspaper.

Vice Media co-founder Shane Smith. Picture: Michael Kovac/Getty Images

“It’s not unusual for the lender to come in and tell the debtor, the borrower, ‘You’re putting this into bankruptcy, you’re going to make a motion to sell, we’re going to put in a first bid.’”

Vice started in Montreal more than 20 years ago before exploding into a global media enterprise with a film studio, an advertising agency, an HBO show, and bureaus in cities worldwide.

Disney reportedly considered buying the company in 2015 for more than $US3 billion ($4.5 billion) but decided against it. Despite its efforts to turn a profit over the years, Vice has consistently failed, losing money and having to lay off employees repeatedly.

Vice announced the closure of Vice World News last month, putting an end to a global reporting initiative that covered world conflict and human-rights abuses.

SBS Viceland’s ‘Fourth Estate: The NY Times and Trump’. Picture: SBS

Co-founder Shane Smith established the company’s reputation with his daring reporting from dangerous locations such as North Korea.

SBS Viceland in Australia has also been affected by the news, with its 45-minute Vice News Tonight program being scrapped for good.

“The SBS Viceland channel is a curated mix of programming including content SBS selects from Vice, alongside a range of other suppliers, and we have the flexibility to respond to programming and scheduling changes when needed,” an SBS spokeswoman said.

“There are currently no impacts for SBS.”

Under the terms of the bankruptcy loan, Vice Media company has 55 days to complete a sale.

Vice Media co-chief executives Hozefa Lokhandwala and Bruce Dixon told The New York Times in a statement that the bankruptcy sale would “strengthen the company”.

“We look forward to completing the sale process in the next two to three months and charting a healthy and successful next chapter at Vice,” they said.

It comes after fellow new media trailblazer BuzzFeed shut down its popular news division last month, blaming a slump in advertising and evolving reader habits.