On May 15, VICE Media filed for Chapter 11 bankruptcy protection and announced its bankruptcy. According to documents filed with the court by the company, the total debt is reportedly estimated at up to $1 billion.
VICE was launched in Canada in 1994 and later changed its base to New York.
Known as an edgy digital media outlet with provocative visual storytelling and punchy, explicit expressions, VICE Media was highly acclaimed for its coverage of Iraq and Syria, where the Islamic State (IS) militant group emerged.
Last month, the company announced the layoff of employees in its global newsroom and closed its international brand of journalism, Vice World News. (However, according to NPR, the company still employs journalists abroad and has no plans to stop reporting international news.) At the same time, it also terminated “Vice News Tonight,” a weekly broadcast program that debuted in 2016 and surpassed 1,000 episodes in March.
The company oversees several brands, including the women’s lifestyle website Refinery29, which it acquired for $400 million in 2019, as well as the British fashion magazine i-D and its in-house creative agency Virtue. On the other hand, as the company expanded its business, advertiser companies began to devote more of their advertising dollars to social media such as Facebook, Instagram, and Tiktok, and the company’s advertising revenues reportedly fell sharply, resulting in a downturn in the company’s business. The company said it plans to continue its operations and complete restructuring procedures, such as asset sales, in the next two to three months.
A string of media mismanagement
VICE Media is not the only media outlet facing a difficult business environment due to declining advertising revenues and the prolonged economic downturn. Since the beginning of this year, many media outlets in the U.S., including Vox Media, ESPN, BuzzFeed, and Paper Magazine, have announced the closure of their sites and the layoffs of employees due to poor management.
Vox Media, the owner of brands such as The Verge, SB Nation, and New York magazine, announced in January of this year that it is cutting about 7% of its workforce due to financial difficulties. The company’s chief executive officer Jim Bankoff said that the company needed to get smaller in the face of the economic downturn, and in an email to employees said the company had already cut spending and frozen new hiring.
The company just merged with Group Nine, which operates lifestyle websites such as PopSugar and Thrillist, in 2022 to become one of the largest digital media companies in the United States. However, the merger was implemented to expand and restructure the publisher’s business to compete for online advertising revenue, and approximately 3% of the company’s workforce was laid off in March 2022 after the merger, and another 39 employees were laid off in July.
On April 20, BuzzFeed announced the closure of its news division, BuzzFeed News, in order to cut costs.
In a message to employees, Jonah H. Peretti, founder, and CEO of the media company cited the shrinking digital advertising market and other factors as reasons for the need to cut costs, explaining, “We have determined that we cannot continue to fund BuzzFeed News as an independent organization.” The company’s future news operations will be conducted through the acquired media outlet HuffPost.
Disney also plans to lay off about 7,000 employees, or about 3% of its worldwide workforce, in an effort to cut $5.5 billion in costs. Among the cuts, ESPN reported that there will be three separate rounds of employee layoffs and payroll reductions.
Paper Magazine to Fire All Employees
Paper Magazine, a New York-based fashion and pop culture magazine founded in 1984, is no exception. Last month the company told all of its approximately 20 to 30 editors, including editor-in-chief Mickey Boardman, that they would be laid off, citing declining advertising.
Paper Magazine was founded in 1984. Since then, it has been a mainstay independent magazine based in New York City, and in 2014, it created a viral sensation with “Break the Internet,” featuring Kim Kardashian, and was gaining popularity among younger readers.
Current Publisher Tom Florio, along with then-Chief Creative Officer Drew Elliot, acquired the magazine from founders Kim Hastreiter and David Hershkovits in 2017. They subsequently formed ENTtech Media Group and hired entertainment production company XRM Media as a strategic partner. ENTtech also added a creative agency.
Florio is looking to cut costs while considering options, including a sale to investors, to avoid employee layoffs and media site closures as seen by BuzzFeed News.
The transition from digital media to social media
The fact that these large media outlets were forced to declare bankruptcy one after another is shocking.
However, as digital media began to emerge, the demand for print magazines and newspapers gradually decreased, and print advertising decreased accordingly. Today, people are getting information on social media platforms, without a doubt. It is natural for companies and brands to advertise where people are gathering, and therefore, it is a natural transition for them to shift advertising dollars that they used to spend on digital media to social media and influencer campaigns.
For example, BuzzFeed, which was forced to shut down, had bet heavily on a social media distribution model but reportedly did not fully understand that the platform would siphon off digital advertising dollars.
Many media companies are also exploring avenues to secure multiple revenue streams, such as paid subscription articles, membership community management, and social media content dissemination. However, it is quite difficult to make up for declining advertising revenues while maintaining the same scale of operations as when digital media was in its heyday.