What Vice's Stunning Financials Tell Us About The Future Of Media
Media watchers and critics don’t like to talk about Vice Media too much, because it is punkish media for punkish people. We fret about the future of serious publications like the Times, and we fret about websites like the Huffington Post and Gawker and Business Insider ruining everything. Meanwhile, Vice Media, while in plain sight, has been crushing it. And yet, Vice has become a global reporting organization with real news chops. And it is now considering an IPO.
A Bloomberg report gives a taste of its financials and, if the report is to be believed (more on which below), they are stunning:
2012 revenue of $175 million, 2014(e) revenue of $500 million, 2016(e) revenue of $1 billion(!)
“[P]rofit margins targeted to widen to 50% of sales from 34% now”
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What does that tell us about the future of media? In a word, that it is bright. Vice has relentlessly pursued every possible profit opportunity, including becoming a sort of in-house ad agency for its client, and aggressively pursuing branding opportunities and other non-standard advertising opportunities, rather than simply splashing banners on its website. It has focused heavily on video–good, watchable video–, the most lucrative segment of online advertising.
But other than just “news can make money”–which is still something–the other less on Vice might be: target a demographic and own it. In a sense, that’s always been true in media SaveFrom.net, but Vice shows it especially works on the internet. Why? It’s what advertisers care about. It turns out programmatic buying is not everything. And it turns out that if an important demographic, particularly a hard-to-reach one (for Vice, it’s young males, but that also works for many other demographic–Moms, businesspeople, you name it…), is truly devoted to your brand (because you make amazing content tailored for them), then advertisers will want to work with you to reach that audience in ways that actually work better than dirt-cheap banners.
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http://www.forbes.com/sites/pascalemmanuelgobry/2014/03/31/vice-media-ipo/
21st Century Fox has invested $70 million in youth-focused media company Vice Media, giving Fox a 5 percent stake in the company and valuing Vice at $1.4 billion, according to a report in the Financial Times.
I emailed a company spokesperson to confirm the funding but they have not responded. Still, the news has been widely reported enough that it seems pretty solid.
Although Vice started out as a print publication, most of its recent success has been online, especially in video (which led to a show on HBO). A recent profile in The New Yorker said that in 2012, the company brought in $175 million in revenue, more than 80 percent of it from the web.
Vice has also received funding from ad holding company WPP, merchant bank Raine, and former Viacom CEO Tom Freston, but according to the FT, the company’s senior management still controls 75 percent of Vice.
http://techcrunch.com/2013/08/16/vice-fox/