Disney Not Pursuing Equity Stake in Vice Media
Time Warner is still considered a suitor for the media company, though the two parties are $400 million apart.
Reports suggesting that several major media conglomerates are interested in paying big money for a stake in Vice Media are overblown, multiple sources told The Hollywood Reporter on Monday.
It was revealed a few weeks ago that Time Warner was interested in taking a position in Vice that would value the hip and edgy new-media company at as much as $2.2 billion, up from the $1.4 billion it was worth a year ago when 21st Century Fox bought a 5 percent stake for $70 million.
But reports have surfaced since then suggesting that Time Warner might have to fend off other suitors. A story in the New York Times on Monday, for example, indicated that Walt Disney has entered the fray and that 21st Century Fox is interested in upping its stake. But in both cases the conglomerates have ruled out an investment — or in the case of the latter, a further investment — in Vice, according to several sources who spoke to THR on the condition of anonymity because of the secretive nature of negotiations.
"An interested party is obviously trying to drum up a bidding war," one person familiar with the matter told THR. "It’s interesting that Viacom isn’t usually mentioned as a bidder, since MTV is most analogous to Vice’s business."
Viacom, Disney, Time Warner and 21st Century Fox declined a request for comment, as did Vice.
Sources said Disney kicked the tires on Vice but is now uninterested in part because its content wouldn’t fit with the conglomerate’s family friendly brand. On Monday, for example, profanity was peppered into several stories at Vice’s website, which also contained some partial nudity and some fairly graphic sexual references.
"Disney has no interest. It’s unclear where they’d even put something like this," one source said.
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Another source confirmed that 21st Century Fox is already "happy with its current stake" in Vice and will not be competing against others who might want to invest. "The 5 percent stake had an opportunity to do more and decided against it," said a source.
And that leaves Time Warner, which spoke to Vice as recently as last week, according to sources, and is looking to make an investment in Vice that would value the whole company at about $1.8 billion, though its CEO, Shane Smith, thinks his company is worth at least $2.2 billion.
One scenario has Time Warner taking a large but not necessarily a majority stake in Vice, then turning HLN into a joint venture between Time Warner and Vice, with the latter handling the programming. In that case, HLN would likely be rebranded.
While Vice is primarily an online company targeting 18-34-year-olds with websites that attract 220 million unique visitors monthly and 5.5 million subscribers to its YouTube channels, it also has TV show Vice on Time Warner’s HBO.
Vice was founded in Montreal, Canada, in 1994. The private company does not disclose financial information, though sources say it will generate about $500 million in revenue in 2014. The company says it has 36 global offices and 1,400 full-time employees. Its online videos boast about 500 million views monthly and it gets $16 CPM rates and more for its video ads. It founded Vice Records in 2002 and also operates a robust branded-content business. A website page promoting the latter business lists more than a dozen recent partners, such as Intel, Budweiser, Nike and Ford, along with a single film studio: Warner Bros., owned by Time Warner.
The HBO television show — which is probably most famous for sending former NBA star Dennis Rodman to North Korea — is in its second season and attracting an average of 760,000 viewers, not including on-demand and online viewing. Sources say that if Time Warner and Vice cannot come to terms on a deal involving an investment stake or joint venture, the conglomerate might simply end up licensing more content from Vice.
"Negotiations are progressing," said a source. "They’re figuring out a way for the companies to work together, possibly through a joint venture or programming relationship. It’s not likely though that Vice will want to sell itself entirely. They’ll want to maintain a controlling stake."
While Disney, 21st Century Fox and Viacom may not be interested in an equity investment in Vice, content partnerships are often discussed, say several people close to the situation. Vice produced 11 hours worth of TV content for HBO, but in total it has produced 76 hours of programming, including lots of TV content in Canada and Germany, and four years ago it produced a show called Vice Guide to Everything for MTV.
"It does make sense for Time Warner to invest because it will give it multimedia exposure to an alternative news platform that skews the news demo younger," said Tony Wible of Janney Capital Markets.