H2 Network to Become Vice Channel in A+E Rebrand

Shane Smith - H 2015
AP Images/Invision

Shane Smith - H 2015

A+E Networks and Vice are set to launch a joint venture cable channel that would take the place of A+E's H2. According to industry sources, A+E is in active negotiations with distributors and is beginning to close deals. Disney and Hearst, A+E's parent companies, and Vice on Tuesday submitted required regulatory filings with the FTC.

Vice likely will have editorial control of the channel, which is targeted to launch early next year and will feature Vice's signature documentary programming. The pact will give Vice its first stand-alone linear channel amid a growing portfolio of digital destinations including the female-targeted Broadly, which is set to launch this spring.

Last year A+E invested $250 million for a 10 percent stake in Vice, and the new deal would give A+E a bigger stake in the Brooklyn-based Vice. At the time, the assumption was that Vice would get a block of programming on H2.

Vice chief Shane Smith has been vocal about his desire for a cable channel; the company was previously in preliminary discussions with Time Warner about taking over HLN. A+E CEO Nancy Dubuc, who led the company's initial investment in Vice, has been working to diversify the A+E content portfolio which includes flagship channels History, A&E and Lifetime. Dubuc had long been looking for the right content investment opportunity, especially as deep-pocketed content companies began to gobble up independent production companies, many of which produce content for the A+E suite of channels.

During a panel discussion last February at the Paley Center in New York, Dubuc noted Vice's "authentic, bold voice."

"I saw the consolidation of the production companies and these astronomical prices that were being paid for companies that we work with that don't own any of their content. We've [looked] at studios that put themselves on the market, take themselves off the market. We've looked at agencies. In Vice, I saw all of it in one. I saw a studio. I saw a content creator. I saw an agency. I saw a distributor," she said. "We want to learn from them. They're talking to a generation we're struggling to connect to as an industry. Some people like to think, 'well, they just don't watch television.' I would counter that we also don't give them a lot of good television."

Of course, the deal comes as basic cable is contending with softening ratings and a maturation of the unscripted content space. Converting H2 to Vice makes sense given both destinations' male-skewing target audience. But the re-brand also should deliver a much younger viewer.

Vice began in Montreal more than two decades ago as a free weekly magazine and in recent years has became a darling of the media industry, attracting millions in investment capital and generating intense interest from legacy media brands that are chasing Vice's young male consumers.

Silicon Valley venture firm Technology Crossover Ventures also invested $250 million last year, giving Vice a valuation of $2.5 billion. Rupert Murdoch's 21st Century Fox bought a 5 percent stake in Vice in 2013 for $70 million. And former MTV mastermind Tom Freston was an early investor and remains a close advisor to Smith.

Vice has produced a newscast for HBO since 2013. Last month, HBO expanded that partnership through 2018 and upped its series order significantly to 48 weeks a year while also committing to a Vice-branded channel on HBO's NOW streaming service.