This story first appeared in the Feb. 12 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Shane Smith needs just six words to describe his grand vision for his forthcoming cable network: “We’re trying not to be shitty.”
“That’s sort of our mission statement,” says the Vice founder and CEO, seated in his second-story corner office high above the legions of 20-something hipsters at his company’s Venice, Calif., outpost. “Though if I want to be falsely modest,” he adds, “I’d say it’s to be less shitty than anybody else.”
“I don’t want to give all my secrets away, but there all kinds of funny, overlooked TV shows that would be really stoner or hung-over TV shows like [‘Second City’ TV] from Canada. We don’t want to curate too much stuff.”
Viceland, which will replace A+E Networks’ little-watched H2 on Feb. 29, gives the famously unfiltered entrepreneur a crack at reimagining cable television for the elusive millennial audience he attracts with Vice’s digital content. If the plan sounds risky or, worse, anachronistic, Smith, 46, would argue you’ve grossly underestimated his vision. This isn’t merely about carving out a spot for his $4.2 billion digital-media brand on Grandma’s cable dial. It’s about conquering the media world as we know it. “I want to become the biggest f—ing media company in the world,” he says with the kind of bravado that’s captivated executives from Robert Iger to Rupert Murdoch and elicited eye rolls from almost everybody else.
To hear Smith tell it, the press falsely has presumed that a cable network is his end goal. Instead, he suggests he’s pursued a network deal — first with Time Warner, then 21st Century Fox and ultimately with A+E — because he recognizes that “75 percent of the world’s advertising budget” is still being spent on television. And while more of that money will move online (“Guess what? I’m in online,” he crows) and, eventually, to mobile (“I’m in mobile!”), he says he found himself wondering, “Why don’t I get that 75 percent while all these other guys who don’t know what the f— they’re doing are getting it?” The arrangement with A+E, which made a $250 million investment in Vice in 2014, offered the company a way to tap the still lucrative TV market without having to spend the hundreds of millions, if not billions, to launch a cable network and fight tooth and nail for distribution.
“I’m friends with Jonah [Peretti], and BuzzFeed is great at what it does, but it’s a completely different business. Everyone loves to compare us, and at some point we probably should just link up and kick everyone’s ass.”
The move, which gives Vice a 49 percent stake in the U.S. channel and complete control over the network’s international activity, comes 22 years after Smith, along with pals Suroosh Alvi and Gavin McInnes, founded Vice, then a niche music magazine in Montreal. In the two-plus decades since, he has amassed a staff of 1,800 with operations in more than 30 countries and tentacles in areas including print, digital, branding, music, film and TV and fashioned a multimedia empire, collecting many millions from behemoths including Fox, Disney and British ad agency WPP. Media expert Michael Wolff once suggested in a Hollywood Reporter column that the latter simply are “drawn to his Pied Piper ability to attract ever-more media executives and the ever-larger multiples they and their colleagues seem willing to pay for a piece of Vice.” Smith seems to delight in the skepticism that both his voracious dealmaking and his personal antics — the free-flowing booze, the $300,000 Vegas dinners and the liberal use of profanity (“f—” was uttered 52 times in this interview) — evoke, but he shoots down Wolff’s premise, unable to contain a chuckle: “You think I could hoodwink Bob Iger, Jeff Bewkes and Rupert Murdoch?” According to comScore, 56 percent of Vice Media’s 58.9 million unique visitors in December fell within that all-important millennial demographic, putting Vice ahead of NBCUniversal investment Vox Media but well behind the company’s other, BuzzFeed (see chart on page 55). Whether those easily distractible millennials will come with Smith and Viceland co-president Spike Jonze to cable remains an open question.
Already, there’s a growing chorus of TV executives and rival producers who are predicting Viceland’s demise. “It’s going to be Current 2.0,” snipes one prominent unscripted executive, referring to Al Gore’s ill-fated leap into the cable business. Some balk at the network’s target demographic (a recent Pew Research study found 19 percent of Americans ages 18 to 29 have cut the cord, while another 16 percent never subscribed at all), others at Vice’s inexperience in TV. But if any of the naysayers fluster Smith or his longtime adviser Tom Freston, a former Viacom CEO who helped launch one-time youth magnet MTV, they aren’t letting on. “There’s always a lot of schadenfreude in the television business,” says Freston. “Everybody wants everybody to fail.”
Smith in New York in 2015. (BOBBY BANK/WIREIMAGE)
Part of what made the deal attractive to A+E Networks CEO Nancy Dubuc is that she had little to lose. Despite its $850 million valuation, H2 had been generating miniscule ratings (342,000 viewers, on average) in 70 million homes, and its prospects in an increasingly unbundled future were grim. “We saw an opening, and for us it’s about brands that will survive regardless of the platform,” she says, “and Vice is the Holy Grail.” Though Dubuc has been quick to temper expectations, the arrangement provides her with roughly a 20 percent stake in the Vice mothership while still maintaining half of what is now a potentially better positioned channel in those 70 million homes.
BTIG analyst Rich Greenfield suggests the risks are minimal. “In success, they create something far more meaningful than H2,” he says. “And at worst, they revert to an H2 strategy in two years.”
Greenfield acknowledges he had been in the camp of “this sounds ridiculous. You’re going the wrong way,” but he has since warmed to the idea. “There are still plenty of 18- to 34-year-olds who watch television,” he says. “Now, if you have an established business, your numbers are falling fast. But as a new entrant? You’re just looking to take share of a falling business. So this is a market-share grab, and if it doesn’t work, so be it; every piece of programming can be repurposed online.”
A September 2015 special for ‘Vice’ on HBO, in which Smith tackled the subject of the U.S.’ broken criminal justice system alongside President Obama. Of Smith, HBO CEO Richard Plepler says, “He’s full of energy and passion, and you know he’s in the room.” (VICE MEDIA).
From the outset, the strategy will be about building a multiplatform audience — on air, online, on VOD — rather than simply a linear one. In fact, Viceland will leak much of its programming on platforms including Facebook prelaunch and then will keep as much of it as possible in front of a digital paywall. In an unprecedented strategic move, A+E also has worked out a deal so that Nielsen data will not be available for Viceland for at least six months. “We know how and where this younger audience is watching, and it’s on mobile, on tablets, on laptops,” says Dubuc. “Until Nielsen can measure a complete TV audience on every platform, I can’t expose this brand to undue criticism.”
The November announcement that Viceland would replace H2 in early 2016 was one of the worst-kept secrets in the media business. News began to leak several months earlier, in part because Smith, frustrated with what he believed was a glacial pace of dealmaking, decided to begin publicly teasing the network (though not the platform) during a boozy presentation at Vice’s May newfront in New York.
With hindsight, he acknowledges his naivete. “When we went to go see a number of the [cable and satellite operators,] they were like, ‘F—, you’re exactly what we need. We love you,’ so we were like, ‘This is going to be f—ing easy,’ ” he says. What he hadn’t realized was that such renegotiations wouldn’t happen overnight, particularly given the added complications of mergers (AT&T-DirecTV) or would-be mergers (Comcast-Time Warner Cable) that caused delays. Considering the circumstances, Dubuc suggests the process was remarkably swift. “We got all but one done inside of six months, which is pretty unheard of,” she says, “and illustrates how positively the change was met.”
While those carrier conversations continued, a Brooklyn-based team led by Oscar-winning writer/director Jonze, the channel’s creative director and a longtime Vice partner, was quietly readying a stable of unscripted documentary series that looked like little else on TV. “We’re trying to make a channel that’s personal, that feels like a group of people trying to understand the world we live in,” says Jonze, 46, who serves as the precocious artist to Smith’s consummate showman. The highest-profile offering at launch will be Gaycation, a travel show from actor turned activist Ellen Page, in which she’ll crisscross the globe exploring the LGBT community in different parts of the world. In one episode, she accompanies a Japanese man as he comes out to his mother; in another, already well covered by the media, she confronts Republican presidential candidate Ted Cruz on LGBT issues at the Iowa State Fair. The series was conceived while Page was crashing at Jonze’s New York apartment. He’d told her what he and Smith were up to and mentioned he was looking for ideas. Over breakfast the following morning, she pitched Gaycation. A few days later, she appeared in the Vice offices to make a more formal presentation to Jonze and Vice chief creative officer and Viceland co-president Eddy Moretti, who would ultimately take it to Smith to get the official green light.
Dubuc (JIMI CELESTE/PATRICKMCMULLAN.COM VIA AP IMAGES)
The vast majority of Viceland’s series will be produced in-house, many of them by longtime Vice employees with little or no traditional TV experience. (Exceptions include comedy show Flophouse from Lance Bangs’ Field Recordings and a project in development from Ben Stiller’s Red Hour Films.) The strategy allows the notoriously frugal company not only to keep costs down, but also to maintain a cohesive look, feel and point of view for the channel. At other times during the day, Viceland will rely on repackaged content from Vice.com and the occasional acquisition. At press time, Viceland had secured the rights to a handful of cult flicks, including The Big Lebowski, Reservoir Dogs and Werner Herzog’s Fitzcarraldo, to include in its Friday night film series, which will pair a half-hour profile of a director with some of the filmmaker’s work.
Though Freston has consistently championed Smith’s unorthodox approach, he urged Smith to hire a handful of people who had TV experience. “There’s a lot to be said for having people who have been there,” says the former suit, who invested in Vice after being ousted as the CEO of Viacom in 2006 and spends a few days per week at the company’s new Brooklyn headquarters, which feature a stocked bar and some 700 employees whose average age is 28. Freston’s son, Andrew, 31, works in Vice’s considerably smaller Venice office, though Smith’s team already is eyeing a nearby parking lot for potential expansion there, too.
Smith, who often jokes of his bromance with friend and colleague Jonze, is a self-described TV junkie. Must-see-TV for him: ‘Game of Thrones,’ ‘Silicon Valley’ and ‘Togetherness,’ all on HBO.
Among Viceland’s veteran hires: Guy Slattery, a former A&E executive who quietly stepped in as Viceland’s GM in December, and James Rosenstock, who was hired away from Discovery to build out Viceland’s international footprint. He’d helped build Discovery into a $2.5 billion international business, and he’s similarly bullish about the global opportunity for Viceland. The company has “strong brand recognition around the world,” he says, and the desire to reach millennials is as appealing outside of the U.S. as it is within. Though the deals are not yet finalized, Rosenstock is confident he’ll have pacts in as many as 10 markets to announce in the next month or so, with several more to follow. Looking ahead, he believes Viceland’s international business, which will consist primarily of partnerships a la A+E in the U.S. and Rogers in Canada, could represent one-third to one-half of the company’s network revenue.
Smith sees an even greater opportunity in messing with the ad model. Though a team at A+E will focus on selling traditional 30-second spots, the network will carry a heavily reduced ad load of only 10 minutes per hour, with ambitions of decreasing it more over time; rival networks like ailing MTV currently stuff in as many as 18 minutes of ads per hour. Vice’s in-house team, which has done sizable deals with companies including Unilever and Anheuser-Busch for its web series, also will work on more innovative deals for the network. Slattery suggests the long-term goal is to replace the 30-second ads with more lucrative sponsored content that Vice has had success with on its other platforms. “The brands we’re talking to are super interested because they all know the model is a little broken,” says Slattery, “and they all want to figure out a way to do stuff differently.”
“What’s funny is in the press, it’s always been, ‘Shane Smith wants a TV network.’ No, I don’t.”
When the switch finally flips in late February, Viceland will be noticeably short on one thing: Smith himself. Though he intends to promote the network, his face and energy are largely committed to HBO, where he’ll soon add a daily news show to a portfolio that also includes a weekly documentary series, now in its fourth season, and specials.
The awards prestige, reach (3 million gross viewers) and professional opportunities (interviewing President Obama) that the premium network offers make it a top priority for Smith, a news junkie whose personal interests don’t always align with those of Vice’s millennial demo. But the relationship between Smith and HBO took an ugly turn this spring; executives at the network, just starting to put together plans for the new daily show, felt blindsided by his Viceland announcement. “There was no disingenuous action,” Smith says now.
The two sides have since made peace, with Smith agreeing that HBO will have a lock on Vice’s news fare while Viceland focuses on lifestyle programming. HBO president of programming Michael Lombardo acknowledges that drawing the distinction may be challenging at times, “but we’re proceeding with a partner who we trust and who has assured us will navigate it openly and transparently and with due respect to our respective business interests.” HBO CEO Richard Plepler adds: “We don’t own the brand, so the most important thing is that we execute really well in the space that’s going to be the joint venture between HBO and Vice.”
The HBO daily show, which is being overseen by Bloomberg veteran Josh Tyrangiel, has many hires left to make. Lombardo suggests it’ll be ready by the beginning of the second quarter, though he admits “there are still a lot of decisions to make: How much are we covering? Who are we in the space?” Smith, who moved his filmmaker wife and two daughters to a $23 million compound in Santa Monica this fall, will make biweekly trips back to Vice’s Brooklyn office, where the show is headquartered, though his on-air contributions largely will be from the road.
HBO insiders suggest they got the better end of the bargain, though one A+E executive, who would only speak on the condition of anonymity, insists it’s the other way around: “They’ll just be the marketing and awards machine, while we build a business.” What is clear is that both companies believe Smith and his millennial content are critical to their own success, even if his brashness and serial dealmaking causes headaches. The question now is how much worse those headaches will get as Smith continues to hunt down bigger and better opportunities. “It’s a great time to be a content creator,” he says, with a smile plastered across his face. “And we’re going to f— shit up, and there’s nothing more fun than that.”
A Guide to Viceland
Ellen Page and her pal Ian Daniel travel the world to learn more about the LGBT experience. In one episode of the docuseries, they accompany a young Japanese man as he comes out to his mother; in another, Page confronts presidential candidate Ted Cruz on LGBT issues at the Iowa State Fair.
F—, That’s Delicious
An adaptation of rapper Action Bronson’s Vice web series of the same name, F—, That’s Delicious follows Bronson and his buddies on their culinary and rap adventures around the world. “I rap. We eat. We look for mystery and adventure, and we find it,” Bronson said in promoting the show at TCA in January.
The comedy show, from longtime Vice collaborator Lance Bangs, is set in the communal homes of young comedians as they try to break in and earn a living.
Host Krishna Andavolu examines the science, culture and economics of the marijuana industry. “We’re doing it at a time when laws are changing and people’s attitudes are changing,” he says. “We’re capturing people’s stories as they really risk everything to get healed, make money or keep out of jail.”