Vice Media Group has officially declared bankruptcy.
The youth-focused digital publisher, long known for its brash and edgy content, has US$834 million in debt obligations, according to The Hollywood Reporter.
Frank A. Pometti, a consultant hired as the chief restructuring officer of Vice Media, wrote in a declaration filing: “Like many other growth companies in the media and technology sectors, VICE has been cash flow negative for the past several years.
“As a result, VICE relied on external funding, raising both debt and equity capital to fuel its rapid growth and to fund expenses in certain parts of its businesses. Although these fund-raising efforts helped to finance VICE’s growth, they ultimately led to the Company being burdened by a highly leveraged and unusually complex capital structure.”
The media group’s creditors include Fortress Investment Group, with a claim of US $474.6 million, CNN Productions, with a $3,798,333 claim, and HBO with a claim of $1,763,157. Other creditors include Amazon Web Services, ad agency Horizon Media, and Getty Images.
According to The Hollywood Reporter, the filing estimates there are more than 5,000 creditors and lists $350 million in assets. With many creditors the publication noted that they are likely to take a loss during Chapter 11 proceedings in the Bankruptcy Court for Southern District of New York.
Media analyst Joseph Teasdale, head of tech on Enders Analysis’ media team, told Press Gazette Vice’s problem was it “never figured out a model at all.”
“Vice had a pitch – we know how to engage young people – but they never found a way to turn that pitch into a business,” Teasdale said.
“They tried digital advertising, sponsored content, creative agency work, TV production, but continually missed revenue targets and never hit sustained profitability,” he added.
Announcing the bankruptcy, Vice’s co-chief executive officers Bruce Dixon and Hozefa Lokhandwala said in a report by the BBC: “This accelerated court-supervised sale process will strengthen the company and position Vice for long-term growth.”
News of Vice Media’s bankruptcy declaration in the US will not impact Australia’s SBS VICELAND.
An SBS spokesperson: “There are currently no impacts for SBS. The SBS VICELAND channel is a curated mix of programming including content SBS selects from Vice, alongside a range of other suppliers, and we have the flexibility to respond to programming and scheduling changes when needed.”
Last week, Mediaweek reported on what the potential of bankruptcy would mean for Australian partners.
See Also: What the potential bankruptcy of Vice Media means for Australian partners