At Jennis Morse we have experience in traditional media Chapter 11 cases and have followed the restructuring in this part of the media space. It appears that the latest crop of media darlings are experiencing challenges getting long traction in their business models.
Over the past couple of months several significant developments have occurred within the media industry. Vice Media, once valued at $5.7 billion, has filed for Chapter 11 bankruptcy in the United States. This marks a notable event for the youth-focused media brand, which had dominated the millennial market in the 2010’s. Vice’s financial struggles can be attributed to its debt burden, leading the company to actively seek a buyer. A consortium, including Fortress Investment Group and Soros Fund Management, had expressed interest in acquiring Vice out of bankruptcy with a reported offer of $400 million. However, the current agreed-upon sale price stands at $225 million. Throughout the bankruptcy process, Vice’s various media brands, such as VICE, VICE News, and VICE TV, will continue producing content. The fate of employees and potential layoffs remains uncertain, as media companies have been significantly affected by job cuts in recent times. The bankruptcy process is expected to conclude within two to three months, during which time Vice has secured $20 million in financing to support its operations.
BuzzFeed News, another prominent digital news outlet, has also announced its closure. The company’s CEO, Jonah Peretti, stated that the challenging business model of news tailored for social media made it increasingly difficult to sustain BuzzFeed News. Consequently, the company will shift its focus to the profitable Huffington Post. Revenue problems, overinvestment without adequate financial support, and various challenges such as the pandemic, recession in the tech industry, declining stock market, and slowing digital advertising contributed to BuzzFeed News’ closure. Layoffs will be implemented, budgets reduced, and non-revenue generating expenditures cut. The media industry as a whole has experienced declining revenue and significant job cuts, with companies like Insider Inc., ABC News, NPR, and Gannett making substantial workforce reductions.
In addition, Vox Media, the parent company of well-known brands like The Verge and New York magazine, has announced a 7% reduction in its workforce. The decision is a response to the economic uncertainty faced by many tech and media companies. Vox’s CEO, Jim Bankoff, explained that downsizing was necessary due to the current downturn, and the company had already implemented spending reductions and a hiring freeze. The affected teams include revenue, editorial, operations, and core services, although specific details were not disclosed. Vox Media, with approximately 1,900 employees, remains confident in its overall strength but acknowledges the impact of macroeconomic forces affecting the industry. The Vox Media Union expressed dissatisfaction with the layoffs and is actively discussing ways to support affected employees. Previously, Vox Media had undergone workforce reductions following its merger with Group Nine in 2022. The media and tech sectors have witnessed widespread layoffs as companies aim to reduce costs amidst declining ad spending and economic challenges.
These case studies prove this market segment is important to watch for insolvency and financial professionals. If you or your firm needs to discuss your situation further contact Jennis Morse for advice from attorneys experienced in media bankruptcy cases.