Front Burner - The rise and fall of Vice Media

Episode Date: May 18, 2023

This week, Vice Media filed for bankruptcy. According to reports, the company may be bought for $225 million, plus its sizable debt. At its peak not long ago, Vice was valued at nearly $6 billion. It was shaping the media landscape, had a huge influence on culture, fashion, and how to draw young audiences to news stories around the world. On this episode, Reeves Wiedeman, writer with New York Magazine, explains how Vice rose to such stunning heights, and what contributed to its downfall. For transcripts of this series, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Alex Panetta. Vice Media, the Canadian-founded news empire that for decades embodied the potential for a new era of journalism and media, has filed for bankruptcy. Vice Media was once one of the hottest names in new media. They've just filed for bankruptcy protection ahead of a proposed deal to sell off to a consortium of lenders. The news wasn't exactly a huge surprise.

The company had been cutting staff. It seemed to be on a downward slide for a few years. But Vice's impact on a generation of fashion, media, advertising, and just culture in a broader sense has been significant. From its drug-fueled gonzo journalism to documentaries from war-stricken corners of the earth, the company tapped into something. Welcome to Bogota, Colombia. We're here chasing after the most dangerous drug in the world. Islamic State Press Officer Abu Mossa said he would take Vice News to see the front lines. Everybody in!

All right, all right. Let's get on. Let's go. Do we need more people in here? We've got Vice in here. Is this the fucking media right here? Audiences, advertisers, investors, they all wanted more. Fledgling journalists found opportunities there, and many stayed, producing award-winning work.

But Vice Media's history is complicated. The company took risks in its coverage, its tone, and how rapidly it grew to a nearly $6 billion operation. Reeves Weidman has been following the story of Vice for New York Magazine. He's here to explain what it took for the company to reach these heights before it all came tumbling down. Hi Reeves. Hey, thanks for having me. Let's start with a touch of personal nostalgia.

Montreal, 1994. I'm there graduating from high school. Meanwhile, something's happening across town. Vice's three founders, Shane Smith, Gavin McInnes, Soroush Alvi, launched the precursor to Vice, which was kind of like a local alt magazine. Okay, so what are these guys trying to do? Yeah, I mean, I wish I was there, except I probably wouldn't have been cool

enough to be in the Vice circle. They were these guys who had this idea kind of on a whim. They were just friends to start this, what was at the time a magazine that was this irreverent, funny, cool, very off-color publication that was kind of unlike anything you could find. It talked about sex and drugs and music and everything that young, cool people like to think and talk about in ways that other publications weren't willing or interested in doing. And in those early days, it really was this kind of center of cool in Montreal and then pretty quickly in other cities, both in Canada and around the US. Yeah, so what I remember from that time is an even more popular cool weekly called The Mirror. So there's like a healthy subculture there at the time, like there there's a thriving scene, and there's a musical scene.

I'm thinking of bands like Godspeed, You Black Emperor. I said, kiss me, you're beautiful. These are truly the last days. A bit later, Arcade Fire coming out of Montreal. Is there anything about the ecosystem that contributes to the creation of this project? I don't know.

It sounds like you might actually sort of know more about it. But I think, you know, it was kind of this era, you know, in the 90s into the early 2000s, where, you know, small magazines, alt weeklies were having sort of a moment. This was before the rise of the internet, but it was also kind of at a sort of era where Gen Xers in particular, which was the generation that the vice founders are from, were sort of, you know, looking askance at corporate media or the media that was out there, the mainstream media. And you could kind of start these little publications on a shoestring and make a business out of it. And so I think, you know, things like Vice were sort of popping up in different places,

but Vice just had kind of some sort of special sauce that felt different and a willingness to do things kind of differently than other people. Okay, so let's talk a bit about that special sauce. I mean, how would you describe Vice magazine in the 90s? Not just the stuff they were covering, but its aesthetic. Like, what was it going for? It was going for shock, I think, in some way. And it was going for, we're going to say the thing that you and your buddies are talking about while you're stoned or drunk at home or at a bar, but that you can't find written about anywhere. And that was, you know, things like they would have all these guides to different things.

And it would be the vice guide to anal sex, the vice guide to shagging Muslims, like all these things that were, you know, I think we look back at now and cringe at and certainly people at the time, you know, some people would look at that and be like something edgy, you know, it was a place to go for that. And it was very funny. Like, they were very clever on what could be crass at times. They were also very funny writers that they were having. So, it felt like this place you could go to get something you couldn't get anywhere else. And the writing was pretty good to boot. And, you know, as part of that sort of counterculture attitude, I mean, drugs had a pretty central role to play in that, didn't they? Yeah. I mean, I think that Shane Smith and others have, you know, have fuzzy memories of that period. And they were open about it. And, you know, it was something that they wrote about. Vice was also an example early on of the kind of publication, you wanted

to go to parties with the vice people, you wanted to go hang out at the office, which meant that you were going to be having beers and doing whatever drugs were handy. And so, you know, it was certainly a part of certainly the coverage and it was just a part of the Vice lifestyle. Okay, so like by the end of the 90s, Vice has already outgrown Montreal. An investor convinces them to move to New York. They set up a shop in Brooklyn. So how central was being from Brooklyn, the whole Williamsburg thing, to their whole brand? I think it helps.

I think Vice actually, interestingly, they first moved to Manhattan. Their first move to New York didn't really pan out. actually, interestingly, they first moved to Manhattan, their sort of first move to New York didn't really pan out. They ended up kind of the three founders on their own again, in Brooklyn, in Williamsburg, which was really the the center of, of hipster New York and, and frankly, global hipster culture in in the 2000s. And so I think what they were able to do is, one, to very genuinely tap into the sort of ethos and aesthetic of the time in Williamsburg in that moment. And then they were eventually able to sort of position themselves as the place who can translate that to a broader audience in a way that, you know, a more mainstream publication just doesn't have the authentic connection to. Okay. So, you know, the magazine and some of the other arms of Vice Media presented a lot of opportunity for young journalists, didn't it? So what's the appeal

to a young writer getting an opportunity to work for this place? I think it's a couple of things. I mean, you know, it wasn't the pay. The pay wasn't very good. If there were benefits, they weren't great and not everyone was getting them. So you weren't going there for stable employment. But you were going there, one, because it was fun. It was a fun office to be in. You know, again, if you're a 23-year-old and there's free beer in the office and you're a certain kind of young person, like it's kind of hard to imagine a better job. And then I think just as importantly, Vice was a place that was willing to try things and to let young people have a crazy idea and try it. Like, you know, let's see what happens if we try to sneak into North Korea with a camera crew.

And then you're flying from Shenyang to Pyongyang in North Korea, and you go, holy shit, we're going to North Korea. And with the express purpose of shooting, which you're not allowed to do, with the express purpose of making a documentary, which you're not allowed to do, with the express purpose of making a documentary, which you're not allowed to do, this is terrifying. So from the first minute I got there, I was shit scared.

And sure, let's just go do it and see what happens and whether or not we make it in, we'll make something fun and funny out of it. So your writing on Vice refers to its so-called 22 rule. Can you walk me through what that 22 rule was? Because I think it says a lot about sort of the work culture. Yeah, I mean, you know, to be clear, it wasn't codified in the HR handbook in part because early on there wasn't much of an HR handbook, but it was kind of an offhand joke that one manager made to sort of describe the environment. And the 22 rule was that we hire 22-year-olds and we pay them $22,000 a year and we work them 22 hours a day. And in some ways that was kind of key to the early culture and the early growth of Vice.

They didn't pay people a ton. They worked you to the bone. Your life really became working at Vice. Okay. So we talked a moment ago about uh vice outgrowing montreal i want to talk now about it outgrowing even the united states becoming truly international and outgrowing print uh so around the mid-2000s it's it's got an international presence we see a move into digital video which results in a lot of the content people probably think of when they think of vice like the one where a vice photographer covers the west dog show on LSD. That dog is crazy. How do you describe the Vice video style? You know, I think it's something that was very revolutionary at the time

and that we've come to think of as somewhat normal now, I think, or a normal way of telling stories. And it was essentially, you know, we're going to, you know, if we're going to go into a war zone, we're going to go into a war-torn country like Liberia. So is that why your nickname was General Butt Naked? Yes, because I was naked, because I fought naked. Or Pakistan. We're hearing lots of guns being shot around us,

and they're just checking to make sure that the guns work. They're doing it with live ammo. Or wherever it might be. Part of the documentary experience is we're sending a young person, a young, cool vice employee, often with a beard, more often than not white, from Brooklyn, to go try to get in wherever you're trying to get into. And so the documentaries became, at least in some part, as much about the person who was doing this and the vice journalist, which I think, you know, again,

people could have looked back kind of problematically. But what it did is, in a somewhat positive way, is it showed that there was a way to get people to care about learning about Liberia and going on a journey to visit there in a way that, you know, a 60 Minutes or a frontline documentary on PBS, like, might not get readers and certainly wouldn't get reviewers and certainly wouldn't get young people. And so I think that sort of sense of creating these documentaries that sort of doubled as kind of adventures where you were following along was one of their sort of innovations. Nice. Your writing has talked about how some former staff have said it's like almost a miracle

nobody got killed on one of our foreign deployments. Because, you know, for those of us in the news business, when we go to a war zone or to a natural disaster site, and there's these long list of protocols you follow, you got this sense that these guys were just going all out all the time. And they did some good work. Like the company starts launching these spinoffs like Motherboard for tech coverage. Denver, Colorado.

Ground zero for cannabis legalization. And home to a booming tech sector in what could be called the Silicon Valley of weed. Noisy for music. A few months back, I started seeing things pop up everywhere about a YouTube channel showcasing MCs from Blackpool. And it was the maddest thing I've seen in a very long time. You know, so like, was this good quality journalism in your opinion? I think that's a big debate. It was at the time, I think still is today. I think that's a big debate. It was at the time. It, I think, still is today. I think, um, the thing that they became most known for, I think, was, was this kind of blending of, of entertainment and journalism that I think you can, you can see as, on the one hand, on having, having some problems. Um, on the other hand, they, again, again, got people to pay attention to stories that they might not otherwise be able to. In the Dragon's Den, a simple pitch can lead to a life-changing connection.

Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people

I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. So I want to talk to you about Virtue. This is the marketing agency Vice launches in 2006. So what was this all about? Virtue was essentially an in-house advertising company where they would take clients, and these were huge companies, and Isaac Bush, these large companies that were saying, we want to try to connect with the Brooklyn hip campaigns, branded content campaigns, to try to connect with and reach that audience. And that was ultimately what the Vice business proposition was.

And, you know, in some ways, more traditional news outlets have kind of followed suit. I mean, even grand old papers like the New York Times have got things like its T Brandt studio to make this kind of paid content, right? Yeah, I think, you know, if you look at a lot of the things Vice did, you know, yeah, as you point out, many other sort of mainstream publications followed suit or were kind of doing the same thing at the same time, you know, the the the cheekiness of having your your main name be vice and your advertising company be named virtue uh but they you know other companies were doing doing sort of similar things vice media is still growing at this point uh shane smith is working on

making all sorts of deals and you joke in your piece that the only person who talks more about his deal making prowess might be donald trump. And there's some great details in your story about the lengths Shane would go to to market himself and his organization. It seems like part of his genius was kind of that bluster. Can you tell me one of your or a couple of your favorite stories about his bluster? Yeah, I think, you know, and again, you look back on some of these stories as both, you know, wow, he was really pulling the wool over people's eyes. And on the other hand, this is just good, good salesmanship. I mean, I think back to, you know, one of the stories I love is early on when the company was trying to sign one of its first big deals. They, you know, had a bunch of executives in town, came to Williamsburg. This would be a common

thing over the years that these big executives, Rupert Murdoch, Disney executives, you name it, in the media world would come and do this tour of the vice office in Williamsburg. In this one example, Shane took these execs out to dinner, then went to, brought them all to a vice party, you know, that night. And, you know, it was like a, whatever, a Tuesday, Wednesday night. The vice employees themselves were not really in a partying mood, but he knew he needed to put on a show. And he kind of walked around the room just like whispering in his employee's ear, start dancing. And it was just this, you know, we're putting on a good time. And even if it's not actually a full-time party here,

that's what we're selling. And that's what we need to show. I've been working in the news business for quite a few years. I've never been forced to dance before. There's this other great story about him. I don't know, like it's a strategically uh timed uh model photo shoot what was what was going on with that at the time and this was kind of early on in vice's growth in in williamsburg you know they had a small office they were they were

just kind of getting by and and they were going to have these big executives in so so he uh shane walked across the hall and and told this uh this architecture firm that was working out of an adjacent office, how much would it cost for me to just get you to leave? And we're going to take over your space by the end of the week. I also made a deal with a photo studio that was there in the building. We're just going to take it over for the day and pretend like we own this thing, even though they're just sort of renting it. And, you know, I think Shane's thing is like, well, you know, if they don't ask me, I don't need to tell them whether we own it. And if they believe it, then all the better for us. Okay, so let's talk about Gavin McInnes. It's around this time, 2008, when McInnes leaves the company. And I think we should dwell on him for just

a moment here, because people will know McInnes as the founder of the Proud Boys, this far-right group of men who praise violence, who show up at progressive events in the U.S. and get into dust-ups with Antifa or help lead the attack at the Capitol on January 6th

to overturn Donald Trump's election loss. For awareness, be advised, there's probably about 300 crowd boys. They're marching eastbound towards the United States Capitol. So how much of that type of politics, like McInnes' politics today, do you see in the early Vice and the content before he left the company? I think it's a complicated story. I don't think that it would be fair to sort of characterize early Vice as political in any way. Again, this was a publication for, you know,

young people looking to have a good time. And I think, you know, Gavin was very clearly in the early days, he was kind of the editorial brains of the operation. And in whatever sense, there was an aesthetic and a type of content that Vice had. It in large part came from Gavin. And so as Vice tried to move away from that, it became a tricky transition for them to make. And I think one that they continued to struggle with for years. Yeah, I'm thinking about one of those guides you alluded to earlier the magazine would put out the vice guide to everything uh i mean some of it was yeah pretty funny some of its cultural gatekeeping some of it's just like racist sexist homophobic i mean

they talk about when white people can say the n-word about when it's okay to smack a woman i mean i'm just wondering like yeah when they pushed gavin out was it because they they they could no longer abide that content or is it also just about making keeping the company palatable enough to keep growing and making money and that gavin was becoming an impediment to that i i think as with all things it's complicated and there were a lot it was a lot going on but i think at the end of the day um shane in particular wanted vice to be big he wanted to to it to grow grow grow and to become a huge media player and certainly by the point um that they pushed gavin out in in 2008 um that was on his radar they were working with mtv uh on a show at the time um and MTV had a bunch of sponsors drop out of a show after they ran a

particular segment. So it was kind of, it was becoming clear to Shane that, you know, they had to rein certain things in if they were going to reach the heights that he now wanted to. And so, you know, I think it's certainly fair to say that in large part getting rid of Gavin was a business decision as much as it was an ethical one. And it keeps growing. You alluded to MTV. Let's talk about HBO.

Sure. How did its partnership with HBO supercharge the brand? Yeah, I mean, I think when they announced that they were going to have a show on HBO, it gave them this real stamp of legitimacy that HBO is both an arbiter of taste and it's also an outlet owned by a very large media organization.

And so I think that was the moment, while it didn't end up being a huge moneymaker for the company, partly because they spent so much to make the thing, it was this huge legitimizer for them in the eyes of both the audience and advertisers, and I think other At this point, the money is just rolling in. Rupert Murdoch, the father of Fox News, he's invested $70 million. Vice Media is now valued at more than a billion dollars. Other deals roll in worth a quarter of a billion each, which drive up the valuation of the company, two and a half billion dollars. Talk to me about how this success affects Shane Smith.

Well, it affects Shane Smith the way it would probably affect any of us and maybe more so with someone with his sort of grandiose temperament. But, you know, he became this big shot media executive. But, you know, he became this big shot media executive. Bloomberg reported that he had spent $300,000 on one dinner in Las Vegas. And Shane, his response to it was it wasn't $ lavish life that he was now living. And I think Shane was sort of inextricable from the brand. And I think in some ways he saw himself and his success as kind of helping to drive the narrative of Vice being this kind of serious player. It also produced a lot of angst and anger from other people in the company and from those 22-year-olds who were only making $22,000 a year. And then in the midst of all this, the Me Too movement starts gaining steam everywhere. Senior vice employees are the subject of a series of allegations,

their settlements, the New York Times report. How much of a problem does this become for the company? It was a really, really difficult period, you know, as it was for many companies, but I think particularly so for Vice. And, you know, this came at a moment in 2017 when the company had just hit its $6 billion valuation, which was its peak, and was really trying to really now had to prove that it could deliver on the promise of what it was selling. And suddenly, this thing that had always been a part of the Vice brand, which was we drink, brand, which was, we drink, we party, we do drugs, we have sex, including in the office, or within the office, were things that were very much a problem in the general discourse and culture. And so I think for Bice, it was a kind of brand problem for the company. So I think it came at a particularly difficult moment for the company and turned a lot of brand problem for the company. So I think it came at a particularly difficult moment

for the company and turned a lot of people both inside the company and outside the company sort of against Vice. And there were also these non-traditional company agreements. Employees had to sign these agreements. What were they? The gist of the agreement was, you know, you know where you're getting into when you come here. And, you know, some people were comfortable with that. Some people for a time were kind of happy to be at a place where you could kind of do whatever. But through the Me Too movement and other things, you know, suddenly that kind of workplace just became totally untenable. And this is right around the time of Vice's high watermark. It hits this estimated

value of $5.7 billion. This is the turning point, right? What else is happening? Where do the fortunes start to slide? I mean, I think the sexual harassment was a blow to the company's reputation at this moment where it had this $5.7 billion valuation, it had just taken on a huge, almost half a billion dollar investment from a large private equity firm. And the expectations for Vice were now so enormous that anything short of the company becoming this huge monolithic player on the scale of an MTV or frankly, even bigger, were going to not only be just sort of a disappointment, but they wouldn't work because the company was now taking on so much money from investors who did not want to create a company that made cool documentaries. They wanted to make the biggest media brand for young people in the world.

And that is just really difficult to do. And I think you can point to a lot of missteps that the company made. But ultimately, I think, you know, the problem was that the ambitions were set so high, both by Shane and by the people who were choosing to invest in Shane, that it was almost going to be impossible to actually live up to. And Shane wants to sell, right? The whole plan was to cash out, and it just never happened. Like, what went wrong? Shane felt very strongly at one point, he basically was sure that Disney was going to buy Vice. And when you're trying to do that at this particular moment where growth was everything,

all you need to show is we're getting bigger and bigger. We're adding a show on HBO. We're adding a cable channel. Our audience continues to go up. And people will be willing to look past the numbers. Once that sale doesn't happen, which falls apart for a variety of reasons, then suddenly you're left with, well, who's going to buy us? And if no one's going to, if there's not many media companies out there

willing to pay $6 billion for us, how do we get to some point where we can become profitable? And the company was just never able to make that turn. And that takes us to the bankruptcy. We've seen a lot of new media companies fold or contract. BuzzFeed News just folded. All newsrooms are struggling these days. So is there something different, very specific device that happened in this case? social media companies, the growth at all costs sort of model that a lot of companies were trying to apply to, and just the disruption of the ad market were all things that every company was dealing with. I think what makes the rise and fall of Vice so shocking is how big it got, which I think both makes the fall sort of all the more startling to see just

in the numbers from $5.7 billion to a sale for $225 million. But also was one reason that it fell so fast is that the fact that Shane was not content being the place that made cool documentaries meant that he had to shoot for the moon and in shooting for the moon you you burn lots of cash you you inevitably make lots of bad decisions and ultimately it it all just came crashing down you you just alluded to the potential acquisition of vice media for uh 225 million dollars and it's a massive fall from the nearly six billion dollar valuation in 2017 uh but from uh reports and from your knowledge of the company what do you expect will happen next like are journalists all out of the job will vice uh live on will the brand live

on in some other form yeah i mean you know there's a lot of there's a lot of people with a lot of money um that are stuck in vice that that would obviously like to get something out of it. The reports in the news suggest that a couple of the investors, Fortress, which is a large hedge fund, and George Soros' investment fund are potentially planning to make this bid. And, you know, I would expect there is some value here. And there are certainly parts of the company that will remain. I think, you know, bankruptcy is never a great thing. And certainly, I would expect that a lot of journalists, a lot of employees of all kinds, are going to be out of a job in the future. And they've already started to cut some parts of the company. But I would also expect, you know, that certain parts of it will remain. And, you know,

I think what will be interesting to watch is whether, you know, does the Vice brand remain or do different parts of the company get sort of, you know, sold for parts to other outlets such that the Vice brand doesn't necessarily even exist anymore. And I think it doesn't hold the cachet it once did. And so the people who own it are going to have to decide, does the name mean something anymore? Or are we just trying to get as much money out of this thing as we can? Okay, so it's no longer the hot young thing, but if I'm understanding you correctly, it's not dead yet either. So, hey, thanks for doing this. I really appreciate it, Reeves.

Of course. Thank you for having me. That's all for today. Thanks for listening, everyone. Tune in tomorrow, The FrontBurner. For more CBC Podcasts, go to cbc.ca slash podcasts.