Digital Media: An Ugly Place To Be

Michael Hedges May 8, 2023 Follow on Twitter

Oh, did we ever love those heady early days of digital news media. Just as internet service became reasonably reliable and relatively cheap the offerings were truly amazing. And, yes, they were unruly and notorious. Traditional publishers had something to hate beside television. Investors couldn’t control themselves. A generation later, death notices have arrived.

Vice Media Group is looking for a bailout, reported the New York Times (May 1), bankruptcy proceedings imminent. More details emerged, via the Wall Street Journal (May 5), of “senior lenders” preparing to takeover the company through Chapter 11 bankruptcy protections, with a valuation of US$400 million. All reports noted the current valuation is less than 10% of the US$5.7 billion number widely touted in 2017. Fortress Investment Group, the lead investor, provided a US$30 million “lifeline” to get the company through these tough times; meaning, to pay the current bills. Soros Fund Management is also participating in the rescue plan.

The turmoil has been coming for several weeks. Its news division was downsized, “painful but necessary,” said co-chief executives Bruce Dixon and Hozefa Lokhandwala in a memo to staff, reported CNN (April 27). The award-winning weekly Vice News Tonight will fade to black May 25. The audio unit will disappear along with the short-form World News video unit. Key executives started hitting the exits earlier this year. Chief executive Nancy Dubuc left in February after five years. Previously, she had been chief executive of A&E Networks, a Vice Media investor.

The news about Vice Media - somewhat presumptive - follows another digital news crash. Pulitzer Prize winning BuzzFeed News will shortly close, announced the company in April. It, too, was heavily dependent on continuous investor support, which had, apparently, run out. Co-founder and CEO Jonah Peretti said he had “made the decision to overinvest” in the news division, quoted by AP (April 21), and the company would be investing more in podcasts. BuzzFeed continues to publish HuffPost, formerly known as Huffington Post. Other once notable digital news portals have also disappeared. Gawker was sued out of existence by right-wing tech investor Peter Thiel. Drudge Report simply disappeared, more than once.

In addition to investor largess, both Vice Media and BuzzFeed News were also dependent on social media traffic and the ad revenues thus generated. “Social platforms are, generally speaking, not places where you can build a business,” said Tow Center for Digital Journalism at Columbia University director Emily Bell, quoted by the Guardian (May 7). Social media portals “are going to take your money and they are going to take your traffic because they can see exactly where it’s coming from and how much you’re paying for it.” Not exactly partners, yes?

“Clearly that VC route runs out after a while, and it’s never going to come back because of interest rates,” she continued. “You’re never going to get returns on investment putting into a Vice Media that’s missing it’s numbers compared to do something else with your money. Being squeezed by private equity is an ugly place to be because it has no commitment to making media sustainable.”

A decade ago digital media companies thought they were dancing on the graves of traditional media, so last century. “Now the legacy journalism providers are thriving as they report on what looks like end times for the digital giants,” wrote New Zealand digital news portal The Spinoff senior writer Duncan Greive (May 5). “Reversals of fortune are nothing unusual in the news business,” wrote former New York Times columnist Jill Abramson in Vanity Fair (May 5). “But in the last few weeks it’s been gobsmacking.” For some, the fun is over.

See also...

• Hot Topics - News Online

• Hot Topics - Digital Transitions

• Hot Topics - Social Media

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