VICE, the online media company, announced its filing for Chapter 11 bankruptcy protection a few weeks after reportedly filing for bankruptcy. The deal on the table involves the potential sale of VICE to Fortress Investment Group and Soros Fund Management for a significantly reduced price of $225 million, only 4% of its 2017 valuation of $5.7 billion.
While the company plans to continue operating during the bankruptcy proceedings, the news of VICE’s financial struggles raises concerns about the future of the digital media industry, which has recently seen other major players face similar challenges.
VICE’s decision to seek Chapter 11 bankruptcy protection allows it to manage its financial issues while continuing to operate and reorganise its business. The bankruptcy filing by VICE indicates the broader challenges the digital media industry faces. In recent months, Pulitzer Prize-winning BuzzFeed News ceased operations as part of company-wide layoffs, impacting 15% of the workforce.
While the decline of VICE and other digital media outlets may be partly attributed to industry challenges, much of the responsibility lies with management decisions. External funding efforts, relying on debt and equity capital, initially supported growth but left VICE unable to meet its debt obligations. Consequently, the company deferred loan repayments to sustain operations, further exacerbating its financial difficulties.
As reported in its financial statements, VICE currently carries approximately $834 million in debt. As part of the Chapter 11 bankruptcy process, VICE aims to raise more than $20 million in funding from financial institutions to maintain its operations during the sale process, which is expected to span several months.