Vice Is Again Looking to Cut Costs and Hoping for a New Buyer to Keep It Afloat

Via Clownfish TV, this report from The Information states that Vice will be mounting a new round of cost-cutting to try to stretch out its solvency while it searches for some sucker to buy it.

Vice does not make money. It will never make money. It just wants a series of Sugar Daddies willing to pump money into it forever to keep its overpaid, underperforming staff paid.

Vice Media is looking to cut costs and had brought in consultancy AlixPartners in recent weeks to help review its business as it explores a sale of its studio arm or the entire company, according to people familiar with the situation.

The New York-based media company is slowing down hiring and cutting other costs to attain positive cash flow and generate $25 million in earnings before interest, taxes, depreciation and amortization this year, the people said. Vice is projecting revenue to rise to over $700 million in 2022, up from around $680 million last year, the people said. Its studio arm, which is one of the assets it is potentially looking to offload, makes up nearly one-third of that revenue.

Vice's cost cutting comes as all media companies are seeing a decline in advertising revenue amidst market uncertainty. Last week, Snap warned that its second-quarter revenue and profits would fall short of its earlier projections due to faster deterioration in the economy than it had anticipated.

But Vice, which operates a news division, a digital business that includes Refinery 29, and the Virtue ad agency, has unique challenges in that it has been under pressure from investors, including private equity company TPG, to repay $1.1 billion in debt it owes.

Oh no, not another round of layoffs at Vice...!

The article says that they can only estimate what Vice is worth. They guess it's worth, maybe, "at least one billion." (And they owe $1.1 billion in debt?)

It was valued at $5.7 billion just a few years ago.

Clownfish TV points out that many of these media and tech company start-ups had a business model of getting a huge pile of venture capital money, running the company for a few years while pretending it might turn a profit in the near future, and then finding a sucker they could then sell the company too for a lot of money, leaving them holding the bag on a company that would probably always lose money.

And these companies have relied on very low interest rates, and very cheap money, to remain afloat. Because they never, ever made money, and have run at a loss every single quarte, they have required periodic infusions of fresh "investments" from venture capital firms or other investors to keep them afloat.

And investors have been willing to play along, because until now, money have been very, very cheap. You can always get another loan to refresh your old one.

But now the era of cheap money is ending. Interest rates are going to keep on climbing, and loans are going to become more and more expensive.

Few are going to want to keep shoveling stacks of cash into the Money Furnaces of failing tech/media companies that were stupid ideas even in 2017 and are just preposterous now.

This Business Insider article is written in such a strident way that it loses credibility, but I do think it's probably a lot more right than wrong: All of the tech/media companies that have been kept alive only by a steady IV drip of fresh infusions of "investment" money -- really, new subsidies -- are about to have the plug pulled on them and be allowed to die.

'Lots of companies are going to get vaporized': The tech titans of Silicon Valley are in serious trouble -- and they're going to take the rest of the stock market down with them

...

[N]ow these vaunted tech geniuses are watching their empires crumble in the face of changing economic winds. Interest rates are rising from historic lows, and it's become clear that a wide array of tech companies -- from the most lionized to the most ridiculous -- cannot survive without easy money. Silicon Valley's inability to weather this inevitable shift is both a disappointment and a wonder. We've seen a tech bubble expand and pop before, bridging the end of the 1990s and the start of the 2000s, but what makes this time so different is the sheer scale of the destruction this will leave in its wake.

Jim Chanos, founder of Kynikos Associates, made a name for his short-selling firm by calling out the excesses of the last tech boom, earning him a forever spot in the Wall Street pantheon of "people who saw it coming." This time around, he told me, the companies that could crumble are even bigger -- and they make up a bigger slice of the economy.

"Our typical short in early 2000 was a $2 billion to $3 billion company that was going away. This go-round it's a $20 billion to $30 billion company. That's why we call this the dot-com era on steroids," Chanos said. "I think lots of companies are going to get vaporized. A lot of them are going to go to zero."

For the past couple decades, Silicon Valley's luminaries told us that money was just fuel for their innovation. What the market is showing us now -- as once seemingly stable businesses degenerate -- is that money was also the engine, the captain, and the destination. In the next few years, many of the hottest tech innovations of this market cycle will simply disappear. Consider this an extinction-level event.

Among the pieces of evidence the article amasses for a coming correction: The major tech investment firm SoftBank has announced that it will cut its investments in startups in half.

The biggest Silicon Valley startup accelerator Y Combinator is advising its portfolio founders to "prepare for the worst:"

Y Combinator, a Silicon Valley kingmaker, is advising its portfolio founders to "plan for the worst" as startups across the globe scramble to navigate a sharp reversal after a 13-year bull run.

And a many other tech investors are preparing "Black Swan" memos also warning of possible wipeouts in the sector.

Below, Ryan Long plays the role of a Vice reporter begging and pleading for a White Knight investor to come along and pour more money into the failing Vice. He tries to sell investors on this proposition by bragging about all the great articles Vice has published -- real articles, note. Ryan Long isn't making these up. These are real Vice articles.

He starts off with a specialty of Vice -- articles insisting that straight men routinely engage in all sorts of gay behaviors and gay sex.

Semi-Related: Target warns that its profit will drop, as it is forced to cancel orders and offer discounts to clear out current unwanted inventory.

Just weeks after reporting weaker than expected profits, retailer aims to discount or cancel orders for products like patio furniture and small appliances, restock with in-demand goods

Target Corp. warned its profit would drop because it needs to cancel orders with vendors and offer discounts to clear out unwanted goods, the latest sign of the sudden mismatch between supply and demand inside America's stores.

Big retailers benefited over the past two years from the pandemic rush to buy patio furniture, laptops and home decor, as shoppers were buoyed by savings and government stimulus checks. Now many of those same stores are grappling with a swift reversal of buying behavior, with consumers spending less on goods in favor of services and necessities such as food and fuel.

I'm sure their Chest Binder for Kids (TM) sales are going through the roof, though.

posted by Ace at 04:25 PM

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