Following layoffs, Vice Media signals an end to its freewheeling days
Vice Media is growing up.
On the heels of cutting 10 percent of its headcount of 2,500 employees, CEO Nancy Dubuc unveiled a reorganization that will streamline Vice around its best-performing business line, jettison far-flung money-losing outposts and cut deeply into “non-core” edit areas like sports and fashion. In short, Vice is looking to go from bad boy to model student as it seeks to build a business that matches the $1.4 billion invested in it. Dubuc, who joined as CEO last March, is signaling a break from the freewheeling, another-round-of-shots approach of Vice co-founder Shane Smith.
“I think most of Vice’s problems are operating acumen problems: coordination, mature process, etc.,” one former executive said. “In the latter parts of Shane’s tenure as CEO, there was not sufficient executive leadership to say, ‘We’re going to do this, and we’re not going to do that.'”
On Friday, Dubuc sent a letter to employees announcing that Vice Media would centralize itself into five separate business units, including studio, TV, digital, news and Virtue, the company’s advertising agency. The restructuring included layoffs of up to 250 employees, 10 percent of a total headcount of roughly 2,500 employees; Vice employs another 500 contributors around the world.
The cuts, which started in the U.S., U.K. and Mexico Friday and will unfold in the coming weeks internationally, will be concentrated in Vice’s digital business, foreign operations and in “non-core” editorial verticals, among other areas, sources familiar with the matter said. A source told Digiday to expect a “bloodbath” in international markets.
The move will allow Vice to invest in core business areas that Dubuc sees as opportunities for growth including its Studios division, which recently sold an Adam Driver-led drama film, “The Report,” to Amazon for $14 million at the Sundance Film Festival; its ad agency, Virtue, which acquired 20 new clients this year; and its News division, which piled up nine Emmy nominations in 2018.
Virtue drives the smallest share of revenue of the five new divisions, a source familiar with the matter said. The Studios division accounts for the most, followed by News and Digital; TV, home to its cable channel, Viceland, ranks fourth out of five. A Vice spokesperson later said that Virtue is not the smallest, but refused to provide additional details
Regardless of where the growth comes from, Vice needs its revenues to grow. The company has been under intense scrutiny, missing its revenue targets once again in 2018, according to The Wall Street Journal. The company, which has raised $1.4 billion in venture capital, reportedly generated between $600 million and $650 million in 2018, missing its target by $50 million. This came a year after Vice missed its 2017 revenue target by $100 million.
Vice’s misses led to Disney, which owns a 21 percent stake in Vice, writing down the value of its investment by $157 million.
Over that same stretch, Vice has seen the digital audience on its owned and operated properties drop. Monthly unique visitors to Vice Media dropped 16 percent, year over year, to 66 million, according to Comscore.
Now, significant changes are coming.
On Friday, Vice’s president of digital, Josh Cogswell, sent a memo to employees saying that the digital department was “exploring the right way to further strengthen and support our VICE coverage under a new unified brand architecture.” The memo promised further changes, as well as investment and staffing against them.
Vice Media’s clean-up will be especially crucial in its global operations. Under Smith, who served as CEO until last spring, business leaders in Vice’s foreign offices were given a green light to sell without consulting much with the teams that were supposed to deliver on those campaigns, one source familiar with the matter said.
That enabled each foreign operation to grow organically and on its own terms. But it also created fiefdoms, whose different levels of development sometimes made it hard for Vice to fulfill global campaigns, sources said. Centralizing the business divisions should help clean those problems up.
In some ways, the reorganization announced today has been long overdue. In some ways, the company, which made a name for itself with its brash sensibility and edgy ethos, is growing up. It used to bring its brash sensibility into sales meetings, a tactic that Vice has moved away from a bit since Dubuc, former CEO of A+E Networks, replaced Smith as Vice’s chief executive, multiple agency sources said.
“They used to come to in and say, ‘If you don’t like this, fuck you, we’ll give it to someone else,” said one agency source, who added that while the company still leads its meetings with discussions around custom content, it has grown more accommodating lately.
Note: This story has been updated to include a Vice spokesperson’s comments.
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