GoDigital wants to buy Vice Media

When Suroosh Alvi, Gavin McInnes and Shane Smith founded Vice Magazine (which later expanded into Vice Media), they built a business based on punk rock, counterculture imagery.smith once Videotaped myself almost naked Drinks and a tour of the media organization’s headquarters in Brooklyn, New York.

The company name is Vice. This is pretty self-explanatory.

Next week, Vice, used to be valued With a market value of $5.7 billion, it is planning to sell itself to emerge from bankruptcy. A little-known Los Angeles company that wanted to buy it had an unrealistic culture that couldn’t compare to the early days of Vice, and it would almost certainly be ridiculed.

GoDigital Media Group is a privately held conglomerate that owns video and music rights, especially Latin-style rights, as well as a range of different businesses. The company is so low-key that it currently has no physical headquarters after closing its Los Angeles office during the pandemic. GoDigital plans to open a new Los Angeles office later this year. Its executives have been running the business remotely since 2020.

Initially, co-founders Jason Peterson, 41, and Logan Mulvey, 38, used the cash flow from music licensing to build a business around digital media distribution by developing A cloud software company called ContentBridge connects content creators with retailers. GoDigital later expanded its copyright business to include Jason DeRulo and TI’s copyright business. Last year, GoDigital Invest $100 million in the division for future growth. Music copyright ownership accounts for the bulk of a company’s revenue and valuation.

In recent years, GoDigital CEO and Chairman Peterson has modeled the company as a mini-Berkshire Hathaway as he tries to play what he calls the “infinity game” — having a lasting business that hits consumers’ passion points.

Since 2020, GoDigital has made eight different acquisitions across the media and commerce space. Peterson and Mulvey were looking for distressed properties with consumer brand recognition.them Acquired YogaWorks for $9.6 million 2021 after filing for bankruptcy in October 2020.Last year, the couple divested assets out of bankruptcyAcquired retailers Eastern Mountain Sports and Bob’s Stores $70 million.

total portfolio It now includes seven companies after merging two companies, Latino-focused media company Mitu and NGL Collective, co-founded by actor John Leguizamo. GoDigital employs approximately 1,300 people through its subsidiaries and generates hundreds of millions of dollars in annual revenue.

The company wanted to “inspire joy” in the process, Peterson said in an interview, in contrast to the straight-up culture Smith brought to Vice.

“Our goal is to create a mood of joy and well-being among our clients and employees,” Peterson said. “What sets us apart is our long-term vision. The goal of an infinite game is simply continuity of play, to ensure that the game continues. When you live and work in this paradigm, you’re living and working in a compound interest paradigm.”

Sean “Dad” Combs Rebellious A bid is also being considered, a person familiar with the matter said. A spokesman for Revolt could not be reached for comment.

Fortress Investment, Vice’s largest creditor turned equity owner, is going through the sale process and has pledged support for some of GoDigital’s bid and other potential bids, said the people, who asked not to be identified because the details of the bid are private. Fortress, along with Soros Fund Management and Monroe Capital, have committed $225 million.

A spokesman for Fortress declined to comment.

GoDigital’s opaque financials and smorgasbord of smaller sizes are fueling doubts about its ability to acquire companies the size of Vice. GoDigital is in talks with other equity partners about acquisitions, said Craig Greiwe, chief strategy officer who was in charge of scouting acquisition targets when he joined the company last year. He declined to provide any names.

“If people haven’t heard of us, I can understand the skepticism,” Greiwe said. “We did have the money to buy it. We were serious about our bid. We also believed the seller saw us as a legitimate and credible bidder. We were confident we could run the business and make a profit from it.”

Peterson and Mulvey said they wanted to own Vice because they believed it was poorly run.Citing corporate profligacy, they’re particularly curious to know Why Rent 20 Offices and production centers around the world instead of having employees work remotely. The co-founders are in talks with Alex Wallace, Yahoo’s former head of media and content for 2020-22, who would become Vice’s new chief if GoDigital buys the company, according to people familiar with the matter. executive officer. Wallace declined to comment.

As CEO, Peterson said he tries to match the employees of his portfolio companies with their own interests. The “Genius Zone,” a concept borrowed from Guy Hendrix’s “Great Leap”, is about the intersection of what people love and what they are Get good at doing things, explains Peterson. If GoDigital buys the company, he said, he’ll be preaching the message to Vice employees on day one.

“I’m going there and I’m going to treat everyone as a person and we’re going to try to figure out what their individual purpose is, what are their values?” Peterson said. “Because when we work at the intersection of what we love and what we’re good at or good at, we do well. If we don’t like something, it doesn’t matter how good we are at it. We don’t Will do it for a long time. When there is a strong alignment of purpose between individuals and organizations, magic happens.”

When business conversations turn to concepts like happiness and value alignment, it’s easy to think of WeWork founder Adam Neumann’s Mission to Raise World Awareness and Cringe. The parallels between the empty language and Vice’s original mission are especially off-putting. Smith, Vice’s executive chairman and former chief executive, could not be reached for comment.

GoDigital execs aren’t embarrassed by their New Age-style business-school jargon. They thought linking passion and purpose would “create an incredibly positive feedback loop for the company,” Peterson said.

“Recognizing that people make decisions based on their emotional state, our goal is to inspire joy in consumers through content, community and the commerce ecosystem,” Greiwe said. “I’m now the one who dreams at night. There is a fundamental Faith, that is, making the impossible possible, and doing it before anyone else.”

Vice have Approximately $600 million in revenue last year And not profitable, Axios reported last month. Vice has had negative cash flow for ‘several years’ According to a bankruptcy filing.

“There’s no reason Vice shouldn’t be profitable today, but because of its past mismanagement,” Peterson said.

But simply figuring out what Vice employees want to do and making sure they do won’t solve problems like a weak ad market or competition for content. Still, Peterson and Mulvey see similarities between Vice’s business and other companies. companies they already own. Mulvey points to YogaWorks as GoDigital’s transformational business to meet new consumption patterns.

With YogaWorks, GoDigital is trying to disrupt the consumer base of indoor yoga with an online subscription service that offers digitally distributed home classes. Mulvey said YogaWorks closed all of its brick-and-mortar stores as part of its bankruptcy reorganization and “lost only a handful of customers” as GoDigital moved its operations online.

Mulvey, who took over as CEO of YogaWorks in January, said the shift from studio to home yoga is akin to changing media consumption habits.

“People are consuming Vice on HBO or on cable,” Mulvey said, alluding to Vice’s HBO Now Canceled Shows And Vice’s wired internet. “We have to make sure we understand our followers and our customers, and that we grow our business in a way that makes sense for the way people consume news, media, entertainment or exercise on the go.”

Peterson pointed out that Vice’s business model is similar to NGL-Mitu. Both make money through branded content and social amplification.

“It’s not a new type of business for us,” Peterson said. “It’s a multi-platform network. We know how to run one.”

Greiwe added that “Vice’s fundamentals are strong” and said GoDigital has no plans to sell any of Vice’s assets, including women’s-focused Refinery29, which Vice acquired in 2019 for $400 million, and Native advertising agency Virtue.

“The brand equity of Vice and Refinery29 is unmatched in the market,” Greiwe said. “It doesn’t make sense for Vice News to exist separately from Vice Publishing. Why isn’t Vice Studios on top, since that company owns decades of intellectual property?”

Peterson admits that much of his interest in buying Vice was that he thought it would be a good candidate to implement his preferred culture and management style, which he calls “the GoDigital way.”

If he’s right, all Vice needs to succeed is a bankruptcy proceeding to pay off its $834 million in outstanding debt and an even better deal.

— CNBC’s Lillian Rizzo contributed to this report.

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