Editor's Note: Inc. Magazine announced its pick for Company of the Year on Monday, November 23. It's Slack! See which one Inc. readers chose as their favorite company of 2015. Here, we spotlight Vice Media, one of the contenders for the title in 2015.
Few companies have expanded as aggressively and in so many different directions as Vice Media has in 2015.
The Brooklyn, New York-based media company partnered with giant brands including Verizon and Snapchat. It expanded an existing relationship with red-hot cable channel HBO. And just this month, Vice announced its plans to launch a 24-hour lifestyle and entertainment TV channel called Viceland in partnership with A&E Networks. The channel is expected to cover topics including fashion, food, music, and sports and will be distributed in about 70 million homes starting in 2016.
Oscar-winning writer-director Spike Jonze, who has worked as a creative director at Vice for years, oversaw the development of the channel, from show creation through production. Not bad for an aging media company that got its start as a free magazine in Canada, eh?
It was 1994, and co-founders Shane Smith, Suroosh Alvi, and Gavin McInnes launched The Voice of Montreal, a monthly magazine focused on art and culture news, funded by the Canadian government. Following a dispute with their publisher, the co-founders changed the name to Vice, adopted more of a punk image, and refocused the publication on edgy topics aimed at a younger generation.
In a previous interview with Inc., Alvi said part of the expansion from old media to new media was not entirely planned. "We ended up with cameras in our hands in 2007 because an executive at Viacom said, 'If we gave you money to make a DVD, what would you do?'"
Since then, however, growth has been swift. In the past 18 months, Vice has attracted a reported $250 million investment from A&E, which acquired 10 percent of the company, and another $200 million from Disney. The latter reportedly raised the company's valuation to a whopping $4.2 billion to $4.5 billion. Last month, Smith speculated that if Vice went public, it could be worth as much as $20 billion. Vice declined to participate in this article.
How does a youth-focused media company fetch a valuation of more than $4 billion--particularly when other media companies are scrambling to stay afloat? Simply, it's diversified. Media organizations like The Washington Post owner Graham Holdings Company has long owned companies outside of the traditional media spectrum--for instance, testing company Kaplan and home health-care provider Celtic Healthcare.
However, Vice is different. The company includes a record label, marketing agency, clothing line, and film production company, with operations in more than 35 countries. Licensing of original TV content to domestic and international networks has reportedly helped the company increase its profit margins dramatically.
In January, the company partnered with Snapchat to distribute video and editorial news coverage and entertainment through the social startup's Discover feature. And in July, Vice announced a similar multiyear partnership with Verizon to produce original video exclusively for the cellular carrier and distribute existing video content to Verizon customers' mobile devices.
"In an era of media clutter, they have really gone multichannel," says Horizon Media analyst Brad Adgate. "A lot of companies want to do it, but it's really difficult, because many times if you go past your core business, it can kind of implode."
Smith recently told CNBC that Vice would bring in close to $1 billion in revenue in 2015. However that figure has been disputed because it's based on bookings that took place in 2015 but won't necessarily result in the company's being paid until 2016.
Included in these bookings are a deal with HBO. In addition to extending the Emmy Award-winning show Vice for four years, HBO will add a daily news show from the company and a Vice-branded channel available on the HBO NOW streaming service. HBO called the agreement its "most expansive programming deal ever."
Not all of the news about Vice this year has been rosy, however. Critical stories from Gawker and other outlets--stemming from unnamed Vice employees, past and present--swirled around about the company's below-market salaries and its allegedly editing content to appease advertisers. Vice's Smith baldly denied the latter allegation. In an article for The Guardian in March, Smith said "no programming has ever been edited for a sponsor." Gawker submits that none of the statements from its anonymous sources were refuted.
Regardless of whether Vice's journalistic integrity is as strong as Smith asserts, what's clear is that Vice the company had a big year in 2015. For that Alvi credits one thing: "Had we not diversified, Vice would still be, like, eight people in a south Williamsburg loft."