Vice Media has grown from a single independent print magazine into a multimedia colossus encompassing a slew of websites and YouTube channels, an HBO series, a music label, a book imprint and an ad agency. Will a cable channel be next?
Sky News and the Financial Times are reporting that Vice is in negotiations to sell a large ownership stake to
That's roughly twice the valuation at which Rupert Murdoch's 21st Century
Unlike that deal, this one may not be a straightforward cash-for-equity exchange. According to Sky News, "One potential structure under discussion would see Time Warner injecting HLN, a news platform owned by its cable operations, into Vice in return for roughly half the enlarged company."
It's hard to put a precise figure on the value of HLN. According to the research firm SNL Kagan, its ad revenue has declined over the last three years, from $197 million in 2011 to $167 million last year. Established cable networks usually derive a big portion of their revenues from the carriage fees they charge distributors, but HLN doesn't have a carriage fee of its own. Instead, distributors pay one fee for a bundle of channels that also includes CNN. Vice would therefore potentially be starting from scratch in creating a second revenue stream.
When Al Gore and Joel Hyatt sold Current TV to Al Jazeera last year, the $500 million sale price represented a multiple of about five times the channel's annual revenues of $100 million. Assuming the details of the Sky News report are accurate -- representatives for both Vice and Time Warner declined to comment when I emailed them -- it would suggest Time Warner values HLN at between $1 billion and $1.5 billion.
A doubling of Vice's valuation would mean a big increase in the personal net worth of Shane Smith, its co-founder and CEO. Vice's senior management now holds about 75% of the company's equity (and would retain operational control after the Time Warner deal, per Sky News), with Smith having the largest individual stake, estimated to be worth about $400 million.
When I profiled him in December 2011, Smith told me he wasn't interested in selling the company except to a strategic buyer of the sort would could instantly make Vice a major worldwide player in the media business:
So if Facebook, for example, would wake up and say, oh, we’re going to go public and we can tick off monetization, content, engagement, all these things….and the reason why I would do that is if we became the network for Facebook or the network of Google, we’d achieve that dream of mine overnight of being the next CNN, the next ESPN or the next MTV with the largest audience in the world. And it would be hard to say no to that, not because of the money but because of the fucking cultural impact you would have. At this point I don’t give a shit about money. I’m worth more money than I can ever spend.
