Despite his own Vice Media’s massive success, Shane Smith used the MacTaggart Lecture at the Edinburgh TV Festival to warned there was a crisis coming in the media industry with consolidation among major players and an “evisceration” of digital businesses that are struggling to make their business models work.
“Next year…. be a [expletive] bloodbath,” he said founder of CEO of Vice. “You are going to see a merger and acquisition frenzy of the last two or three big boys, buying the last two or three [digital] scale plays to say ‘we’ve got digital, we’ve got mobile, we’re smart.’”
Smith talked about rivals like Buzzfeed and Vox, which have received $200m each in investment from NBC Universal, and Business Insider, which sold up to Axel Springer –as examples of how many of the new digital news media were finding it tough.
He believes the secret to Vice’s success was when it ‘gre up: “The good news is the growth of Vice, valuations and our traffic growth and everything, happened….when we stopped talking about cocaine, supermodels and rare denim. When we started talking about the environment, women’s issues, LGBT issues. Because our audience demanded it.”
“Everyone said young people don’t care about news [and] they sure as hell don’t care about international [news]. [expletive] They care. But they don’t like way its been portrayed up until now. This is a huge white space.”
Vice has a multi-billion dollar valuation after Disney put in $400 million last year for an 18 per cent stake. The company’s other backers include Sir Martin Sorrell’s WPP, and Viacom.
Smith warned that all media had a “fear of Facebook” which, along with Google, hoovers most of the digital advertising many media companies rely on. There was also the spectre of Facebook “changing its algorithm”, which would mean it effectively “owned” the media companies that had become too dependent on its giant global popularity to drive audiences to their content.
“I learned this two years ago which is why we moved into TV,” he said. “We realised we had to get off the crack that is Facebook or at least somewhat mitigate it with some methadone [by expanding Vice on to multiple platforms].”
Smith talked about his own company and its super valuation: “I can stay independent. It is good for me, as a megalomaniac, I’m set for life…. As a chief executive I have a fiduciary responsibility to my shareholders to do the best thing for the company. And it is something I wrestle with every day. Do I do something that is good for me and stay independent? Do I do something for the shareholders, and probably the company going forward, do I [continue to massively invest in the business] or do I take the risk of public markets?”