Vice Media to Shrink Workforce as Growth Stalls

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Nancy Dubuc, CEO of Vice Media, speaking earlier this month in New York.

Nancy Dubuc, CEO of Vice Media, speaking earlier this month in New York.


Photo:

Stephanie Keith/Getty Images

Vice Media plans to shrink its workforce by as much as 15% through attrition and cut its selection of digital sites by at least half, according to people familiar with the matter, as growth stalls at the onetime new-media darling.

Revenue at the Brooklyn-based company is expected to be roughly flat this year, the people said, coming in between $600 and $650 million, on par with 2017. That number is more than $100 million below the projection Vice offered private-equity firm TPG in the summer of 2017. TPG’s investment gave Vice a $5.7 billion valuation, the highest of any new-media company.

Vice lost more than $100 million in 2017 and is on track to lose more than $50 million this year, people familiar with the matter said.

At a board meeting in Los Angeles on Tuesday, Vice Chief Executive Nancy Dubuc suggested the company focus on areas of growth, such as its in-house advertising agency, Virtue, and make more television shows and movies for third parties.

The plan outlined by Ms. Dubuc, who took over from co-founder Shane Smith in May, essentially shifts Vice’s emphasis away from the kind of online content that originally put it on the map for young users, but struggled in recent years as traffic stalled.

Vice runs more than a dozen online “verticals” such as Munchies for food, Noisey for music and Broadly for women. Ms. Dubuc plans to fold several of them into between three and five verticals, according to people familiar with the matter.

To reduce head count, Ms. Dubuc issued a companywide hiring freeze about six weeks ago, leaving about 220 positions open at the company of 3,000 employees, according to the people. Through that freeze and natural attrition, she plans to slim down Vice’s ranks by between 10% and 15% overall, they said.

Web traffic to Vice’s own sites has declined to 27 million unique visitors in September from 36 million two years earlier, according to comScore.

Ms. Dubuc’s plan represents a reversal of fortunes for Vice, which billed itself as uniquely able to attract millennial audiences and drew investment and partnerships with

Walt Disney
Co.

,

21st Century Fox
Inc.

and WarnerMedia’s HBO, now part of

AT&T
Inc.

The retrenchment comes amid a broader slump in digital media, as rivals such as Vox Media and Refinery29 missed revenue targets in recent months, with the latter announcing last month it was laying off about 10% of its workforce.

Some of Vice’s problems are unique to Vice. The company launched a cable channel, Viceland, in 2015 just as cable television’s decline was accelerating, and has struggled to adapt to a broader cultural shift powered by the #MeToo movement that hasn’t always sat well with its macho, devil-may-care hipster brand.

Ms. Dubuc took the reins from Mr. Smith earlier this year in the wake of reports of sexual harassment at the company that prompted apologies from Vice for what it called its “boys club” culture.

In a statement to The Wall Street Journal, Vice’s board of directors touted the company’s “diversified revenue streams” and said it would keep growing.

“At a time of seismic change across the media landscape, Vice has never been better positioned to continue its remarkable growth,” the board said.

Vice has diversified in various realms beyond digital media, most notably with an Emmy-winning weekly show on HBO. That deal is up at the end of the year and hasn’t yet been renewed, according to people familiar with the matter.

Vice’s digital business, once the main draw for eye-popping, eight-figure advertising deals, has in recent years found it harder to pitch itself in that central role as traffic has dropped.

Vice in the past sold a number of multimillion-dollar deals for sponsored content and traditional ads to marketers like consumer-goods giant

Unilever

PLC, brewer Anheuser-Busch InBev SA and insurer Geico.

But some of its partnerships haven’t aged well. Although Vice was best known for its ability to resonate with young men, in 2015 Vice sold Unilever on its growing female audience, according to a client presentation, pitching the company on sponsoring a new female-focused vertical called Broadly.

Broadly featured a number of Unilever’s feminine care brands, including Vaseline, Tresemmé and Dove. Over more than two years, Unilever paid Vice more than $15 million, including traditional ad commitments, according to people familiar with the deal.

Unilever realized that Broadly wasn’t always reaching its desired consumers. Broadly viewership was weak compared with that of Unilever’s other ad campaigns, according to a 2016 Unilever report reviewed by the Journal that analyzed some Broadly engagement data.

Unilever ultimately ended its sponsorship of Broadly and moved much of its spending to Virtue, according to some of the people.

Some of Vice’s leaders have expressed doubt that the company will be able to achieve profitability solely by cutting costs and shifting investment to more lucrative divisions, and instead must raise money once again, according to people familiar with the matter.

Adding to Ms. Dubuc’s challenges is last year’s $450 million investment from TPG that gives the fund the right to get its money out first and expand its holding over time—terms seen as impediments to attracting more capital or selling the company, some of the people said.

Mr. Smith, now Vice’s executive chairman, has traveled to both Saudi Arabia and the United Arab Emirates this year to negotiate deals, the people said. Some of the people said these deals only involved content partnerships, while others said they also included talks with sovereign-wealth funds about potential investment.

Mr. Smith’s visits to Saudi Arabia occurred earlier this year, before the murder of journalist Jamal Khashoggi prompted global outrage against the country’s crown prince, Mohammed bin Salman.

Write to Keach Hagey at keach.hagey@wsj.com, Benjamin Mullin at Benjamin.Mullin@wsj.com and Alexandra Bruell at alexandra.bruell@wsj.com