A deal that gives 21st Century Fox a 5 percent stake in Vice Media effectively values the company at $1.4 billion. The deal, scheduled for a Monday announcement, means that Fox just spent $70 million to get a little piece of the company that (maybe!) has an interview with North Korea's Kim Jong Un hidden somewhere in its archives, and managed to get unfriended by John McAfee.
While that valuation is kind of bonkers, the deal isn't completely out of the blue. Rumors started over Fox's interest in Vice when it became public knowledge that News Corp's Rupert Murdoch (the CEO and majority shareholder in the recently spun-off 21st Century Fox) digs them:
Who's heard of VICE media? Wild, interesting effort to interest millenials who don't read or watch established media. Global success.— Rupert Murdoch (@rupertmurdoch) October 13, 2012
For a sense of scale: John Henry paid $70 million for the Boston Globe two weeks ago, and Amazon's Jeff Bezos paid $250 million for The Washington Post several days later. To buy Vice, which was founded as a Canadian music magazine in 1994, you'd have to pony up more than triple the cost of both newspapers combined.
Financial Times has the details on the deal. Vice was apparently advised by Tom Freston, the former chief executive of Viacom, who is also a minority shareholder in the company:
Mr Freston advised Vice on the transaction. “The idea was to raise capital to help fund a lot of the initiatives we want to undertake more aggressively outside the US – but also have some strategic alliances with a company that has robust distribution,” he said.
Minority shareholders own a quarter, total, of Vice Media, with the founders and senior management holding on to the rest. But Fox, apparently, has something that Vice could really use right now as they try to expand into India and Europe, following their television move via HBO. According to FT, Vice will jump aboard 21st Century Fox’s Star in India to try and grab up that market. Or here's the more Vice-y way to put it, from CEO Shane Smith speaking to Deadline:
We get to make all the content we want? With the best platforms in the world? Grow our brand exponentially? Become the next global media brand? And all the while own the vast majority of the company and vote 95% of the board? Where-do-we-fucking-sign?!
Predictably, the media world is gawking at the figure and wondering how if the company's gonzo-spirited brand has finally reached its corporate culmination:
Hipsters liked them before they sold out: Vice valued at $1.5 billion after selling 5% stake to 21st Century Fox. http://t.co/3sVzbNQiHJ— Tom Gara (@tomgara) August 16, 2013
We are apporaching peak Hipster: Vice sells %5 stake to 21st Cent. Fox valued at $1.4 billion http://t.co/g7kTO3TC3G— David Cohn (@Digidave) August 16, 2013
But should we really be surprised? It's news to no one that new media is expanding and newspapers nearly worthless, and journalists have been blasting Vice as sell-outs for longer than anyone can remember.
This article is from the archive of our partner The Wire.