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Shane Smith and the Final Collapse of Vice News

How did a Brooklyn media giant valued at $5.7 billion just a few years ago wind up going bankrupt and folding its newsroom? Look no further than its brash (and still highly paid) founder.

Just weeks after the company he founded entered Chapter 11 bankruptcy last May, Shane Smith jetted to the French Riviera. But this wasn’t a vacation for the 54-year-old flamboyant former Vice CEO to drown his sorrows. Smith landed in Cannes on a mission to save the media company that he had started as a scrappy punk music magazine in Montreal three decades ago from the financial scrap heap. 

Smith, the brash face of Vice, had been quietly operating behind the scenes since stepping aside as CEO in 2018. In his new capacity as executive chairman, he worked the phones and hustled for deals as only he knew how. Now, accompanied by his chief of staff, Alon Soran, he was at Cannes Lions, the annual advertising confab that attracts the monied set looking to do business, desperate to ensure the company he had built didn’t disappear into liquidation and irrelevancy. 

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In a series of previously unreported meetings with Fortress Investment Group’s managing director, Brian Stewart, Smith convinced Stewart that Vice would have another life, two people familiar with the matter tell The Hollywood Reporter. It was the final play by the master dealmaker on his quest to get the company, now run by CEO Bruce Dixon, to financial stability. 

And it worked. On June 23, an announcement went out that a bankruptcy court had approved a $350 million sale of Vice to one of its prior investors, hedge fund Fortress, which led a consortium of buyers in the deal. Smith had pulled off one last magic trick. “In the lore of Shane, this is what he does,” a person familiar with the Cannes meeting says. “Whether it’s on a yacht, or wherever it is, you have this living-large moment and everyone agrees, ‘We are going to do this.’ That’s how he gets the big deals.” Smith did not respond to a request for comment. 

For a company valued at $5.7 billion in 2017, it was a fire sale of a transaction. Disney CEO Bob Iger held talks with Shane Smith in 2015 and 2016 about buying the company for $3.4 billion, according to a person with direct knowledge of the discussions. (Disney did not respond to a request for comment.)

But even that valuation turned out to be wildly inflated. Many current and former Vice employees argue that Smith knew the company was puffed up on air because he was the one puffing it up — and was well compensated for doing so. Smith is believed to be paid a multimillion-dollar annual salary and likely far more in commissions and bonuses under the terms of a multiyear deal that began in 2019 and is scheduled to finish at the end of 2024, a well-placed source says. 

Shane Smith and media executive (and Vice investor) Tom Freston in 2013. Jemal Countess/Getty Images

Smith knew that a little bit of crazy and a little bit of cool would prove irresistible to legacy media figures. He understood that media has the ability to get people irrational. Who doesn’t like a bit of buzz? Even when that hype is as unhealthy as a sugar high.

By selling “cool” and boasting a much sought-after youth audience, Smith was able to get aging moguls to open their wallets. Murdoch’s 21st Century Fox paid $70 million for a 5 percent stake of Vice in 2013. Two years later, Iger made two bets each of $200 million as Vice unveiled plans to launch TV channel Viceland, which would be distributed in 70 million homes. Murdoch’s youngest son, James, would throw in more money in 2019 and 2021 as the company struggled to stay afloat. 

Why did these very serious multibillion-dollar media companies put big bets on Vice? If you’re a top dog at a media organization it’s your job to roll the dice. To put your chips on some squares. Shareholders are looking at you to create optionality. Murdoch and Iger were seeing growth in a business, media, where they didn’t usually see growth and, crucially, they were seeing a notoriously hard demographic to attract and one advertisers flock to: youth.

At the same time, there was an effort made to professionalize the executive structure of Vice. In 2018, Smith brought in former A&E CEO Nancy Dubuc to clean up the books and try to sell the company. But she and her senior leadership team weren’t able to close a deal or produce many programming hits. (Vice’s deal with HBO expired in 2019, while its run at Showtime ended last year.) Dubuc, who departed the company early last year, did not respond to a request seeking comment. 

Vice’s bankruptcy filings paint a fascinating narrative of a company cratering under wide-scale industry disruption. It’s a business without a consumer revenue stream that depends too heavily on advertising and partnership deals. Vice “relied on external funding, raising both debt and equity capital to fuel its rapid growth and to fund expenses in certain parts of the business,” wrote Frank A. Pometti, a consultant hired as the chief restructuring officer of Vice Media, in a May 2023 declaration filing. “Although these fund-raising efforts helped to finance Vice’s growth, they ultimately led to the company being burdened by a highly leveraged and unusually complex capital structure.”

With the Feb. 22 disclosure that Vice is getting out of the news business, all that remains is Vice TV, a joint venture of A&E and Vice, the ad agency Virtue and Vice Studios. The question is whether Fortress has a vision other than reducing overall spend as it tries to bring in revenue from a number of stand-alone businesses. “Vice will become a B2B company and no longer pursue a direct-to-consumer strategy,” a person familiar with Fortress’ thinking says, adding: “Vice will be on a path to profitability, for the first time.”

Shane Smith and Nancy Dubuc at Vice’s NewFronts in May 2019 in New York City. Craig Barritt/Getty Images

At its core, the story of Vice is one of money, greed and the cult of personality. Was Shane Smith a visionary or a villain? Like the characters and stories that the journalists at Vice News pursued over the past 11 years of award-winning journalism, it might be a more complicated portrait than that. 

“I remember we would be drunk at a bar and he would have his lips up against my ear holes and he would be like, ‘We are going to be so rich. We are gonna get so fucking rich,’ and I was like, ‘Dude, it’s Friday, let’s focus on having fun and not really dwell on how rich we are going to be,'” says Vice co-founder Gavin McInnes, who left the company in 2008 and went on to found the Proud Boys, the far-right group that made headlines for its members’ role in the Jan. 6, 2021 Capitol riot.

“The beauty of Shane is he could have kept Vice going if it was a blog about crocheting mannequins,” McInnes adds of Smith’s fundraising prowess. “He could’ve sold swampland in Florida.” 

But Smith did what many could not by taking a defunct lads mag that had been around for more than a dozen years and building it into the first new-media giant since MTV: from web video to sponsored content. With his innovation came big bags of money for other digital media companies, including BuzzFeed, Gawker and Vox, which helped to employ thousands of journalists. Arguably, even CNN and The New York Times took notice of the wave of innovation Smith had created in tone and style. 

Whether it be luck or cunning, Smith got out just in time. He is known to enjoy visits to Vegas and, like any professional gambler, smartly cashed out when he was on top. “We have known that, as an industry, digital advertising was going to crash and burn,” a former Vice executive says. “The last 10 to 15 years, these companies were chasing an endless scale that is not sustainable.”

This ex-Vice exec adds, “Shane was able to raise a ton of capital over fifteen years, over and over, and get more money, but it was all smoke and mirrors. He was good at selling a brand and a vibe but it wasn’t real.”

On Feb. 26, Vice formally laid off more than 100 journalists days after CEO Dixon wrote in a memo to staff that “it is no longer cost-effective for us to distribute our digital content the way we have done previously.” The brand’s flagship website is likely to remain dormant, with the possibility that Fortress could shutter it and nuke archives of years of impactful journalism. 

“What kept so many of us at Vice for so long was this sense of freedom to work on stories that few others would take on, let alone resource,” says Subrata De, former exec vp news and documentary. “It was an electrifying place with crazy internal pride around the work. That’s what makes the end of Vice News that much more crushing.” 

This story appeared in the Feb. 28 issue of The Hollywood Reporter magazine. Click here to subscribe.