Vice Media Ramps Up Millennial-Focused Media Effort

Commentary

• by Wayne Friedman , Staff Writer, 70 minutes ago

Maybe we need another big millennial-focused media company. The secret sauce? Think TV advertising -- way less of it. Some investors might be thinking along those same lines. On Monday, Vice Media announced Monday it has raised $450 million in investment from private-equity firm TPG. Shane Smith, CEO of Vice Media, told CNBC on Monday the new funding puts the media company’s valuation just under $6 billion.

The big monetary resources will let Vice grow, allowing it, Smith says to build “the largest millennial video library in the world... [including] news, food, music, fashion, art, travel, gaming, lifestyle, scripted and feature films.”

Currently, two of Vice Media highest-profile media assets are its basic cable channel, Viceland, and its continuing news/documentary programming on HBO. Vice programming is also in 80 countries.
Early investors in Vice include 21st Century Fox, A+E Networks and Walt Disney. A+E has a joint venture with Vice Media for its Viceland channel, formerly A+E’s H2 channel.

As for Vice Media’s media competitor with traditional roots in cable? Viacom is an obvious company. At Tuesday’s close, Viacom had a market capitalization of $14.1 billion -- more than twice the private-equity valuation of Vice Media currently. 

Smith told CNBC he has no immediate plans for an IPO.
“Our revenue story is getting better and better. But it has to be more consistent,” he said. He noted the company was looking more for the “hockey stick” trend line.

Vice Media isn’t alone  -- including digital media companies, with many channels on YouTube -- that want to be in the same space. At the same time, big companies like Viacom want to transform themselves.

In addition to its edgy content -- and to appeal to younger viewers -- Smith says Viceland’s goal has been to limit advertising to only 10 minutes of commercial advertising per hour. Many cable networks air well above this level from 15 to 17 minutes per hour.

So where’s the monetization with less advertising?
Early thinking was that Viceland would create special sponsorship/marketing deals. The jury is still out here. One hint in things to come: Smith says, “We are also looking at transactional -- direct to consumer [businesses]. And if we are going direct to consumer we need to build much bigger library.”

No traditional media company wants to be left behind when it comes to grabbing the next generation of adults TV viewers. So if Vice Media has figure out the monetization of targeting millennials, they want in. 

But are there any lessons to be learned  -- in the short term -- when it comes to traditional TV companies drastically cut back on advertising to keep young viewers hanging around?