It was the summer of 2016, and Vice Media co-founder Shane Smith was seated on the shores of the French Riviera for an interview on CNBC's "Closing Bell." The media mogul leaned back in his chair as the sun reflected off the ocean, thinking hard about the latest question. 

"When will Vice go public?" 

"We'll go when we're ready," he said. 

The setting was appropriate for a company that touted its own coolness from its start in 1994 as a punk magazine in Montreal. And the good times appeared far from over. Smith and the company's shareholders were ready for a huge cash windfall in the form of an IPO. Though no announcement came in 2016, a year later, TPG Capital invested $450 million in the business, giving it a presumed valuation of around $5.7 billion and cementing its place as a digital media behemoth. At the time, it was thought the deal was in preparation for its long-rumored public offering. 

Two years later, Vice has not gone public. Smith is no longer in charge, and the company has started a turnaround plan in a digital media environment that's become increasingly volatile for even the most successful outfits. 

What's next for Vice? And what does it mean for the future of investments in the digital media? Both remain unclear. 

But first let's recap how Vice went from a $5.7 billion valuation to needing a savior. 

The first sign of trouble came in late 2017 when The New York Times released a feature detailing how the company allegedly failed to create a "safe and inclusive workplace" for women, citing multiple instances of sexual harassment. Then in early 2018, rumors of financial trouble came when The Wall Street Journal reported the company had missed its $805 million revenue target by over $100 million in 2017, due in large part to Viceland, its struggling TV network. 

In March 2018, Smith shocked the media world by stepping down from his CEO role, with A&E CEO Nancy Dubuc replacing him. Her primary job: Make Vice profitable. Instead of scaling, Vice made a series of editorial changes and announced earlier this year that it would cut 10% of its global workforce and consolidate its web channels onto Vice.com. In the meantime, HBO canceled its Emmy-winning weekly program "Vice" and in June canceled nightly news show "Vice News Tonight," ending a seven-year relationship with the company. 

Vice's investors are still waiting for their exit. That includes 21st Century Fox, which invested $70 million in 2013 at a $1.4 billion valuation. Technology Crossover Ventures backed the company with a $250 million investment at a $2.5 billion valuation in 2014, and Disney made two investments of $200 million at a $4 billion valuation in 2015. Disney has since written off its entire investment, per its latest earnings report. 

As for TPG, the firm's deal reportedly came with a clause that it would minimize losses if the company sold for less than $5.7 billion, according to The New York Times. That would seem all but certain if Vice were to be acquired now. In addition, if the company isn't sold in the next couple of years, TPG's stake in the business would reportedly increase. No such provisions are known to exist for TCV, Disney or 21st Century Fox. 

It's not like TPG is the only private investor to back a booming digital media business that's now struggling. BuzzFeed, which built a click empire on cat videos and other shareable content, has raised nearly $500 million in VC funding from a who's who of firms including a16z, NEA and General Atlantic. The last two rounds came frpm NBCUniversal via a pair of $200 million deals the latter in 2016 valuing the business at $1.7 billion.

But BuzzFeed appears to be nowhere near that valuation. After repeatedly missing revenue targets, the company isn't profitable and produced $300 million in revenue in 2018, up from $260 million in 2017. In January, CEO Jonah Peretti announced it would lay off 15% of its workforce, or over 200 employees. This after the company was rumored to be planning an IPO in 2018, according to Axios.

Workers weren't happy and opted to form a union in February. Despite months of negotiations, management hasn't recognized the union. Employees staged a walkout this month. And earlier this week, company chairman Ken Lerer announced he would step down to pursue other media deals with his VC firm, Lerer Hippeau Ventures, again per Axios. 

In other words, things could be going better. 

It's probably too early to say if the unionization of digital media companies such as BuzzFeed will have a chilling effect on VC investments. But it's clear that VC investors who were bullish on the US digital media space have been less active in the area, with total deal count decreasing annually from its peak in 2014, per PitchBook data. That is no doubt in part to Facebook and Google's well-documented domination of digital advertising, which has left privately backed media operations with a challenging path to a sustainable business. As a result, it's fair to wonder if VC-backed media deals will continue their decline. 
 

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