After Buzzfeed News Operation Shutters, Vice Media Group Declares Bankruptcy

Hard times are continuing to hit the online news sector. Following Buzzfeed’s decision to shutter news, Vice declared bankruptcy.

Digital advertising in recent times has been quite tough from a publishers perspective. We know ourselves with the continued drops in ad revenue despite overall traffic being up by quite a bit in recent times.

Of course, the evidence of the carnage in the world of online ad revenue isn’t exactly secret, either. For example, just look at this report back in February:

Major tech companies have seen a general fall in ad spending in their most recent quarterly reports, as some of their brand and retail clients are pulling back on digital marketing.

Last week, tech giant Alphabet reported a 3.6% drop in Google’s advertising revenue to $59 billion from $61.23 billion in the fourth quarter of last year. Facebook parent Meta saw a drop of 4.2% in advertising revenue in its fourth quarter quarter earnings. The pace of growth in Amazon’s advertising business also decelerated to 19% in the most recent quarter, compared to a faster 32% year-over-year gain during the same period last year.

Analysts told Modern Retail that while there is an overall pullback in the ad market reflected in the numbers cited above, there is a possibility of a recovery. For instance, macro-economic indicators like the jobs report have shown some signs of improvement. In January, the U.S. added 517,000 jobs and unemployment levels fell to an over four decade low at 3.4%. However, these earnings reports indicate that many brands and retailers are still cutting back on advertising, with inflation still dampening consumer spending.

“What we’re seeing is softness now. Advertisers have been cautious, but there’s potential for rebound here,” Andrew Lipsman, principal analyst for retail and e-commerce at Insider Intelligence said. But, he added, “there’s going to be consumer demand and consumer demand ultimately drives advertising.”

“It feels like we are probably hitting the worst of it right now,” said David Heger, senior equity analyst at Edward Jones, “in terms of different industries and companies talking about slowdowns in their businesses and rethinking spending.” Heger added that “perhaps by the second half of the year — if the economy’s starting to improve — then we may see the spending environment come back up a little bit.”

While there is some optimism in the report at the time, it looks like the pain of dropping revenues continues to be felt in the world of online news. For example, back in May, Buzzfeed made the huge announcement that it would be shuttering its news division. From the Guardian:

BuzzFeed is shutting down what remains of its award-winning news department, signalling the end of an era for a website that once promised to upend the industry.

Founder Jonah Peretti told staff on Thursday that “the company can no longer continue to fund BuzzFeed News” and would be looking to make substantial redundancies across the company.

He said the whole company had been hit by the pandemic, a troubled stock market listing, a tough economy, a declining stock market, a slowdown in digital advertising, and changing audience habits.

Peretti suggested that there may not be a sustainable business model for high-quality online news. He wrote: “I made the decision to overinvest in BuzzFeed News because I love their work and mission so much. This made me slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.”

As we’re finding out today, it appears that Buzzfeed News isn’t the only recent casualty in the online news sector. Another one is apparently Vice Media Group. The company has announced that it is declaring Chapter 11 bankruptcy as it moves to begin selling off its assets. From the BBC:

The company behind the websites Vice and Motherboard has filed for bankruptcy in the US and is set to be sold to a group of its lenders.

Vice Media Group – which was valued at $5.7bn (£4.5bn) in 2017 – could be taken over for $225m.

The youth-focused digital publisher said it will continue to operate during the bankruptcy process.

It added that it “expects to emerge as a financially healthy and stronger company in two to three months”.

Launched in 1994 as a fringe magazine called Voice of Montreal by Shane Smith, Gavin McInnes and Suroosh Alvi, Vice currently operates in more than 30 countries.

It was once heralded as part of vanguard of companies set to disrupt the traditional media landscape with edgy, youth-focused content spanning print, events, music, online, TV and feature films.

Really, if you ever wanted to find out how tough of a business online news is, the above two examples certainly drive home that point. One hopes that this is the extent of the collapsing, but who really knows at this point?

Drew Wilson on Twitter: @icecube85 and Facebook.

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