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Vice buys Refinery29 to create $4bn digital publishing group

Vice Media Inc

Vice buys Refinery29 to create $4bn digital publishing group

Leading lights of new media generation join forces as sector struggles for ad revenues

Nancy Dubuc, Vice Media chief, said: 'As other parts of the sector consolidate, I think we have to march in long step' © Bloomberg

Vice Media has agreed to buy Refinery29 in a mostly stock transaction that people familiar with the matter say values the online publishers at a combined $4bn.

Nancy Dubuc, who replaced Vice founder Shane Smith as chief executive last year, said the combination signalled a “new era of lasting change in digital media”. 

“We will not allow a rapidly consolidating media ecosystem to constrict young people’s choices,” she said. 

The deal between Vice, which is known for its edgy reporting and has a majority male audience, and Refinery29, an online publisher catering to millennial women, unites two of the biggest names from the early years of “new media”.

The companies are among a generation of start-ups that pulled in venture capital funding only for growth to stall as the advertising climate collapsed.

Many analysts see further consolidation in the sector as inevitable. The agreement follows Vox’s acquisition last week of New York Media, the company behind the flagship magazine as well as sites including Vulture and The Cut. 

“There were a couple of other ideas floated” as acquisitions, Ms Dubuc told the Financial Times. She said Refinery29 was the right brand and cultural fit, with a young, mostly female audience that she expects to attract advertisers. “As other parts of the sector consolidate, I think we have to march in long step.”

Vice is pushing for scale as it looks to woo advertisers with larger audiences. It declined to comment on financial terms with Refinery29 but said the deal would boost its online reach by 17 per cent to 350m unique visitors a month, while diversifying its 60 per cent male audience. 

The acquisition comes as digital publishers such as Vice, BuzzFeed and Vox fight for revenue as Facebook and Google swallow up online advertising spending.

Jonah Peretti, BuzzFeed chief executive, last year raised the idea of merging digital media companies to better compete with technology giants.

He described Vice, Refinery29, Vox Media and Group Nine as companies “doing interesting work”.

Vice is more diversified than its peers, having reduced its reliance on digital advertising years ago when it expanded into TV through deals with HBO and international broadcasters.

It has also built out an in-house advertising agency and pushed into video, selling documentaries and feature films to Netflix and Amazon.

Investors such as Walt Disney and TPG poured money into the group, with TPG’s 2017 investment valuing it at $5.7bn.

But Vice has not been immune to the sector’s woes. The company missed its revenue targets in 2017 and Disney has repeatedly written down the value of its $400m investment.

Ms Dubuc, an experienced television executive, has quickly put her stamp on the company.

In February she cut about 250 jobs, 10 per cent of Vice’s workforce, and trimmed its stable of websites.

A few months later Vice raised $250m in debt, including from George Soros’s investment fund. The money helped fuel investments in Vice’s faster-growing businesses such as advertising agency Virtue, and Vice Studios, which makes movies and shows to sell to third parties. 

These moves have already borne fruit: revenues in the second quarter were up 14 per cent from the previous year, according to the company. 

As part of a strategy to make Vice profitable, Ms Dubuc is focusing on growth internationally. Vice makes half of its revenues and draws 60 per cent of its audience outside of the US. Ms Dubuc says the company is on track to reach profitability by early 2020.

Vice’s relationship with HBO ended recently but last week it unveiled a new contract to produce documentaries for Showtime. The company says it has more than 110 projects in development worldwide.

Refinery29, founded in 2005 as a guide to New York’s independent fashion shops, has evolved into a wide-ranging online publisher aimed at millennial women. The company will operate as a vertical within Vice Media, with management reporting directly to Ms Dubuc

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