Brooklyn, NY, United States (4E) – According to individuals familiar with the transaction, A+E Networks is in the midst of completing an agreement to purchase 10% of Vice Media. The deal, expected to reach around USD2.5 billion, places the online media company’s worth at nearly USD2.5 billion.
This transaction comes in the after Time Warner Inc had abandoned negotiations with Vice Media regarding the partnership over Time Warner’s HLN channel, which would be revamped to fit the brand of nonfiction programming Vice Media has been very well known for.
A+E Networks, which is co-owned by the Hearst Corp and Walt Disney Co, has in its programming such known channels as History and the A+E. With the deal, the network would be able to reach out to a more mature audience, with a younger demographic to complement its older male population viewership.
On the other hand, Vice Media would have access to content as well as platforms that A+E possesses, from films, to television, to online media, mobile media and many more.
The sale could be announced by next week. The valuation for the 10% stake is a steep increase in the value of the youth oriented media company. Just last year, 5% was purchased by 21st Century Fox for just USD70 million.
Vice Media has a number of online channels that cover a range of topics such as news, sports, music and technology. It operates in 36 countries and uses an off the wall kind of publishing, such as having taken Dennis Rodman to meet Kim Jong Un, the North Korean leader. It then intersperses its headline grabbing antics with serious topic discussions.
Under the deal, Vice Media would create digital and cable shows for A+E. There will be no shows to be taken over for the meantime. This was the sticking point in the Time Warner negotiations. A+E runs shows such as “Duck Dynasty”, “Storage Wars” and “Epic Ink”. Other shows it produces include “Bates Motel”.
According to Vice Media CEO Shane Smith, “It’s a great deal for us. It means we can preserve our independence and it gives us a war chest for another three years of dramatic growth.” He co-founded the company as a counter culture magazine twenty years ago. One of the company’s objectives was to expand into television and now online media. It currently operates a magazine, online properties, a record label as well as film production company.
He once said he wanted Vice Media to become ‘the next MTV, ESPN and CNN all rolled into one.’ It is one of the most popular channels on YouTube and it has been lauded for its ability to connect with its online audiences.
Not only is A+E interested in Vice Media. Technology Crossover Ventures is also purchasing 10% of the Vice Media for the same price. This is just another instance of how media companies have been harvesting large influx of investments for their expansion. Andreessen Horowitz, the venture capital firm, has invested in BuzzFeed for USD50 million. The investment was completed just this August, as it helps BuzzFeed, expand its portal and its go viral content.