While ESPN’s loss of seven million subscribers over the last two years has that network in full belt-tightening mode and has even hurt parent company Disney’s stock price, Disney still seems bullish on the media sector, and particularly one edgy media company. That would be Vice: Disney invested $200 million in them in early November (immediately after ESPN shuttered another millennial-focused media project, Grantland), and now, they’re doubling their investment, putting in another $200 million. From Sydney Ember of The New York Times, here’s what Disney’s focusing on with the new money:
The cash infusion brings Disney’s stake in Vice to about 10 percent, according to one of the people. The investment does not change Vice’s valuation, the person said, which last month was put in the range of $4.2 billion to $4.5 billion.
The money will help finance original programming, including TV shows, the people said. Vice is expected to unveil its new cable channel, Viceland, as early as the end of February, and intends to fill it with lifestyle and entertainment programming. Viceland will replace H2, the History channel spinoff owned by A&E Networks.
The investment — which brings Disney’s total to $400 million — is the latest show of support for Vice, whose brash voice and ability to attract young male viewers has attracted piles of cash from traditional media companies seeking to reach its core audience. A&E Networks, the television group owned by Hearst and Disney, invested $250 million last year, and 21st Century Fox has invested $70 million.
Vice also has a weekly newsmagazine show on HBO and is expected to introduce a daily newscast on the premium cable network next year.
It’s fascinating that Disney’s willing to put so much into Vice, considering that they’ve often been criticized for trying to stay too family-friendly (see “Mickey and Mickey in the morning“), and Vice is anything but. Perhaps that’s the advantage of being just an investor (although a significant one; between their own stake and their stake through A&E, Disney has lots of equity in Vice), as not everyone’s going to associate Vice’s programming with Disney. The Times article goes on to say that “Although the odd-couple nature of Disney and Vice carries risks, Disney has come to believe that the Vice brand can be kept entirely separate from its own.”
What’s even more interesting is that Disney’s doubling down on media investments despite subscriber losses at ESPN and their other networks dragging down their bottom line. ESPN (and its subscriber fees) is still incredibly valuable for them, but many companies would see an underperforming sector and decide to stay away from further investment; Disney is doing the opposite. That could mean one of two things; either they feel that Vice will reverse the larger media trend thanks to its unique branding and audience, or they feel there’s still lots of value to be had in media in general.
We’ll see how this bet pays off for Disney, which may depend on just how successful Vice’s TV channel in particular is. It does have the advantage of taking over the established H2 network, so it will start in approximately 70 million homes, giving it a leg up over a lot of fresh channels. Still, it’s going to be interesting to see just how much of a demand there is for Vice programming on a conventional TV channel (and if the market’s saturated between Vice’s HBO deal, web content and more). At the least, Disney’s expanded investment is certainly a bold gamble that there is a future in media investments, and that Vice is part of that future. We’ll find out if they’re right.
[The New York Times, via Mathew Ingram]
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