Vice Media, known for its edgy, youth-oriented online and TV programming, is more than doubling the size of its news operations, the latest sign that digital-media outlets see growth potential in news

November 13, 2013 Leave a comment

Vice Media Bulks Up News Division

Company With Knack for Reaching Young Adults Ads More Journalists

WILLIAM LAUNDER

Nov. 12, 2013 12:02 a.m. ET

Vice Media Inc., known for its edgy, youth-oriented online and TV programming, is more than doubling the size of its news operations, the latest sign that digital-media outlets see growth potential in news. Over the past two months, Vice has quietly hired more than 60 additional journalists, increasing the size of its formal news team to more than 100, to cover everything from Middle East war zones to health-care reform through an expansion of its digital video offering, Chief Executive Shane Smith said in an interview.The company plans to spend around $50 million over the next three years to build up its news operation, according to a person close to the closely held company. The expansion will include a dedicated “Vice News” channel on YouTube, as well as the introduction of a recurring online video series, live coverage of breaking news events and in-depth documentaries—a niche where Vice has already had some success.

Mr. Smith said Vice is completing partnerships with advertisers including a “big tech company” to support the news expansion. He declined to identify potential sponsors. The expansion is expected to kick off in the first quarter of 2014.

Vice launched two decades ago as an alternative magazine in Montreal, but has become a multimedia empire for youth audiences spanning traditional TV, the Web and print. Its namesake website covers topics ranging from hipster fashion “Dos & Don’ts” to an account of performing stand-up comedy on LSD.

Earlier this year, Vice raised $70 million by selling a 5% equity stake to the company now known as 21st Century Fox, FOXA -1.12% an entertainment company controlled byRupert Murdoch. Until June, 21st Century Fox was part of the same company as The Wall Street Journal’s owner, News Corp. NWSA -1.02% Other Vice shareholders includeViacom Inc. VIAB +0.09% ‘s former CEO Tom Freston, who is also an adviser to the company, ad-agency holding company WPP WPPGY -1.00% PLC and merchant bank Raine Group.

Vice hopes the expanded news effort will help it capture a bigger share of the market for “millennials”—the crop of people currently age 18 to 32. “We see that as a huge demographic that’s underserved,” by traditional news media, said Mr. Smith. Vice says its average viewer age is 24.

As newspapers have already learned, it is also a demographic that is much less interested in mainstream news sources, or traditional TV in general, than older generations. Last year, 28% of adults aged 18-24 got news from the Internet only, while 29% said they consumed no news at all—higher percentages than for any other age group, according to Pew Research Center.

To be sure, Vice is bulking up in a crowded market for youth-focused news. BuzzFeed earlier this year introduced an online video news channel through a partnership with YouTube, based on content from Time Warner‘s TWX -0.22% CNN, and has also expanded into business and international reporting. Last month, BuzzFeed announced plans for an investigative reporting team led by a Pulitzer Prize winner.

Vice’s flagship site drew 3.7 million unique visitors in September, according to comScore, a fraction of the 20.7 million that visited BuzzFeed. Vice says its audience is much bigger than the ComScore data reflect, through traditional TV as well as online video outlets—where its growth is focused—like YouTube and China’s Youku.

Traditional TV is taking similar steps to recruit young audiences: Walt Disney‘sDIS -0.35% Co.’s ABC News and Univision Network last month launched Fusion, a cable and online news venture aimed at young Hispanics.

“The idea that all of these ventures are going to be successful is a pipe dream,” said Scott Hess, a specialist in marketing to youth audiences and senior vice president at ad agency Spark. “But some of them might be.”

Vice has already made a name for itself with its documentary series on HBO, in which Mr. Smith and other correspondents report on topics ranging from child suicide bombers in Afghanistan to social issues facing Mormon teenagers. The show returns for a second season next year, having picked up around 2.8 million viewers and an Emmy nomination in 2013.

Vice, which says it makes a “healthy profit,” generates most of its revenue through corporate sponsorships of its content, typically lighter fare like technology and music. Getting corporate marketers to sponsor hard news topics, like Middle East conflict reporting, tends to be more difficult, Mr. Smith said. But Vice says its newsier content is already some of its most popular material, making it an important area for growth. “We are being pushed by our audience,” Mr. Smith said.

As it expands its news operation, Mr. Smith said Vice is intent on keeping news costs low. Instead of satellite trucks and high-paid celebrity journalists, the company is hiring young reporters armed with Google GOOG -0.54% Glass and smartphones. That frees up more money for editing suites, which Vice has crammed into phone-booth sized rooms around its Brooklyn, N.Y., headquarters and 34 foreign offices.

“We can open foreign bureaus as fast as other news organizations are closing them,” Mr. Smith said.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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