Vice Media is facing uncertainty in its executive ranks at a pivotal moment, as the digital media company tries to rebound from a substantial revenue miss last year and fend off shareholders pressing for an exit.
Vice, whose $5.7 billion valuation makes it the most valuable new media company, missed its 2017 revenue target of $805 million by more than $100 million, according to people familiar with the matter.
That setback, largely due to the struggling Viceland cable TV channel, comes as co-president
who was placed on leave after sexual-harassment allegations surfaced in a New York Times report, is unlikely to return to his post, according to people familiar with the matter. Mr. Creighton led the company’s advertising business, but could be given other roles within the company among other possible outcomes, these people said.
Mr. Creighton, who has denied the allegations, didn’t respond to requests for comment. A Vice spokesman said the company’s review of the matter is continuing.
Vice has also been working to fill out its top executive ranks to give more support to its co-founder and Chief Executive
who is focusing on long-term strategy and on making content, according to people familiar with the matter. The situation with Mr. Creighton is a complicating factor in that effort, one of the people said.
Vice has struggled to meet the expectations of its investors, which had bet the company could continue to quickly expand its digital audience and advertising sales growth and to translate its edgy, youthful brand to television in a financially efficient way. Those investors, which include private-equity firms TPG and TCV,
, Hearst and
are now pushing for the company to turn a profit this year, which would require cost-cutting, the people said. Mr. Smith controls the company through supervoting shares.
While revenue at the digital publishing and television company didn’t keep up with projections in 2017, it did grow. Its digital business continued to expand in the U.S., with web traffic rising 16% from a year earlier to 78 million unique visitors a month in December, according to comScore.
“Across every key metric, 2017 was the best year in VICE’s 23-year history,” a Vice spokesman said. “We experienced record ratings and the highest traffic ever, posted double-digit revenue growth, and brought our award-winning programming to new audiences around the world.”
The Vice spokesman said the company expected to record “strong financial growth across every line of business” this year.
A big driver of the revenue miss was the Viceland cable TV channel, which has been slow to build an audience at home and abroad. In the U.S., it drew an average prime-time audience of 55,000 viewers among adults 18 to 49 in 2017, up 28% from the previous year when it launched, according to Nielsen. Well-established entertainment cable channels average anywhere from a few hundred thousand prime-time viewers to upward of 1.5 million.
Vice’s programming has fared better on HBO. Across all platforms, the total audience for the daily show “Vice News Tonight” grew 19% to 582,000 viewers in 2017.
In January, Vice lost a major international partnership when Canadian telecom giant Rogers Media Inc. cut ties on their $100 million joint venture. It had provided Viceland with Canadian distribution and served as the template for dozens of subsequent multiplatform partnerships that Vice has since struck around the world.
New leadership at Rogers pulled the plug on the partnership after a fiscal year in which Viceland lost $2.5 million in Canada through the end of August, according to the country’s broadcasting regulator. “We tried something new and it didn’t work,” Andrea Goldstein, Rogers’ spokeswoman, wrote in an email.
Vice is in talks with other Canadian distributors including Bell Media, the media arm of BCE Inc., about carrying Viceland, according to people familiar with the matter.
Vice’s capital raising has come with constraints. According to the terms of the $450 million convertible-preferred equity investment it took from private-equity firm TPG last summer, TPG’s 8% stake in the company can grow in the next few years. That would dilute other investors, giving them an incentive to find an exit.
Vice isn’t likely to be ready for an initial public offering this year, according to people familiar with the matter.
Selling the company in the current media environment would be tough. The growing clout of
and Google has made it hard for publishers to make money from online ads. BuzzFeed, valued at $1.7 billion in 2016, late last year was on track to miss its revenue target for 2017, while Mashable, valued at $250 million as recently as 2016, was sold at the end of last year for a paltry $50 million.
Mr. Smith has been increasingly delegating his responsibilities, in an attempt to professionalize a company that began as a 1990s punk ’zine and today has 3,000 employees in 40 countries. Daily operations have lately been run by co-presidents Mr. Creighton, a 16-year Vice veteran who handles advertising and agency clients, and
a former Paul, Weiss lawyer who runs M&A and corporate strategy.
Last November, the company elevated one of Mr. Schwab’s hires,
and William Morris Endeavor veteran
to the dual roles of chief operating officer and chief financial officer.
—David George-Cosh and Lukas I. Alpert contributed to this article.
Write to Keach Hagey at email@example.com