Shane Smith Fiddled While the Company Burned

Illustration by Zohar Lazar

Just weeks after the company he founded entered Chapter 11 bankruptcy last May, Shane Smith jetted to the French Riviera. But this wasn’t a vacation for the 54-year-old flamboyant former Vice CEO to drown his sorrows. Smith landed in Cannes on a mission to save the media company that he had started as a scrappy punk music magazine in Montreal three decades ago from the financial scrap heap. 

Smith, the brash face of Vice, had been quietly operating behind the scenes since stepping aside as CEO in 2018. In his new capacity as executive chairman, he worked the phones and hustled for deals as only he knew how. Now, accompanied by his chief of staff, Alon Soran, he was at Cannes Lions, the annual advertising confab that attracts the monied set looking to do business, desperate to ensure the company he had built didn’t disappear into liquidation and irrelevancy. 

In a series of previously unreported meetings with Fortress Investment Group’s managing director, Brian Stewart, Smith convinced Stewart that Vice would have another life, two people familiar with the matter tell The Hollywood Reporter. It was the final play by the master dealmaker on his quest to get the company, now run by CEO Bruce Dixon, to financial stability. 

And it worked. On June 23, an announcement went out that a bankruptcy court had approved a $350 million sale of Vice to one of its prior investors, hedge fund Fortress, which led a consortium of buyers in the deal. Smith had pulled off one last magic trick. “In the lore of Shane, this is what he does,” a person familiar with the Cannes meeting says. “Whether it’s on a yacht, or wherever it is, you have this living-large moment and everyone agrees, ‘We are going to do this.’ That’s how he gets the big deals.” Smith did not respond to a request for comment. 

For a company valued at $5.7 billion in 2017, it was a fire sale of a transaction. Disney CEO Bob Iger held talks with Shane Smith in 2015 and 2016 about buying the company for $3.4 billion, according to a person with direct knowledge of the discussions. (Disney did not respond to a request for comment.)

But even that valuation turned out to be wildly inflated. Many current and former Vice employees argue that Smith knew the company was puffed up on air because he was the one puffing it up — and was well compensated for doing so. Smith is believed to be paid a multimillion-dollar annual salary and likely far more in commissions and bonuses under the terms of a multiyear deal that began in 2019 and is scheduled to finish at the end of 2024, a well-placed source says. 

Smith knew that a little bit of crazy and a little bit of cool would prove irresistible to legacy media figures. He understood that media has the ability to get people irrational. Who doesn’t like a bit of buzz? Even when that hype is as unhealthy as a sugar high.

By selling “cool” and boasting a much sought-after youth audience, Smith was able to get aging moguls to open their wallets. Murdoch’s 21st Century Fox paid $70 million for a 5 percent stake of Vice in 2013. Two years later, Iger made two bets each of $200 million as Vice unveiled plans to launch TV channel Viceland, which would be distributed in 70 million homes. Murdoch’s youngest son, James, would throw in more money in 2019 and 2021 as the company struggled to stay afloat. 

Why did these very serious multibillion-dollar media companies put big bets on Vice? If you’re a top dog at a media organization it’s your job to roll the dice. To put your chips on some squares. Shareholders are looking at you to create optionality. Murdoch and Iger were seeing growth in a business, media, where they didn’t usually see growth and, crucially, they were seeing a notoriously hard demographic to attract and one advertisers flock to: youth.

At the same time, there was an effort made to professionalize the executive structure of Vice. In 2018, Smith brought in former A&E CEO Nancy Dubuc to clean up the books and try to sell the company. But she and her senior leadership team weren’t able to close a deal or produce many programming hits. (Vice’s deal with HBO expired in 2019, while its run at Showtime ended last year.) Dubuc, who departed the company early last year, did not respond to a request seeking comment. 

Vice’s bankruptcy filings paint a fascinating narrative of a company cratering under wide-scale industry disruption. It’s a business without a consumer revenue…