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When Suroosh Alvi, Gavin McInnes and Shane Smith founded Vice magazine, which later expanded into Vice Media, they built a business based on a punk rock counterculture image. Smith once he was filmed almost naked and drinking alcohol, a tour of the media organization’s headquarters in Brooklyn, New York.
The company is called Vice. It goes without saying.
Next week, Vice, once awarded to $5.7 billion, plans to sell out of bankruptcy. The little-known Los Angeles-based company that wants to buy it has a quixotic culture that would be incomparable to those early days of Vice, and would almost certainly be ridiculed.
GoDigital Media Group is a privately held conglomerate that owns video and music rights, particularly in the Latin genre, and a number of different businesses. The company has such a low profile that it currently has no physical headquarters after closing its Los Angeles office during the pandemic. GoDigital plans to open a new office in LA later this year. Its managers have been running the business remotely since 2020.
Initially, co-founders Jason Peterson, 41, and Logan Mulvey, 38, used cash flow from music licensing rights to start a digital media distribution business, connecting content creators with retailers by developing a cloud-based software company called ContentBridge in 2010. GoDigital later expanded its rights deal to include rights from Jason DeRulo and TI Loni GoDigital invested $100 million in this division for future growth. Ownership of music rights accounts for the majority of the company’s revenue and valuation.
In recent years, Peterson, GoDigital’s chief executive and chairman, has modeled the company as a mini-Berkshire Hathaway as it tries to play what it calls the “endless game” — owning durable businesses that tap into consumer passions.
GoDigital has made eight different acquisitions since 2020, which were related to media and commerce. Peterson and Mulvey looked for distressed assets with consumer brand recognition. They acquired YogaWorks for $9.6 million in 2021 after filing for bankruptcy in October 2020. And last year the pair picked up the property from bankruptcycollecting retailers Eastern Mountain Sports and Bob’s Stores for $70 million.
Overall portfolio now includes seven companies after merging two of its companies, Latino-focused media company Mitu and NGL Collective, co-founded by actor John Leguizamo. GoDigital, through its subsidiaries, employs about 1,300 people and generates annual sales in the high hundreds of millions.
The company wants to “inspire happiness” along the way, Peterson said in an interview that evoked the opposite of the in-your-face culture Smith brought to Vice.
“Our goal is to create emotions of joy and happiness in our customers and our employees,” Peterson said. “What sets us apart is our long-term perspective. The goal of the infinite game is simply the continuity of the game to ensure that the game continues. And when you live and work in that paradigm, you live and work in the compound interest paradigm.”
GoDigital co-founders Logan Mulvey (L) and Jason Peterson (C) with chief strategy officer Craig Greiwe (R)
Vice would be GoDigital’s biggest acquisition to date. GoDigital plans to bid for Vice on Tuesday for between $300 million and $400 million, according to people familiar with the company’s thinking. GoDigital executives declined to comment on the details of their planned offering.
If another buyer makes an offer or offers to buy part of the company but not the whole, an auction will be held on June 22. The following day, a judge will confirm the potential acquisition at a court hearing.
Sean “Diddy” Combs Insurgency is also considering an offer, said a person familiar with the matter. A Revolt spokesman could not be reached for comment.
Fortress Investment, Vice’s largest lender-turned-shareholder, is leading the sale process and has pledged to back part of GoDigital’s bid and other potential bids, said the people, who asked not to be named because details of the bids are private. Fortress, along with Soros Fund Management and Monroe Capital, committed to a $225 million stalking horse offering.
A spokesman for Fortress declined to comment.
GoDigital’s opaque finances and hodgepodge of smaller assets raise skepticism about its ability to acquire a company the size of Vice. Chief strategy officer Craig Greiwe, who was tasked with finding acquisition targets when he joined the company last year, said GoDigital is in talks with other equity partners about a bid. He declined to name any names.
“I can understand the skepticism if people haven’t heard of us,” Greiwe said. “We have the money to buy it. We are serious about our offer. We are also confident that the sellers see us as a legitimate and credible bidder. We are confident that we can run the company and do it profitably.”
Peterson and Mulvey said they want to own Vice because they think it is poorly run. They cite society’s extravagant spending, specifically thinking why is he renting 20 offices and manufacturing centers around the world, rather than employees working remotely. The co-founders are in talks with Alex Wallace, the former head of media and content at Yahoo from 2020 to 2022, to become Vice’s new CEO if GoDigital buys the company, according to people familiar with the matter. Wallace declined to comment.
As CEO, Peterson said he tries to connect the employees of his portfolio companies with their own interests. “Zone of Genius”, a concept borrowed from Gay Hendricks “The Big Leap” is about the intersection between what and a person loves and what he is like good, Peterson explained. He said he would preach that message to Vice employees on day one if GoDigital acquired the company.
“I’m going to go in there and treat each person as an individual person and try to find out what their individual goals are, what their values are?” Peterson said. “Because if we work at the confluence of what we like and what we’re great or good at, we’ll do well. It doesn’t matter how good we are at something if we don’t like it.” We won’t be doing this for a long time. When you have a high degree of alignment of purpose between the individual and the organization, that’s when the magic happens.”
When business conversations turn to concepts like happiness and values alignment, it’s easy to think of WeWork founder Adam Neumann a mission to raise the world’s consciousness and cringe. It’s especially annoying to align the aerial language with Vice’s original mission. Smith, the executive chairman and former CEO of Vice, could not be reached for comment.
Shane Smith, co-founder of Vice.
GoDigital executives are unabashed about their New Age business school jargon. He believes that connecting passion and purpose creates “an incredible positive feedback loop for society,” Peterson said.
“We recognize that people make decisions based on their emotional state, and we aim to inspire happiness through an ecosystem of content, community and commerce across consumer passions,” said Greiwe. “Now I’m the guy who dreams about it at night. There’s an underlying belief in making the impossible possible and doing it before anyone else.”
Every company, including GoDigital, would have their share of problems with the Vice takeover.
“There’s no reason why Vice shouldn’t be profitable today, other than past mismanagement,” Peterson said.
But simply figuring out what Vice employees want to do and making sure they do it won’t solve problems like a weak advertising market or competition for content. Still, Peterson and Mulvey see similarities between Vice’s business and several others companies they already own. Mulvey pointed to YogaWorks as a business that has transitioned GoDigital to meet new ways of consumption.
With YogaWorks, GoDigital attempted to disrupt the studio yoga consumer base with an online subscription service offering digitally distributed home classes. YogaWorks closed all of its brick-and-mortar locations as part of its bankruptcy reorganization and “lost only a very small number of customers” as GoDigital moved the business online, Mulvey said.
Mulvey, who took over as CEO of YogaWorks in January, said the shift from studio yoga to home yoga is analogous to changing media consumption habits.
“People were consuming Vice on HBO or cable,” Mulvey said, referring to Vice’s now canceled show on HBO and the cable network Vice. “We need to make sure we understand the audience and customers, that the way we grow the business makes sense for how people consume news, media, entertainment or exercise on the go.”
Peterson noted that Vice’s business model is similar to NGL-Mit. Both make money from branded content and social outreach.
“This is not a new type of business for us,” Peterson said. “It’s a cross-platform network. We know how to run it.”
Greiwe added, “Vice’s fundamentals are strong” and said GoDigital has no plans to sell any of Vice’s assets, including the women-focused Refinery29, which Vice acquired for $400 million in 2019and his domestic advertising agency Virtue.
“The brand value of Vice and Refinery29 is unmatched in the market,” said Greiwe. “It doesn’t make sense for Vice News to exist separately from Vice Publishing. And why wouldn’t you have Vice Studios on top of it all, with the decades of IP that exist in that company?”
Peterson acknowledged that much of the interest in buying Vice is that he thinks it is a good candidate to implement his preferred culture and management style, which he calls the “GoDigital way.”
If he’s right, all Vice ever needed to succeed was a bankruptcy filing to pay off his $834 million debt and a little more zone genius.
— CNBC’s Lillian Rizzo contributed to this report.
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