Vice looking into a content deal with Saudi-backed firm
After Saudis killed journalist Jamal Khashoggi in 2018, Vice Media joined many other American companies in publicly distancing themselves from the Saudi Arabian government, whose agents carried out the killing.
Now Vice is in talks to expand its business in the kingdom.
The youth-focused digital media company is exploring a deal with MBC, a media giant partly owned by the Saudi government, to start a new content partnership in the region, according to two people with knowledge of the talks who would speak only on the condition of anonymity.
The deal, which may include the creation of a media brand focused on lifestyle coverage and training local media workers, could be worth at least $50 million over multiple years, one of the people said. Shane Smith, a co-founder of Vice, has been involved in some of the discussions.
Vice is talking with MBC at a pivotal time for the company, which has struggled to live up to its lofty $5.7 billion valuation and has been weighing a sale of its business. Any significant deal with MBC could increase the price it is able to command from a suitor. But the talks could still fall through, and any prospective acquirer could try to distance the company from entities affiliated with the Saudi government.
The potential deal could also cause internal blowback at Vice.
In April 2021, the company’s decision to open a commercial office in the Saudi capital, Riyadh, became a point of contention. In a call with the staff to discuss the new office, one producer called the decision “morally bankrupt.”
A Vice spokesperson said in a statement that the company was focused on young audiences underserved by existing media organizations, especially in countries like Saudi Arabia, where a majority of the population is under 35.
“We’re proud of the internationally recognized work we’ve done across the Middle East, our incredibly talented team there and the impact they’ve had,” the spokesperson said.
While some media companies backed out of deals with firms tied to the Saudi government after the killing in 2018, some maintained their relationships or reached new business deals more recently. Vice, which had long-standing business ties to Saudi Arabia, publicly backed away.
Vice in October 2018 put its business with the Saudi Research and Media Group under review. Another deal worth a projected $20 million to produce films for the Saudi Research and Media Group through Broadly, Vice’s website dedicated to issues of gender and identity, was “on hold due to bad press,” according to a March 2019 internal document. That same document said Vice was still contemplating a deal worth up to $150 million in Saudi Arabia.
A Vice spokesperson said those two deals hadn’t come to fruition.
Vice faces financial headwinds this year as it tries to achieve a full year of profitability, which would mark a milestone. A memo obtained by the Times sent to employees in June by the company’s chief executive, Nancy Dubuc, said the company’s revenue forecast was flat against the same period last year, meaning that the company was “slightly behind” its overall financial target.
“This means being ruthless about areas of the business that are not growing and focusing our energies on areas that are,” Dubuc wrote.
Yet Tom Rosenstiel, a professor at the University of Maryland and a former director of the American Press Institute, said it was understandable that a deal between Vice and MBC could cause consternation among journalists at Vice.
“There’s a difference between being owned by a company that’s part of the Saudi government versus doing business with them,” Rosenstiel said. “Nonetheless, I think it would give anyone in news pause to be in business with a government that kills journalists.”