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Vice boss predicts M&A ‘bloodbath’

EITF: Vice Media CEO Shane Smith has used this year’s MacTaggart Memorial Lecture to slam mainstream media and predict a frenzy of consolidation in the TV industry.

Shane Smith delivers the 2016 EITF MacTaggart

Shane Smith delivers the 2016 EITF MacTaggart

Smith issued a warning to the industry at the Edinburgh International Television Festival, which kicked off today, that it must rapidly adapt to changes in global youth behaviour or run the risk of extinction.

The speech kicked off with Smith joking that he had accepted an offer to head up the BBC and would be filling its schedule “with child eating cannibal warlords and cooking shows from North Korea with our host Kim Jong-il.”

Smith went on to detail how the next 12 months will be a “bloodbath,” with merger and acquisition activity involving the likes of Apple, Fox, Time Warner, Netflix and Viacom.

“The big five will become the big three. Apple has made a bid for Time Warner. They also want to buy Netflix. And if Viacom continues its Shakespearean implosion – which is a glory for me to watch – then everybody is going to be snapping off bits,” Smith said.

Smith said the TV industry was reacting to disruption the same way the music business had, which led to the monetisation model around it collapsing. “Instead of innovating, we’re retreating, with a lot of lawyers around us, to hold onto our IP and an increasingly small piece of the pie,” he claimed.

“There is a revolution going on in media. And it’s scary, and it’s fast, and it’s going to be ugly. But it’s also totally necessary to keep going forward. Change has never been more important, never so crucial, especially in our industry.

“If there’s another economic downturn, which is on the cards. All of this gets much worse.”

Smith co-founded Vice as an alternative arts and culture magazine in Montreal in 1994. Twenty-two years later, the youth-skewing firm is in the process of launching its first TV channel, Viceland, around the world, including the UK next month.

Vice’s move into scheduled television has been labelled as counterintuitive at a time when the medium’s audiences are declining and ad revenue is down.

Smith hit back by saying that the business could be highly profitable and that the bespoke content for Viceland would be able to attract millennials back to TV.

Smith also argued that moving into TV will help protect Vice from the instability of the digital market, which he predicted would increasingly merge with traditional media.

“OId media needs new media, and new media needs old media. A lot of new media is going to go away; there’s just not enough money. So what we’re doing is getting our war chest together, because we’re going to go out there and buy market share,” Smith said.

Earlier in the day, the 46-year-old denied that Vice, whose minority shareholders include Rupert Murdoch’s 21st Century Fox, US channels operator A&E Networks and Disney, was now part of the establishment.

Smith, who is the company’s largest shareholder, also acknowledged the rumours that Disney was interested in buying the company and admitted that selling Vice was tempting.

“If you look at Marvel, Pixar and Lucasfilm, they all went through the roof after Disney. It’s a great place for brands. They don’t want to make Vice like Disney, they want to give us autonomy, make mistakes and be their laboratory,” Smith said.

“And if you can take that money and put it into content, then it makes a lot of sense,” added Smith, who now needs to ensure that Vice produces enough programming to sustain a 24-hour TV channel that aims to be present in over 50 countries soon.

Smith also took aim at mainstream media news outlets in the US and cited the rise of Donald Trump – and CNN’s “collusion” with the Republican Party nominee – as “a perfect example of what’s wrong in media today. As a result, young viewers have turned away from TV news en masse, creating a disaffected audience that Vice has been able to tap into.”

He added: “Everybody said that young people don’t care about news, and they sure as hell don’t care about international. But that’s bullshit. They fucking care, they just don’t like the way it has been portrayed up until now,” said Smith.

For Smith, the turning point for Vice came when the company “stopped being the hipster’s bible talking about rare denim, cocaine and super models” and “started talking about the environment, talking about women’s issues and talking about LGBT issues. Our audience demanded it.”

“Baby boomers have had a stranglehold on media and advertising for a generation. That stranglehold is finally being broken by a highly educated, ethnically diverse, global-thinking, hard-to-reach generation, and media is having a hard time adapting to this rapid change,” said Smith.

The CEO urged attendees to follow James MacTaggart’s own advice when the late TV executive said in 1964, “What we need are people who are excited by the possibilities and say ‘The hell with the limitations, we’ll break the rules.’ I think we’ve got far too many damn rules.”

“So lets break some rules. And here’s a good place to start. Open shit up. Media today is like a private club, so closed that most young people feel disenfranchised. You have to hand it over to the kids.”

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