Vice Media sent former NBA player Dennis Rodman to North Korea to meet Kim Jongeun
Vice Media sent former NBA player Dennis Rodman to North Korea to meet Kim Jong Un © AFP

Twenty-First Century Fox has taken a 5 per cent stake in Vice Media, the digital media and publishing group that brought basketball player Dennis Rodman to North Korea, in a deal that values the company at $1.4bn.

The $70m deal will be announced on Monday, after being signed before 21st Century Fox was split from News Corp this summer. It comes as Vice, which specialises in youth culture and operates some of YouTube’s most popular channels, has agreed content-distribution partnerships with companies that include Facebook and Twitter.

Brooklyn-based Vice started life as a music magazine in Canada but its growth in the past five years has been fuelled by online video, particularly its gonzo-style films from world trouble spots. The company generated revenue of about $175m in 2012.

It is planning an aggressive push in India through 21st Century Fox’s Star, and in Europe, where 21st Century Fox has stakes in Sky channels in the UK, Germany and Italy. Vice will also use 21st Century Fox’s media assets in India, where the company owns the Star platform.

“I want us to be the next MTV, ESPN and CNN rolled into one – and everyone always rolls their eyes,” said Shane Smith, Vice’s co-founder and chief executive.

“The reality is that MTV was bought by Viacom and CNN went to Time Warner. We have set ourselves up to build a global platform but we have maintained control.”

21st Century Fox joins other minority shareholders in Vice, including WPP, the global marketing group; Raine, a merchant bank backed by Hollywood and Silicon Valley investors; and Tom Freston, the former chief executive of Viacom.

Mr Freston advised Vice on the transaction. “The idea was to raise capital to help fund a lot of the initiatives we want to undertake more aggressively outside the US – but also have some strategic alliances with a company that has robust distribution,” he said.

The minority shareholders hold about 25 per cent of Vice; the rest is held by Vice senior management. The founders, led by Mr Smith, will continue to have majority control of the board. The structure of the deal, Mr Smith added, “gives us the freedom to do what we want to do.”

Vice operates online channels dedicated to music, art, technology and mixed martial arts and hit the headlines this year when it took the basketball player Dennis Rodman and three members of the Harlem Globetrotters to North Korea, where they secured a very public meeting with Kim Jong-eun, the country’s president.

Speculation has been rife since last year that 21st Century Fox, or News Corp, would buy Vice, triggered by a tweet from Rupert Murdoch, 21st Century Fox’s chairman and chief executive, declaring Vice a “wild, interesting effort to interest millennials who don’t watch or read established media”.

Vice recently moved into television, producing an HBO series, which was aired and then renewed by the cable channel. It has formed a joint venture with Antenna, the largest media group in Greece, and made a deal with Facebook, whereby it makes customised campaigns for advertisers. It has formed a similar partnership with Twitter to produce a daily news show composed of one-minute clips, and agreed a content production deal with Youku, the largest video site in China.

Vice has managed to maintain an edginess with its viewers while working with some of the biggest brands, such as Intel, which wholly funds Vice’s Creators Project online channel for artists. It has also created branded video series that have been underwritten by sponsors ranging from GE and Toshiba, to Vitamin Water and Converse.

Its connection to a youthful demographic has generated interest from plenty of potential partners. Mr Freston said the challenge was to ensure the company reached new audiences while maintaining its edgy appeal. “Everyone wants to do business with them [but] they have to pick through [the offers] and keep reinventing themselves.”

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