Vice Media founder and CEO Shane Smith this evening delivered the keynote MacTaggart Lecture at the Edinburgh TV Festival, sounding a warning to legacy media that it needs to adapt. In an hour-long speech, the gonzo ex-punk rocker spoke of the profound changes the industry is currently facing as young people break from their parents’ generation in what content they consume and how they consume it. “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,” Smith said. “Change has never been more important, never so crucial — especially in our industry.”
Earlier in the day, and speaking of his own company, he told reporters that with regard to Disney’s $400M investment in Vice from December last year, and speculation that the Mouse could acquire the whole of the company, “It makes sense for them, it makes sense for us.” But, while he did not say a deal was forthcoming, he allowed he wrestles with his options on a daily basis. He also predicted a “f***ing blood bath” in consolidation next year and “a merger and acquisition frenzy.”
On the changing landscape of media, Smith said tonight, “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.” In a volatile marketplace, “only the most nimble and dynamic companies will survive.”
So, he argued, big media needs to give young viewers meaningful content, arguing it’s not just good for humankind, it’s good for business. “Let’s break some rules. And here’s a good place to start. Open sh*t 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.”
Scotland!!! If you want to hear scandalous gossip and fearful innuendo come to my #MacTaggart lecture in Edinburgh this week. Then we drink
— shane smith (@shanesmith30) August 21, 2016
Speaking to reporters ahead of the lecture, Smith noted that at the recent Cannes Lions advertising conference, the talk centered on “the death of the 30-second spot. That’s what ad people say which means the basis of TV and online is going away” and that’s causing chaos. Tonight, he said, the reason why there is currently “chaos in media is because the new audience, the new purchasing power realizes that vapid and vacuous sh*t isn’t going to get us to where we need to go.”
To connect with this new generation, Smith urged those in attendance to follow James MacTaggart’s own advice when he commented 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.”
He had earlier said, “How do we solve for all of these problems? We all know what we have to do. Three screens, one screen with OTT and innovative monetization. That’s the Holy Grail. Everyone knows that, but are we going towards that? No, we’re fighting each other on it. We’re doing the exact same thing the music industry did: retreating and trying to hold onto IP; fighting each other even though we all know where we have to go.”
Vice, which now operates in over 30 countries, includes an international network of digital channels; a television and feature film production studio; a magazine; a record label; an in-house creative services agency; a book-publishing division; and newly-launched TV network, Viceland. The company received a $400M investment from Disney last year; the Mouse now owns 18% and Vice is valued at $4.5B. Smith announced in June that it would embark on a rapid global expansion that will see the youth brand launch linear, digital and mobile channels in over 50 new territories in 2017.
Ratings on cable channel Viceland U.S. are not published by Nielsen, but they were reportedly lower among adults 18 to 49 in primetime in July, 51% fewer than on H2, the channel it replaced on the cable dial, The Wall Street Journal has noted.
Vice was forced by its young audience to evolve dramatically, transforming from a brand that covered sex, drugs and rock ’n’ roll, to covering important news events, human rights, environmental challenges, criminal justice reform, LGBT issues, and more.
“Now, Gen Y knows what side of history it wants to be on,” Smith said. “But where are they getting the media that satisfies these passion points? Now ask yourself, and ask yourself honestly, are we collectively making enough of this? Do we push it? Do we fight for it? I asked myself that question and realized that honestly the answer was no. So we changed our brand from hipsters’ bible talking about rare denim, cocaine and super models to doing environmental programming, social justice, women’s issues, and, of course, music. I’m not stupid. And guess what? Our business grew. Our audience exploded. And we made more money. Which is good because more money means more content.”
Speaking of consolidation earlier in the day, Smith said, he was unsure if it is good or bad, but he warned that the future will see “an evisceration of digital media.” Old media needs new media and new media needs old media. “What will happen is that consolidation of mainstream media, but a lot of new media is going to go away.”
What Vice is doing is getting its war chest together, “because we’re going to go out there and buy market share. You’ve already seen a huge consolidation this year. Next year is going to be a f***ing blood bath and the smart guys have taken their valuations to the peak to get their cash. Then on top of that, there will be a merger and acquisition frenzy where the last two or three big boys buy the last two or three scale plays.”
Regarding speculation that Disney might acquire the whole of Vice, Smith said he was on the fence. “If Disney bought all of Vice, it would be good for me because then I can say ‘Rupert Murdoch doesn’t f***ing own Vice’.” Fox currently has a 5% stake in the company.
— C21 Media (@C21Media) August 24, 2016
Disney doesn’t want to turn Vice into Disney, Smith said, referencing the distinct brands the studio now owns like Marvel and Lucasfilm. “It makes sense for them, it makes sense for us and if you can take that money and put it into content it makes a lot of sense… As a CEO, I’m responsible to shareholders. I wrestle every day. Do I do something good for them, or for me, or roll the dice?”
Smith said Vice could stay independent, but he also believes the industry is at the peak of media evaluations “and there will be an economic downturn and when that happens, we say ‘Let’s wait another eight years to get back to where we were last year.’ I believe the next economic downturn, after the Arab Spring, etc, if you pull the rug out from under them just as they’re getting on their feet again it’s gonna be a lot f***ing worse and then you’re going to see profound political hit.”
So, the question becomes, “How do we mitigate that through media? How do we get out there and say, ‘Let’s not all f***ing lose our heads.’”
Known for his brash talk, Smith said before the lecture that “at one point or another, Time Warner tried to buy us, Fox tried to buy us, Viacom tried to buy us… Besides Disney, they’ve all tried to give us haircuts and censor us. I’m going to get my revenge tonight.” He added he hoped his speech would be “a rousing call to action. I’m going to try to get the younger people in the audience to burn the auditorium down.”
While Edinburgh is not literally on fire, Smith’s speech was greeted by applause with attendees saying they had never heard quite such a MacTaggart.
These Lectures are never staid affairs, but Smith’s appearance tonight marked a shift from some of the more traditional choices of years past. The speech has previously been delivered by three members of the Murdoch family, Channel 4’s David Abraham, Kevin Spacey and last year, Armando Iannucci.