To determine if a company is financially sound and solidly well run, the litmus test is simple: leaf through the trade press. If you see their ads, there’s money behind them. If you don’t see ads, there is only smoke and mirrors.

When it appeared on the international TV scene in 1994, Vice Media was considered almost a divine vision. Now, 29 years later, the company has filed for Chapter 11 bankruptcy. The bankruptcy will facilitate the sale of Vice Media to a group of its lenders, led by Fortress Investment Group and Soros Fund Management.

The first peak of Vice’s appeal was reached in 2001 when it relocated to New York City from Montreal, Canada, but the company’s real apex was reached a few years later. While at international TV trade shows like MIPTV and MIPCOM in Cannes, Vice was like Mozart’s Figaro — everyone wanted to partner up with the firm or to have it as a brand association, or for endorsement. And Vice appeared to be everywhere all at once — apparently without investing any of its own marketing money. The consumer press might have idolized Vice, but I, for one, never clicked with what was considered a passing phenomenon by most of the trade media. Granted it took more than a quarter of a century to become a “passing phenomenon,” but, as they say in Hollywood, “it takes 15 years to become an overnight success.” (And in this case, it was actually an overnight fiasco!)

The last one to turn Vice’s lights off was Greek broadcaster Antenna, which recently terminated a multi-million-dollar contract to buy Vice’s news content.

To me, and I suppose a good part of the trade media, Vice was never a prospective advertiser, and we assumed that the reason was simple: No money. Vice’s innovative PR stunts were good at creating smoke and mirrors with the general press, whose cult-like attention brought the company investors and investments. First, it had investments for $4 million (1999), then a variety of investors poured $70 million into it (2013), followed by $250 million (2014), another $200 million the following year, and finally $450 million in 2017. By then Vice was valued at $5.7 billion, but was not profitable. After failed attempts to find a buyer, Vice had been valued at $225 million by its major lenders, which have agreed to the acquisition of the company.

We in the trade business tend to follow the money more than the PR narrative. We know that if a company is cash poor, the first thing to go out the window is marketing and advertising, leaving just the less expensive PR to keep generating more smoke screens. “I cannot afford to advertise,” Norman Horowitz used to cry when he was running MGM/UA in 1990. “I need the money to pay my secretary!”

Vice and other similar cases (like Elon Musk reevaluating advertising for his Tesla cars) should be studied in MBA classes. Students should also learn the lesson of looking at a company’s marketing and advertising budgets to determine if they are solid.

This concept isn’t anything new. It was widely employed in the 1980s, especially by content distribution companies that ultimately became very successful. Case in point was Telepictures’ strategy of plastering its ads in every possible TV trade publication during TV markets, but since, in the company’s early days, it had little TV content available for licensing, its ads consisted of illustrations of birthday cakes up until its third anniversary. The strategy paid off, and the company became widely successful, and is still active today.

(By Dom Serafini)

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