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LOS ANGELES -- Danny Gabai was used to being ignored. For years, he ran what may have been Vice Media's most uncool business -- the production of feature films, made to be shown in theaters.

"We were seen as a redheaded stepchild," Gabai said, "if our existence was acknowledged at all."

But that was the old Vice, the one that functioned less as a company and more as an out-of-control frat party. The new Vice, which started to take shape last year, with the arrival of a new chief executive, Nancy Dubuc, has decided to turn Gabai's operation into an anchor division, one she hopes can help Vice overcome difficulties elsewhere in its empire.

Dubuc, who has vowed to stop the flow of red ink at Vice by next year, named Gabai the head of Vice Studios U.S. in January and gave him a mandate: Drastically increase the number of television shows the company produces for outside buyers while continuing to make a smattering of sharp-edged feature films.

"It's a tremendous opportunity for us," she said, noting the proliferation of streaming services and their "more, more, more" need for original movies and series.

In some ways, Vice's heightened focus on its studio is an acknowledgment of the shifting tides in media. Upstart online media companies like Vice and BuzzFeed that became darlings during the digital advertising boom have lately been retrenching. Online-ad spending has become increasingly controlled by Facebook, Google and Amazon.

"Vice has found itself in a bloody hard business," said Mike Vorhaus, a longtime digital media consultant.

Vice laid off 10% of its workforce this year and recently folded a half-dozen sites into its core "Vice.com," a streamlining the company explained as benefiting both advertisers and audiences. Earlier this month, The Walt Disney Co., which owns about 27% of Vice, revealed in a securities filing that it had taken a $353 million write-down on its stake. Disney had previously written off $157 million.

But the studio business is thriving. Companies that make films and television shows -- old media -- have been awash in money from streaming services. Netflix, Amazon, Hulu, Apple and Disney Plus will spend roughly $15 billion combined on original content next year, according to Rich Greenfield, a media analyst at BTIG Research.

Vice Studios, which includes a British production company, Pulse Films, has had four shows premiere this year, with another, 1994, a docuseries about a pivotal year in Mexican politics, coming to Netflix on Friday. Vice has 15 additional shows in production, including the scripted Gangs of London, a big-budget action drama commissioned by HBO's Cinemax and Sky, the British pay-television service.

Gabai said the studio had more than 60 series in development worldwide. Many are unscripted, and some are based on "Vice" articles. Vice Studios employs 69 people and has overseas production hubs in London and Singapore.

Vice-produced films include documentaries like Fyre: The Greatest Party That Never Happened, which was a recent hit for Netflix, and the coming AKA Jane Roe, described as an exposé about Norma McCorvey, the anonymous plaintiff in Roe v. Wade. It will roll out at fall festivals.

Scripted movies from Vice Studios include The Report, a political drama involving the torture of terrorism detainees in the aftermath of the Sept. 11 attacks. Amazon paid $14 million for rights to the film, which stars Annette Bening as Sen. Dianne Feinstein. It arrives in theaters Sept. 20.

Vice is far from the only company going after streaming money. The field includes Viacom and NBCUniversal, which are coping with cord-cutting by shifting their channel-centric business models to studio-centric strategies. Viacom's MTV, for instance, started a studio last year to produce series for outside buyers. Its first effort is a reboot of The Real World for Facebook.

Vice has its own cable network challenges. Its 3-year-old channel, Viceland, which is in 66 million homes in the United States -- 170 million worldwide -- has struggled to find an audience.

Vice's partnership with HBO, where Vice News Tonight runs on weekdays, has been more fruitful. The show, aimed at young adults, attracts about 560,000 viewers per episode. HBO is expected to make a renewal decision this year, however, and some of the program's advocates at HBO are no longer there -- namely Richard Plepler, the channel's former chief executive, who decamped in February.

Asked to assess her turnaround efforts at Vice, Dubuc said: "We've made quite a bit of progress in a short amount of time. The last two quarters have been very strong." She noted that the company's in-house advertising agency, Virtue, brought in 20 new clients last year, including Google Chrome and Marriott Rewards.

Vice raised $250 million in debt financing this month from a group of investors who included George Soros.

SundayMonday Business on 05/19/2019

Print Headline: Vice sells content to turn profit

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