Mainstream media companies have opened the door for digital upstarts because their obsession with ratings led them to fail their audiences by colluding with controversial politicians, according to the billionaire journalist behind the Vice website.

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Shane Smith, the site’s founder, said that traditional media companies have failed to connect with young audiences or cover the issues they were interested in, and even accused some of tacitly “colluding” with notorious politicians to drive ratings.

“The secret or our success can be traced to the day we changed our content. The business grew and the audience exploded and we made more money,” he said, giving the annual MacTaggart lecture at the Edinburgh international TV festival.



At an earlier press briefing, he had called out CNN’s extensive coverage of Donald Trump as an example of the established media’s failings. “If you look at Trump as an example: Trump gives you ratings. The whole collusion between CNN and Trump is a perfect example of what’s wrong in media today.”



Vice, founded by Smith as a “punk” magazine in Montreal in 1994, has gradually become a global multimedia company after it expanded into edgy online video. Its success has attracted a string of blue-chip media investors, including Disney, which pumped $400m (£302m) into the company for an 18% stake, and it plans to launch a TV channel in the UK and 58 other countries later this year.

But despite that success, Smith warned there would be an impending crisis in the media industry with consolidation among major players and an “evisceration” of digital businesses, who he said where struggling to make their business models work.

“Next year, you’ve already seen huge consolidation this year, next year will be a fucking bloodbath,” he said. “You are going to see a merger and acquisition frenzy of the last two or three big boys, buying the last two or three [digital] scale plays to say ‘we’ve got digital, we’ve got mobile, we’re smart.’”

Smith pointed to online rivals such as Buzzfeed and Vox, which have received $200m each in investment from NBC Universal, and Business Insider, which sold up to Axel Springer – owner of Europe’s biggest-selling tabloid Bild, as examples of how many of the new breed of digital news media were finding it tough.

He said Vice’s success had come when the the website “stopped being the hipster’s bible” and adopted a more mature journalistic approach with shows such as feminist writer Gloria Steinem’s show Woman, the documentary series Gaycation and its Vice News operation.

“The good news is the growth of Vice, valuations and our traffic growth and everything, happened,” he said, “when we stopped talking about cocaine, supermodels and rare denim. When we started talking about the environment, women’s issues, LGBT issues. Because our audience demanded it.

“Because of that it changed everything. Everyone said young people don’t care about news [and] they sure as hell don’t care about international [news]. Bullshit. They care. But they don’t like way its been portrayed up until now. This is a huge white space.”

The company’s other backers include Sir Martin Sorrell’s WPP, the MTV owner Viacom and Disney, whose $400m investment late last year provided Smith with a business valued at $4.5bn.



The move by Disney, which now owns an 18% stake directly and through its A+E Networks joint venture with Hearst, has heightened speculation that it will ultimately purchase the company.

“At one point or another Time Warner tried to buy us, Fox tried to buy us, Viacom tried to buy us,” Smith said. “Recently we’ve done a big deal with Disney. And besides Disney they’ve all tried to give us haircuts on valuation, some have tried to censor us. They don’t want to make Vice Disney, they want to give us autonomy. It makes sense for them and it makes sense for us.”

He warned that all media had a “fear of Facebook” which, along with Google, sucks up giant swaths of the digital advertising revenue that is the lifeblood of many media companies. There was also the spectre of Facebook “changing its algorithm”, which would mean it effectively “owned” the media companies that had become too dependent on its giant global popularity to drive audiences to their content.

“I learned this two years ago which is why we moved into TV,” he said. “We realised two years ago we had to get off the crack that is Facebook or at least somewhat mitigate it with some methadone [by expanding Vice on to multiple platforms].”

Smith has a penchant for happily fuelling speculation about the future of his company. He controls Vice holding super-voting shares, and says that the industry is at the peak level of valuations and could face a crash.

“I can stay independent. It is good for me, as a megalomaniac, I’m set for life,” he quipped. “As a chief executive I have a fiduciary responsibility to my shareholders to do the best thing for the company. And it is something I wrestle with every day. Do I do something that is good for me and stay independent? Do I do something for the shareholders, and probably the company going forward, do I [continue to massively invest in the business] or do I take the risk of public markets?”