Welcome back to a post-Labor Day issue of A Media Operator. It was nice taking a week off and recharging. However, now that we're back, I'm excited to jump in.

But first, a message about our sponsor, Freestar.

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When I was at CoinDesk, we partnered with Freestar to be our advertising partner, helping us to scale that business from tens of thousands of dollars to seven figures a year. As they grew, we grew with them, our revenue increasing in lockstep. 

Now Freestar is expanding once again. 

It has acquired Sortable, a Canada-based ad management company. This deal sees Freestar moving upstream in the proverbial “ad tech” stack with the Sortable Exchange. This SSP will enable Freestar to cut a middleman out of the bidding process, resulting in more revenue for publishers.

What I’ve always liked about working with Freestar is the sense of partnership. They helped me scale an ad business that was hemorrhaging potential revenue. And if I were launching a publication that had the scale for programmatic advertising, I’d partner with them again. They lived by their philosophy of publisher first, a rarity in the adtech space. 

You can learn more about them here. Tell them I sent you.

Now let's jump in...

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In what can only be described as déjà vu, news came out while I was off that the deal Vice had been working on to go public through a SPAC had been called off. According to The Information:

"Hoping to raise money by going public" is being very kind to Vice. It was not only hoping. It needed to go public. Desperately, some might say. When Vice last raised a $450 million round in 2017, valuing the business at $5.7 billion, it made certain promises to TPG, its biggest investor. According to a WSJ story from March 2020:

Vice—and specifically, co-founder Shane Smith—made a bet that it would be acquired or go public before those difficult terms came due. But when the market for media companies disappeared over the past few years, Vice was left dealing with a scenario it had not expected to worry about.

That's why all the recent SPAC activity was a possible saving grace for the company. If it could make the deal happen, TPG and all its investors would convert from their special shares that guaranteed certain returns to common shares.

Alas, with the company still not being profitable, growth slowing, and a valuation more inflated than a pool toy, it should come as no surprise that the deal fell apart. This leaves Vice in a very precarious position. While TPG and others have invested over $85 million in fresh capital, the clock is ticking.

So, what comes next?

You can tell a lot about a team by how it deals with adversity. You can also tell a lot about a media team by what tools they pull out of their toolbox. I'm a newsletter guy. My first instinct when dealing with something might be to think about how a newsletter can help solve it. They're tried and tested. I know them.

Vice is doing the same thing, but with video. In July, it told The New York Times that it was cutting the number of text articles it published by 40-50% across its network of sites and focusing more of its effort on video.

For some reason, the executive team at Vice thinks that it can refocus on platform-based and studio-quality video as a way of achieving its goals. The problem is that this is not too dissimilar to what it tried doing over the past few years. This is the pivot to video part deux.

It let go fewer than 20 people as part of this move, likely because it needs to do everything in its power to break even and reach profitability before that $85 million runs out.

Even if that does happen, it's hard to see how this can become a positive scenario for Vice shareholders. And I really can't understand throwing additional money at the problem. Frankly, this feels more like shareholders being unable to admit they made a mistake than a sound investment.

One possible scenario is that this gives Vice more time. And, perhaps, that time is what is needed to find a new SPAC partner. But despite all the excitement about SPACs, how many media deals have we seen? BuzzFeed, Forbes (just announced), and Group Nine's snake eating its own tail (not actually real yet because it needs to find another company to buy along with itself).

My suspicion is the SPAC ship has sailed. If it can't convince new SPAC investors to agree to its valuation or convince current shareholders to take an even bigger cut in valuation, I think Vice's hope for liquidity this year is gone. We'll learn a lot more when BuzzFeed shares start trading.

There has been a lot of ink spilled over the past couple years about how great subscriptions are. And with a volatile news cycle, media companies left and right saw considerable growth in their subscriber lists.

But now comes the hard work. According to Digiday:

As someone who runs a paid subscription newsletter (you can sign up here), I know how important this is. On one hand, I get very excited whenever I get a new paying subscriber. It's like a hit of dopamine. But logically, I know what matters most is that I reduce how often people unsubscribe. It's hard to get to a big number when you take two steps forward and then one step back.

One area of the story, in particular, really jumped out to me:

While I get paid to write about strategies to reduce churn, increase revenue, etc., this is the most important thing publishers can do. By paying very close attention to what types of stories subscribers are engaging with, publishers can invest more resources in deepening those categories.

For The Atlantic, that's the above topics. For A Media Operator, it's focusing on the business of media. Unless you're The Times, zeroing in on the specific niches that your audience cares about is critical to keeping a sustainable subscription media business going. Even generalist publications still need a niche focus.

Once there's a deep understanding of what content paying subscribers care about, we can shift toward other tactics to reduce churn. That could mean things like reducing passive churn and communication strategies to keep users coming back.

But it starts with the content, our main product. If the content isn't engaging or it is bad, no marketing tactic will matter.

Thanks for reading today's A Media Operator. If you have thoughts, hit reply. And if you want to become a premium member, sign up here. Thanks and see you next week!