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07 Sep
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Vice Weighs Content Deal With Saudi-Backed Firm

After Saudis killed the journalist Jamal Khashoggi in 2018, Vice Media joined many other American companies in publicly distancing itself from the Saudi Arabian government, whose agents carried out the killing.

Now, Vice is in talks to expand its business in the country.

The youth-focused digital media company is exploring a deal with MBC, a media giant partially owned by the Saudi government, to launch a new content partnership in the region, according to two people with knowledge of the talks who would speak only on the condition of anonymity.

The deal, which may include the creation of a new media brand focused on lifestyle coverage and training local media workers, could be worth at least $50 million over multiple years, one of the people said. Shane Smith, a co-founder of Vice, has been involved in some of the discussions.

The talks with MBC come at a pivotal time for Vice. The company has struggled to live up to its lofty $5.7 billion valuation and has been weighing a sale of its business. Any significant deal with MBC could increase the price it is able to command from a suitor. But talks between MBC and Vice could still fall through, and any prospective acquirer could try to distance the company from entities affiliated with the Saudi government.

The potential deal could also cause internal blowback at Vice.

Last April, the company’s decision to open a commercial office in the Saudi capital of Riyadh became a point of contention. In a call with the staff to discuss the new office, one producer called the decision “morally bankrupt.”

A Vice spokesman said in a statement that the company was focused on young audiences underserved by existing media organizations, especially in countries like Saudi Arabia where a majority of the population is under 35.

“We’re proud of the internationally recognized work we’ve done across the Middle East, our incredibly talented team there, and the impact they’ve had,” the spokesman said. “The editorial independence of Vice News has never been compromised by the countries in which we operate, and that won’t change.”

Vice has continued covering human rights issues in Saudi Arabia as it has negotiated the deal. In July, the company reported that Tala Safwan, a social-media influencer, was arrested in Riyadh after posting a video.

A person familiar with MBC said the company has regular conversations with potential partners to expand its digital footprint and reach wider audiences around the world. MBC already has commercial deals with prominent American media firms, including MGM Studios, with which it has produced films.

While some media companies backed out of deals with firms tied to the Saudi government after the killing in 2018, some maintained their relationships or reached new business deals more recently. Penske Media Corporation, the parent company of the Hollywood trade publications Variety, The Hollywood Reporter and Deadline received a $200 million investment from the Saudi Research and Media Group in 2018, before Mr. Khashoggi was killed. Bloomberg Media announced a deal in 2020 to collaborate with the Saudi Research and Media Group on Asharq Business With Bloomberg, a financially focused division of the Asharq News, a media company based in Riyadh.

Vice, which had longstanding business ties to Saudi Arabia, publicly backed away as well. Vice in October 2018 put its business with the Saudi Research and Media Group under review. Another deal worth a projected $20 million to produce films for the Saudi Research and Media Group through Broadly, Vice’s website dedicated to issues of gender and identity, was “on hold due to bad press,” according to an internal document from March 2019. That same document said Vice was still contemplating a deal worth up to $150 million in Saudi Arabia.

A Vice spokesman said those two deals didn’t come to fruition, and Broadly was folded into Vice.com in May 2019.

But more recently, Vice’s ad agency, Virtue, has worked on marketing campaigns aimed at promoting Riyadh, according to documents obtained by The New York Times.

An 89-page Virtue creative brief from 2021 shows the agency pitching city festivals including “Taste of Arabia,” “Bukra Fest” and “Footura,” a summer “footwear extravaganza.” A document listing sales opportunities from 2020 shows a $70,000 deal in the pipeline from another firm in Riyadh.

Multiple companies have expressed interest in buying Vice, including the Greek broadcaster Antenna, which last year sold a 30 percent ownership stake in one of its subsidiaries to MBC. Group Black, a media company focused on Black ownership, is also considering an offer. A deal could value Vice at upward of $1.5 billion, a person with knowledge of the negotiations said. That figure remains a moving target.

Vice faces financial headwinds this year as it tries to achieve a full year of profitability, which would be a milestone for the company. A memo obtained by The New York Times sent to employees in June by the company’s chief executive, Nancy Dubuc, said that the company’s revenue forecast was flat against the same period last year, meaning that the company was “slightly behind” its overall financial target.

“This means being ruthless about areas of the business that are not growing and focusing our energies on areas that are,” Ms. Dubuc wrote.

Vice’s deals with commercial partners have caused internal strife in the past. In 2018, as Vice Media was preparing to introduce a media brand funded by Philip Morris called “Change Incorporated” focused on persuading readers to quit cigarettes, members of the company’s communications team drafted a memo raising concerns that the deal could cause “anger, frustration and widespread resentment within Vice,” according to a document obtained by The New York Times.

The company planned to work with Fleishman Hillard, a public relations firm, to develop a crisis communications plan, according to a document viewed by The New York Times, and proposed developing a “response site” in the event of a leak. Vice also planned to identify “key opinion leaders” on staff, “expose them” to the project and “take them away for a day or two and get them to absorb all this.”

Richard Tofel, a former news executive at ProPublica and The Wall Street Journal, said news organizations should try to avoid entering into voluntary commercial agreements with governments whenever possible and condemned Mr. Khashoggi’s murder.

But he added that news organizations should also be careful not to draw up a list of so-called “bad guys” and “good guys” because it has the potential to compromise their coverage.

“If you have a blacklist of people who are so reprehensible that you would not do business with them, aren’t those people entitled to say that you have made a judgment — before reporting about any particular situation — that they are overwhelmingly likely to be in the wrong?” said Mr. Tofel, who said that he wasn’t privy to the details of Vice’s discussions with MBC.

Yet Tom Rosenstiel, a professor at the University of Maryland and the former director of the American Press Institute, said it was understandable that a deal between Vice and MBC could cause consternation among journalists at Vice.

“There’s a difference between being owned by a company that’s part of the Saudi government versus doing business with them,” Mr. Rosenstiel said. “Nonetheless, I think it would give anyone in news pause to be in business with a government that kills journalists.”

Matina Stevis-Gridneff contributed reporting.

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