Vice boss Shane Smith predicts 'bloodbath' of media consolidation in 2017

Vice Media will go on an acquisition spree next year, as Shane Smith's company looks to take advantage of a "bloodbath" of consolidation in the digital media industry.

Smith, Vice's co-founder and chief executive, said the millennial media giant is building a "war chest" of funding to "go out there and buy market share."

He made the comments in a press briefing ahead of delivering the MacTaggart lecture at the Edinburgh International Television Festival, a landmark event in the British TV industry calendar.

Smith predicted that 2017 will be a period of enormous consolidation in the digital media business, with another economic crash fueling a "bloodbath" of deals, as old media buyers build scale and online content firms strive to secure much needed cash.

Smith also shared some rumours about potentially landscape-shifting takeovers that are being speculated on in America media circles. One persistent rumour, he said, is that Apple wants to buy Time Warner and Netflix.

"What you're going to see is a mergers and acquisitions frenzy where the last two or three big boys buy the last scale plays to say: 'We've got digital, we've got mobile, so we're smart.' And the digital guys are going to go, 'f**k thank god, we've finally got money,'" Smith said.

Expanding on his theme in his speech, Smith said Facebook and Google's algorithm changes have exacerbated matters. "What does this do? Well, it's bad. It means a lot less traffic and a lot less money," he told delegates in an 80-minute address at the Edinburgh Playhouse.

"The smart guys," Smith added in the press briefing, "have taken their valuations at their peak," pointing to companies including BuzzFeed - which raised $200 million (£151 million) from NBCUniversal last year - and Business Insider, which sold to German publisher Axel Springer for $343 million (£249 million) in 2015.

He predicts there will be 30% fewer digital players by next year and suggested that Vice is well-positioned to take advantage of the changes.

Vice Media counts Disney and News Corp among its backers. Disney owns 10% of the millenial media business after doubling its nvestment to $400 million (£303 million) last year. Rupert Murdoch's News Corp took a 5% stake in Vice in 2013 for $70 million ($53 million).

The company is currently valued at $5 billion (£3.8 billion) and Smith argued: "The secret to Vice's valuation is very simple: we make money."

He did not rule out the prospect of Disney buying Vice outright, but said its investment will help Vice "turn on the jets" in its mission to grow its monthly audience from 380 million, to one billion.

'Let's break some rules to keep media healthy.'

Speaking ahead of the launch of TV channel Viceland in the UK this year, Smith argued that creating content that with a social purpose for young people is not just good for humankind, but good for business.

"Baby Boomers have had a stranglehold on media and advertising for a generation," he said. "That stranglehold is finally being broken by a highly educated, ethnically diverse, global-thinking, hard-to-reach generation, and media is having a hard time adapting to this rapid change."

He added: "Let's break some rules. And here's a good place to start. Open s--- up. Media today is like a private club, so closed that most young people feel disenfranchised. You have to hand it over to the kids."

In a break from tradition, Smith delivered most his address without a script. Journalists were not given an embargoed copy of his speech - the first time this has happened for a MacTaggart in a least a decade - and instead were briefed by Smith himself on the morning of the lecture.