Vice co-founder and CEO Shane Smith, left, gestures as Rogers Communications president and CEO Guy Laurence looks on during an announcement in Toronto on Oct.30, 2014. Rogers is partnering with Vice Media as part of a $100-million joint venture that will create a new TV channel and open a production studio in Toronto.Nathan Denette/The Canadian Press
When Rogers Communications Inc. revealed plans to enter into a $100-million Canadian joint venture with Vice Media, it invited reporters to a stylish event space in a downtown Toronto brick and beam building instead of summoning them to its cluster of midtown office towers.
Talk-show host turned hockey personality George Stroumboulopoulos presided as Vice co-founder Shane Smith dropped four-letter words and Rogers CEO Guy Laurence rocked a leather jacket and reminisced about forging the deal over drinks at a bar, not in a stodgy boardroom.
Through it all, the message from Rogers was clear: We're coming for you, millennials. The company is hoping to leverage the counter-culture Vice brand to connect with a young audience that can win it both advertising dollars as well as cellphone, Internet and cable subscribers.
"Vice truly gets it in terms of the kind of content that needs to be created for 18- to 34-year-olds," Mr. Laurence said, noting that according to his research, half of Canada will be between 18 and 34 within seven years. "It was like manna from heaven," he said. "You've got the best in the world, [Vice is] Canadian, they get it, they want to do it big and we have the distribution and the technology, so it's a perfect marriage."
Rogers and Vice are each putting up half of the investment, which will be spread over three years.
Rogers and Vice – which started as a free magazine in Montreal in 1994 and expanded to a New York-based empire of edgy digital content recently valued at $2.5-billion (U.S.) – are each putting up half of the investment, which will be spread over three years.
The companies plan to produce Canadian-focused content at a downtown Toronto studio to launch early next year with a strong emphasis on news targeted at a young demographic. They aim to launch a conventional television channel – the VICE TV Network – in the second half of 2015 and will create much of the content with online and mobile viewing in mind.
"Most 18 to 34 year olds are really interested in current affairs. They love the kind of stuff that Shane and the team produce," Mr. Laurence said while repeatedly noting the approach would be "mobile first."
Online video is attracting a growing number of younger viewers. According to recent figures from the Television Bureau of Canada, people in the 18 to 24 demographic watch an average of 8.2 hours a week of online video content, more than any other age group. Coming a close second with 7.6 hours a week is the expanded age range of 18 to 34-year-olds.
However, television viewing is still a significant draw, with 18 to 34-year-olds watching 21.6 hours on average per week. That's only about half of the television those 55 and over watch on a weekly basis, but the figure has remained fairly steady since 2011, even as online viewing has almost doubled.
For his part, Mr. Smith said Vice has come around to the merits of television – citing a successful collaboration with HBO on its Emmy-winning series VICE – and is now "platform agnostic."
Vice will be responsible for the creative direction of the studio, which will employ about 150 people in the first year, Mr. Smith said.
The company, which threw itself a 20th anniversary party in Toronto Thursday night, raised $500-million this summer from A&E Networks and Technology Crossover Ventures, both of which invested $250-million for 10-per-cent stakes.
Vice makes most of its money from digital videos and operates numerous channels including a suite of YouTube channels with roughly nine million subscribers.
Rogers also plans to leverage the content to the advantage of its communications division by offering daily mobile updates for its Rogers and Fido customers.
It has attempted a similar strategy with its National Hockey League rights, creating the GamePlus mobile app with exclusive camera angles and analysis solely for Rogers customers.
Last week, BCE Inc. complained about the app to the Canadian Radio-television and Telecommunications Commission (CRTC), alleging it runs afoul of rules designed to ensure vertically integrated media and distribution companies make their content available to competitors. (BCE owns 15 per cent of The Globe and Mail.)
But Mr. Laurence says the GamePlus app contains content that was designed with mobile and online viewing in mind, which exempts it from the CRTC's rules on offering television content to its rivals. Similarly, he said, some of the Vice content will be created specifically for mobile devices.
Macquarie Capital Markets Canada analyst Greg MacDonald called the joint venture a "positive strategic move" for Rogers Thursday.
"We think this move gives Rogers equity exposure to a digital media product with growth potential beyond Canadian homes while at the same time exposes Rogers to a new model that could help change its legacy media culture," he said.