The global publisher Vice Media, which licensed its Australian web operation to Nine and a TV channel to SBS, has filed for bankruptcy protection in the US and struck a deal to sell itself to creditors, punctuating a precipitous fall for the media upstart that once boasted a $US5.7 billion ($8.5 billion) valuation.

The developments cap a tumultuous few months for the firm, which began as an alternative magazine in Montreal nearly three decades ago and captured the attention of young viewers globally with documentary-style videos. It shared a Pulitzer Prize in 2020 and multiple Emmy wins for Vice News Tonight.

Nine’s Pedestrian Group operates Vice AU and Refinery 29 Australia under a licence agreement with Vice after it made almost all of its own Australian staff redundant in 2020. SBS’ second channel is called Viceland, which airs several shows from Vice as well as drawing on its name. Both Nine, which also owns this masthead, and SBS said there had been no change to their Vice-branded outlets, but the Vice that emerges from bankruptcy is likely to be a much smaller media player than it has been in the past.

Vice’s rapid downfall underscores the challenges facing digital media companies, which are struggling as advertisers cut spending during an uncertain economy and route marketing towards tech platforms from Facebook and Google to TikTok.

The Brooklyn-based company listed both assets and liabilities in the range of more than $US500 million to as much as $US1 billion in a Chapter 11 petition filed in the Southern District of New York. In a separate statement, Vice announced it reached a deal with creditors including Fortress Investment Group, Soros Fund Management and Monroe Capital to purchase its assets for $US225 million and assume significant liabilities.

The agreement, however, allows for rival bidders to emerge. At its peak, Vice attracted multibillion-dollar valuation along with investments from Disney and the then-Murdoch owned 21st Century Fox. In 2012, Rupert Murdoch tweeted that Vice was a “wild, interesting effort to interest millennials who don’t read or watch established media”. James Murdoch invested in Vice in 2019 through his holding company, Lupa Systems.

In a statement, SBS said the bankruptcy had no immediate impact on its Viceland channel. “The SBS VICELAND channel is a curated mix of programming including content SBS selects from Vice, alongside a range of other suppliers, and we have the flexibility to respond to programming and scheduling changes when needed,” a spokesman for the broadcaster said.

Pedestrian Group chief executive Matt Rowley said there was no change to the Australian or New Zealand Vice-branded operations. Pedestrian employs the staff responsible for the content there. “Any Vice Media Group corporate issues are matters for them to comment on. Far from the Vice brand decreasing, Vice AU is in rude health and has just this year expanded into NZ with new staff hires.”