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Newspapers battered by years of falling print sales and shrinking advertising revenues are often told to mimic their disruptive digital counterparts — fast-moving companies like Vice Media, BuzzFeed and Vox Media that are experts in creating snappy content that goes viral.

These start-ups have attracted big investments and sky-high valuations for their ability to attract younger audiences, sparking envious glances from the ink-stained wretches of the newspaper business. Two years ago, an internal New York Times “innovation report” warned that the paper risked “falling behind” the digital upstarts, adding ominously that the gap would grow “unless we quickly improve our capabilities”.

But while newspapers are increasingly taking their lead from BuzzFeed et al, and their mastery of content distribution via platforms such as Facebook, the digital upstarts are shifting focus to a distinctly 20th century medium: television.

It turns out that while digital news operations are great at attracting eyeballs, they have yet to crack an online business model that justifies their valuations. Mashable this month laid off two-dozen journalists, part of what it said was a “strategic shift” towards video. Last week, the Financial Times reported that BuzzFeed had missed its 2015 revenue target and slashed projections for 2016. In a subsequent interview on Re/code, Ken Lerer, BuzzFeed chairman, denied that the company had cut 2016 projections but declined to give other figures.

Insiders say BuzzFeed’s business model, which is built around creating custom content for brands, is too time-consuming and unscalable. With this in mind, BuzzFeed — which, like rival Vox, is part-owned by NBCUniversal — is spending more time on programming that could one day air on television. Jonah Peretti, BuzzFeed’s founder and chief executive, is closer to Hollywood these days, having moved from New York to Los Angeles, and the company’s west coast office now employs 300 people.

Mr Peretti talked about efforts to crack Hollywood in an interview with The Hollywood Reporter this week. In a line that could have come straight from Silicon Valley, HBO’s comedy about west coast tech companies, he said he was surprised when he “started to interface with the entertainment industry” because “there was this entire system set up to say ‘no’ to people that want to make things”.

The jury is out on whether his Hollywood push will be a success. But in leaping into television, BuzzFeed may have taken its cue from Vice. Three years ago, Vice launched a television series on HBO. Since then, it has struck licensing deals with international broadcasters, such as Rogers Communications of Canada, and distributors, such as US telecoms group Verizon. It recently launched its own cable channel called Viceland.

There is an irony in digital media companies rushing into television, because that sector is facing big structural problems in the US. Over the past year, the biggest owners of cable channels have been hit by a wave of sell-offs on concerns about “cord-cutting” — the cancellation of pay-TV subscriptions. Younger viewers are watching less, which has hit ratings and valuations. Shares in Viacom, owner of MTV, Comedy Central and Nickelodeon, are down 30 per cent since mid-2015. Time Warner’s are down 15 per cent, while Walt Disney’s are off by a similar amount, on fears of slowing growth at its ESPN channel. By contrast, the S&P 500 is flat over the same period.

Why, then, are native digital companies so keen on television? For Vice, it is the ability to earn more than it ever did when it operated a magazine and a few websites: it has scored licensing deals for its programming and sponsorships for Viceland, even though audiences for the new cable channel have been minuscule.

Cable TV may be under pressure, but it is still more profitable than the online space where Vice and its rivals first made their mark. A long-anticipated flow of advertising dollars from TV to digital sites has not materialised, while fraud and ad blockers have weighed on online growth prospects. As Mashable and BuzzFeed show, an ability to attract eyeballs does not necessarily correspond with sustained revenue growth.

One thing is clear. When it comes to making real money from online news and entertainment, the traditional publishers and the digital upstarts are in the dark, together.

matthew.garrahan@ft.com

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