EXCLUSIVE
Media
Sports Illustrated’s Publisher Guts Staff. Future Unclear
BY A.J. PEREZUPDATED JANUARY 19, 2024 | 04:39 PM
The Arena Group, which publishes SI, recently missed a $2.8 million payment to SI’s license holder, Authentic, leading Authentic to sever the deal.
On Friday, Arena laid off all employees working for the 70-year media company.
The entire staff of Sports Illustrated was notified on Friday that their jobs were being eliminated.
Authentic, the licensing group that purchased Sports Illustrated for $110 million from Meredith five years ago, has terminated the agreement it holds with The Arena Group to publish SI in print and digital, according to an email obtained by Front Office Sports. That move comes three weeks after Arena missed a $2.8 million payment that breached the company’s SI licensing deal, which began in 2019.
The fallout: On Friday Arena told all SI employees in an email “… We were notified by Authentic Brands Group (ABG) that the license under which the Arena Group operates the Sports Illustrated (SI) brand and SI related properties has been officially revoked by ABG. As a result of this license revocation, we will be laying off staff that work on the SI brand.”
“Some employees will be terminated immediately, and paid in lieu of the applicable notice period under the [the union contract]. Employees with a last working day of today will be contacted by the People team soon. Other employees will be expected to work through the end of the notice period, and will receive additional information shortly.”
Authentic’s move to terminate Arena’s license and Arena’s eliminating SI’s staff signals a shift in the company that operates SI, weeks after Manoj Bhargava, the founder of 5-Hour Energy, introduced himself to employees of Arena, including SI, as their new leader. Since then, Authentic has had exploratory conversations with and reached out to multiple parties about the possibility of taking over Arena’s role with SI, industry sources with knowledge of the situation tell FOS.
It’s unclear whether Authentic will indeed pursue the path of establishing a new operator or will now allow Arena to renegotiate its current deal. Sources tell FOS, though, that Authentic’s goal is to move the process along as quickly as possible. One way or another, says one insider, “Authentic will see Sports Illustrated through a necessary evolution.”
SI, meanwhile, has struggled to find its financial foothold in the digital age, culminating in a November report that suggested its website had published AI-generated reviews without disclosure. That fiasco was followed by a head-scratching town hall in December led by Bhargava with SI and other Arena employees that spanned more than 90 minutes and during which Bhargava said, “No one is important. I am not important. … The amount of useless stuff you guys do is staggering.” Bhargava’s Simplify Inventions agreed to purchase roughly 65% of Arena in August, a $50 million deal.
Authentic acquired SI from Meredith in May 2019. The Arena Group—operating as Maven, before changing its name in 2021—then paid Authentic $45 million up front as part of a 10-year licensing agreement. Until a month ago, Ross Levinsohn led SI and Arena as Arena began to purchase other struggling media outlets, such as Men’s Journal.
Authentic, sources close to the situation tell FOS, has been irked by Arena in recent years as SI has instituted multiple rounds of layoffs, run off top talent such as Grant Wahl, and undergone constant leadership changes. Authentic’s contact with potential replacement operators predates Arena’s recent missed payment, sources with knowledge of the situation tell FOS.
In addition to Friday’s SI layoffs, Arena fired more than 100 employees on Thursday throughout its organization. But Bhargava, who was tapped as Arena’s interim CEO on Dec. 11, didn’t make those cost-cutting moves. That’s because Bhargava stepped down from that position on Jan. 5 “to avoid any conflicts of interest,” according to an SEC filing. That conflict: Bridge Media Networks, a company completely owned by Bhargava, is in negotiations to make “a substantial investment” in Arena, according to the Arena news release that announced the layoffs on Thursday. The layoffs were carried out instead by Arena execs, its board of directors, and Jason Frankl, of FTI Consulting, who was appointed as Arena’s chief business transformation officer the same day Bhargava resigned, according to SEC filings.
“My immediate focus is to collaboratively design a growth-oriented media company, ensuring the financial stability necessary to cultivate and grow the brands we cherish,” Frankl said in a statement. “While this week’s layoffs were regrettably necessary, I look forward to sharing detailed plans soon.”
