Sports Illustrated's Publisher Makes Severe Staff Cuts, Future Appears Uncertain

 Sports Illustrated staffers received a notification on Friday about significant layoffs, with some happening immediately and others in the near future.

The licensing group Authentic, which acquired Sports Illustrated for $110 million five years ago, has ended its agreement with The Arena Group to publish SI in both print and digital formats. This decision came after Arena failed to make a $3.75 million payment, breaching the licensing deal that began in 2019. Authentic's termination triggered a $45 million fee due immediately, as per an SEC filing on Friday.

The aftermath: In an email to SI employees, Arena stated, "We were notified by Authentic Brands Group (ABG) that the license under which the Arena Group operates the Sports Illustrated (SI) brand has been officially revoked." As a result, staff working on the SI brand will face layoffs. Union sources suggest that guild members will receive 90 days' notice, with a possibility of resolving the licensing deal during that time. Non-guild employees will be let go immediately. The extent of the layoffs was unclear, but it was anticipated to be significant.

"Some employees will be terminated immediately and paid instead of the notice period, while others will be expected to work through the end of the notice period," mentioned Arena's email. As of Friday afternoon, there was confusion about the details, but affected staffers expressed concerns about the depth of the cuts.

The Sports Illustrated Guild posted on social media, "We have fought together as a union to maintain the standard of this storied publication and to ensure fair treatment for our workers. It is a fight we will continue."

Authentic's move to terminate Arena's license and Arena's subsequent layoffs mark a shift in the company. Manoj Bhargava, founder of 5-Hour Energy, recently introduced himself as the new leader of Arena. Authentic has explored the possibility of taking over Arena's role with SI and aims to expedite the process.

It remains uncertain whether Authentic will establish a new operator or allow Arena to renegotiate its current deal. However, sources suggest that Authentic's goal is a swift resolution, ensuring a necessary evolution for Sports Illustrated. SI has faced financial challenges in the digital age, including a report of AI-generated reviews on its website without disclosure.

In a bizarre turn of events in December, Bhargava led a town hall lasting over 90 minutes, during which he emphasized the insignificance of individuals. Bhargava's Simplify Inventions had agreed to purchase 65% of Arena for $50 million in August.

Authentic acquired SI from Meredith in 2019, and Arena, formerly known as Maven, paid a substantial upfront fee as part of a 10-year licensing agreement. Authentic's frustration with Arena predates the missed payment, attributed to multiple layoffs, talent losses, and leadership changes at SI.

Aside from SI layoffs, Arena fired over 100 employees throughout its organization on Thursday. Bhargava, Arena's interim CEO, did not make those cuts, having stepped down on January 5 to avoid conflicts of interest. Arena's layoffs were carried out by executives, the board of directors, and Jason Frankl, appointed as Arena's chief business transformation officer.

Frankl stated, "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." He expressed regret about the layoffs and promised to share detailed plans soon.

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