Thu. Feb 22nd, 2024

Sports Illustrated, the venerable bible of sports journalism, has been in decline for years, as the internet annihilated print magazines and cost-cutting turned the weekly publication into a monthly and whittled its staff. But on Friday, the magazine received perhaps its toughest blow yet.

The company that publishes Sports Illustrated said in an email to employees that it was laying off many of them, leaving in doubt what lies ahead for the publication.

The move came after the Arena Group, which publishes the magazine and website under a complicated management structure, had its license to operate the publication revoked.

Reporters and editors for Sports Illustrated were asked on Friday to attend a Zoom call at 2 p.m. Eastern time. It lasted just seven minutes. On the call, Jay Frankl, the Arena Group’s newly hired chief business transformation officer, said, “We will continue to produce the Sports Illustrated brand and online content until the situation is fully resolved,” according to a recording of the meeting heard by The New York Times. No questions were taken.

Some Sports Illustrated staff members received emails with immediate layoff notices, while others were told in further Zoom meetings that they would keep their jobs for at least 90 days. (Roughly 100 journalists work for Sports Illustrated.) Arena Group’s executives told Sports Illustrated staff members they planned on continuing to publish the magazine and website, despite having their license to operate the publication revoked. But it was not immediately clear how that would work. It was also unclear whether the magazine’s owner, Authentic Brands Group, would strike a new agreement with the Arena Group or find a new company to operate it.

But it seems certain that even if Sports Illustrated survives in some form, it will be severely diminished.

The mood among staff members in the wake of the layoff announcement was a mix of anger, frustration and confusion. Journalists at Sports Illustrated texted and messaged one another on Slack, unsure in some cases who had been laid off, and what the ultimate fate of the magazine would be.

For decades, Sports Illustrated was a weekly must-read for sports fans and a financial engine for the Time Inc. empire. It once had over three million subscribers, and its writing, reporting and photography were considered the pinnacle of sports journalism. Landing on the cover was the most coveted endorsement an athlete could receive, even well into the television and internet eras. And its annual swimsuit issue was a pop culture phenomenon.

“I think it is one of the best magazines to ever exist, with some of the best photographers, writers and editors that have ever been in one building,” said Rick Reilly, who for years wrote the magazine’s popular backpage column. He added, “If it is really dead, it has kind of been dying.”

Sports Illustrated has indeed been in trouble for years. It struggled to shift to the digital media world, and it was hampered by mismanagement.

Meredith purchased Time Inc., which included Sports Illustrated and other media assets, for $3 billion in 2017. Two years later, the media conglomerate sold Sports Illustrated to Authentic Brands Group, which is primarily a licensing company that acquires the rights to celebrity brands, for $110 million. It was bought for the value of the Sports Illustrated name and intellectual property, not because Authentic Brands Group intended to run a magazine.

The Arena Group — which owns Men’s Journal, Parade and TheStreet and was previously known as the Maven — quickly struck a 10-year agreement with Authentic Brands Group to operate and publish Sports Illustrated. It paid at least $45 million for the right to do so, while Authentic Brands Group retained commercial rights for things like a potential Sports Illustrated-branded hotel in Michigan.

In a statement, Authentic Brands Group said it was committed to ensuring that “the brand of Sports Illustrated, which includes its editorial arm, continues to thrive as it has for the past nearly 70 years.”

The Arena Group is in negotiations with Authentic Brands Group, and plans to continue to publish Sports Illustrated, said Rachael Fink, an Arena Group spokeswoman. “We hope to be the company to take SI forward but if not, we are confident that someone will,” she said in a statement.

Over the past decade, Sports Illustrated’s newsroom has shrunk. The company’s last remaining staff photographers — the “illustrated” in Sports Illustrated — were let go in 2015, and several rounds of layoffs followed. The magazine, once published weekly, now comes out monthly. Many of the stories on its website are now written by little-paid contractors.

Despite those changes, the publication’s digital audience has grown steadily. In December, Sports Illustrated drew more than 50 million visitors, according to Comscore, doubling its audience from four years earlier.

The layoffs at the magazine are the latest piece of bad news for the publishing industry, whose fortunes have gone from bad to bleak in recent months. Storied publications like The Los Angeles Times and The Washington Post, which are owned by deep-pocketed billionaires, have slashed their newsrooms over the last year as advertising revenue dried up and attracting new online subscribers proved elusive. Even startups that were once hailed as the future of the media industry — like BuzzFeed and Vice — have abandoned or sharply curtailed their news gathering efforts as investors soured on digital publishing.

The union representing Sports Illustrated confirmed that the Arena Group was laying off many Sports Illustrated employees.

“This is another difficult day in what has been a difficult four years for Sports Illustrated under Arena Group (previously the Maven) stewardship,” the union said in a statement. “We are calling on ABG to ensure the continued publication of SI and allow it to serve our audience in the way it has for nearly 70 years.”

It has been a particularly tumultuous several months at Sports Illustrated. In August, Manoj Bhargava, the entrepreneur behind the 5-Hour Energy drink, agreed to buy a major stake in the Arena Group, raising hopes that he might provide a measure of stability.

But shortly after Mr. Bhargava agreed to buy the stake, Sports Illustrated was thrown into chaos. Several of the Arena Group’s senior executives were forced out of the company, including its chief executive, Ross Levinsohn; its president, Rob Barrett; its chief operating officer, Andrew Kraft; and its general counsel, Julie Fenster.

In November, reports circulated that Sports Illustrated had published product reviews under fake author names, seemingly generated by artificial intelligence, which the Arena Group blamed on a vendor.

“My god, they had A.I. writers with backstories, robots they were trying to pass off,” Mr. Reilly said, before invoking renowned Sports Illustrated writers. “This is a place that hired Jim Murray and Dan Jenkins!”

The situation got worse after that. In early January, the Arena Group failed to make a $3.75 million payment to Authentic Brands Group, breaching its licensing agreement. Days later, Mr. Bhargava resigned as its interim chief executive officer, and the company signed an agreement with FTI Consulting to help turn the business around.

Things came to a head on Thursday, when Authentic Brands Group sent Arena Group a letter terminating the Sports Illustrated license, according to public filings, setting off an immediate $45 million payment to Authentic Brands Group. The same day, Arena Group announced it was cutting one-third of its work force.

Mr. Levinsohn — who himself oversaw cuts to Sports Illustrated’s newsroom amid industry headwinds — resigned from Arena’s board on Friday. He reacted to news of the layoffs on LinkedIn, calling them “one of the most disappointing things I’ve ever witnessed in my professional life.”

A spokesman for Mr. Bhargava, Steve Janisse, said in a statement that Arena Group was in “active negotiations” with Authentic Brands.

“And we aren’t the only ones,” Mr. Janisse wrote. “They have been approached by others as well. Based on this interest, we expect that the great institution of Sports Illustrated will continue, survive and grow.”

In 2020, shares of the Arena Group traded for as much as $14.20. On Friday, they were trading for under $1.

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