Licensing Agreement Termination: On Friday, Sports Illustrated employees received notifications of significant layoffs, some immediate and others imminent within a short timeframe. There’s potential for the complete staff to be gone in three months. Authentic, the licensing group that acquired Sports Illustrated for $110 million from Meredith five years ago, has terminated its agreement with The Arena Group for publishing SI in both print and digital formats. This decision follows Arena’s failure to make a $3.75 million payment, breaching the licensing deal initiated in 2019. Authentic’s termination notice triggers a $45 million fee due immediately, as reported in an SEC filing on Friday.
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Licensing agreement termination
In response to the license revocation, Arena informed SI employees via email, stating that they would be laying off staff working on the SI brand. According to SI union sources, guild members will receive a 90-day notice, during which there’s a possibility of resolving the licensing issue. Non-guild employees, however, will be laid off immediately. Although there was initial confusion about the extent of layoffs, a 2 p.m. staff call clarified that anyone remaining in 90 days would be laid off unless the licensing issue was resolved.
Arena’s email to staffers outlined different termination scenarios, with some employees being paid immediately instead of the notice period, and others expected to work through the end of the notice period. The Sports Illustrated Guild expressed their commitment to fighting for fair treatment of workers and maintaining the publication’s standards.
Authentic’s move to terminate Arena’s license and Arena’s subsequent layoffs signal a shift in SI’s operations. Manoj Bhargava, the founder of 5-Hour Energy, introduced himself as Arena’s new leader weeks prior. Authentic has explored potential replacements for Arena’s role with SI, aiming to expedite the process. Authentic is committed to guiding Sports Illustrated through a necessary evolution to preserve the brand’s legacy.
SI has faced financial challenges in the digital age, including a controversy in November regarding AI-generated reviews without disclosure. Bhargava’s Simplify Inventions agreed to purchase roughly 65% of Arena in a $50 million deal in August.
Authentic acquired SI from Meredith in 2019, and sources indicate their discontent with Arena’s management, including multiple layoffs, talent loss, and leadership changes. The recent contact with replacement operators predates Arena’s missed payment.
In addition to Friday’s SI layoffs, Arena fired over 100 employees on Thursday. Bhargava, Arena’s interim CEO as of Dec. 11, did not make those decisions due to stepping down on Jan. 5 to avoid conflicts of interest. Arena’s board and executives carried out the layoffs, led by Jason Frankl, Arena’s chief business transformation officer.
Frankl expressed his immediate focus on designing a growth-oriented media company for financial stability and growth while acknowledging the regrettable necessity of the recent layoffs. Detailed plans for the future are expected to be shared soon.
Conclusion: On Friday, Sports Illustrated employees were notified of significant layoffs, some immediate and others impending within a short timeframe. There is a possibility that the entire staff may be gone within three months. Authentic, the licensing group that acquired Sports Illustrated for 0 million from Meredith five years ago, terminated its agreement with The Arena Group for publishing SI in both print and digital formats. This decision comes after Arena failed to make a .75 million payment, breaching the licensing deal initiated in 2019. Authentic’s termination triggers a million fee due immediately.
In response, Arena informed SI employees via email that layoffs would occur, with guild members receiving a 90-day notice to potentially resolve the licensing issue. Non-guild employees would be laid off immediately. A 2 p.m. staff call clarified that the remaining employees after 90 days would be laid off unless the licensing issue was resolved.