In a tumultuous turn of events on Friday, the iconic publication Sports Illustrated initiated widespread layoffs, causing a significant downturn in the stock value of Arena Group Holdings Inc. The publication’s union issued a warning that the layoff wave could impact “possibly all” of its guild-represented staffers.
At the time of this publication, Arena Group Holdings Inc stock (AREN) has witnessed a decline.
Arena Group Holdings Inc
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The NewGuild of New York, representing approximately 80 editorial workers at Sports Illustrated, and the Sports Illustrated Union jointly released a statement early Friday, revealing that The Arena Group intended to lay off a substantial number, potentially all, of the Guild-represented workers due to Authentic Brands Group (ABG) revoking Arena’s license to publish SI. This development marked another challenging day for Sports Illustrated under Arena Group’s stewardship over the past four years.
The root cause of the layoffs was Arena Group Holdings’ failure to fulfill a $3.75 million quarterly licensing payment to Authentic Brands Group, as disclosed in a securities filing. The licensing deal, established after ABG acquired Sports Illustrated from Meredith Corp. in 2019, granted Arena the rights to publish the magazine and news brand. However, ABG retained the authority to terminate the agreement if Arena defaulted on payments.
According to a filing by Arena Group, ABG notified the company on January 18, 2024, of its intention to terminate the Licensing Agreement immediately. While discussions between Arena Group and ABG were ongoing, the termination triggered a substantial $45 million payment obligation for Arena Group.
As a consequence of the financial strain, Arena Group announced a 33% reduction in its staff, including those at Sports Illustrated, with estimated severance charges ranging from $5 million to $7 million.
The future of Sports Illustrated remains uncertain should ABG regain control of the publication. Although ABG had licensed the SI brand for various commercial ventures, including an SI-branded online sportsbook and resort hotels, it expressed disinterest in operating a news publication when it initially licensed the rights to Arena in 2019.
The NewsGuild is currently holding meetings to strategize next steps in response to the layoffs. The Sports Illustrated Union and the NewGuild of New York are urging ABG to ensure the continued publication of SI, emphasizing their commitment to fighting for fair treatment of all affected colleagues as per their union contract.
These layoffs at Sports Illustrated are part of a broader trend of major cuts occurring across notable publications. The Los Angeles Times recently confirmed plans for a significant round of layoffs, referred to as “the Big One” by the union’s president. Additionally, Condé Nast announced the integration of the music publication Pitchfork into GQ, leading to layoffs of Pitchfork staffers.
Sports Illustrated, founded in 1954, has faced a series of challenges in recent years. Acquired by Meredith Corp. in 2018, the publication was later sold to ABG in a shift that also involved unionization efforts by digital editorial staffers in 2020. The publication drew controversy in December for allegedly using artificial intelligence to generate stories, leading to the termination of its collaboration with the third-party provider and the dismissal of its CEO.
