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ABG Hands Over Sports Illustrated in $45 Million Up-front Deal to Start-up

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In a $45 million upfront deal, Authentic Brands Group (ABG) hands over operation of newly-acquired sports publication brand Sports Illustrated (SI) from Meredith to media distribution start-up The Maven.

According to the terms of the licensing agreement as disclosed in a Maven SEC filing, Maven will operate SI exclusively in the U.S., Canada, Mexico, the U.K., Ireland, Australia, and New Zealand. The deal covers print and digital and includes the swimsuit issue as well as any future offshoots like “special interest publications, video channels, bookazines” as well as future licensing and syndication deals “of certain products and content.”

When it first acquired SI, ABG indicated that it would develop “events and conferences, licensing, gambling and gaming, IP development, especially in video and TV.” It’s not clear yet who will exploit what between ABG and Maven.

The Maven will rename SI to Sports Illustrated Media and appoints Ross Levinsohn as CEO of the unit. Per WWD, Levinsohn’s turbulent 30-year history as a media exec (including stints at Fox and Yahoo!) includes two sexual harassment lawsuits and an NPR investigation (since settled; he was cleared in a subsequent investigation by a law firm hired by The Tribune, then Tronc) and a highly unpopular tenure while heading up the LA Times (the staff threw a party when their paper was finally sold off). According to NPR, at the LA Times Levinsohn embraced a strategy called “gravitas with scale,” a profit model that depended on unpaid contributors. And it looks like the story will continue at SI; Maven bragged in its latest annual SEC filings that it cut one-third of its staff last year.

The rest of Maven’s executive team includes President Josh Jacobs (who worked with Levinsohn at Fox and Yahoo!), COO Paul Edmondson (Microsoft, his startup HubPages was acquired by Maven), Chief Product Officer Ben Trott (his startup Say Media was also acquired by Maven), and CTO Ben Joldersma (notably, Microsoft).

When ABG purchased SI from Meredith for $110 million not one month ago, the companies set up a joint venture in which Meredith would take over editorial operations for up to two years. This was to help the delayed sales process along, per Meredith; “from the outset,” its “goal was to execute a complete and simple asset sale” similar to those for the Time and Fortune brands. (SI didn’t ‘fit in’ with Meredith’s entertainment portfolio.) With this licensing deal, “Meredith’s goal of a completed transaction is achieved.” Per the NY Post, Maven had been backing Junior Bridgeman’s bid to buy SI last month; negotiations fell through after the retired NBA star failed to get his portion of the financing lined up. ABG had only joined in at the “eleventh hour.”

Critically, only a portion of the overall deal has been executed. Maven and Meredith are currently in talks to sort out certain aspects of the SI business, like print operations, which it doesn’t appear that the former can take on (“Maven is a software model,” per its SEC filings). In a statement, Meredith noted that the publisher now has “upside opportunity to provide certain transition and back office services (similar to those provided to the owners of Time and Fortune) at an attractive return.” This is a far cry from its previous arrangement, which as the NY Post reports, would have required Meredith to pay between $10 million to $15 million a year to ABG.

While Maven is on the hook for guaranteed minimums every year, the amount hasn’t been disclosed. And, of course, the startup has already prepaid $45 million in royalties. While this sum isn’t small, it would not seem to cover all royalties due under the full 10-year term of the licensing agreement.

No matter what happens with Meredith, Maven’s licensing agreement will kick off as soon as the Meredith deal terminates and shall continue through the end of 2029. Maven has the right to renew the deal nine consecutive times for 10-year terms if it meets certain conditions (for 100 years in total). And ABG gets stock warrants in Maven for 10% of its common stock.

Just last week, Maven acquired financial news site The Street for $16.5 million in cash in a transaction funded almost entirely through loans; the same company which provided the fully committed debt financing also advised Maven during this transaction. It’s not clear how Maven financed the $45 million royalty prepayment to ABG.

Maven’s two other major acquisitions this last year were HubPages and Say Media. The Maven’s 300-some publishers include History, Maxim, Yoga Journal, and Ski Magazine as well as extremists like Blue Lives Matter and The Intellectualist “looking for a new home” post-Facebook purges and for an “alternative” platform in general (per Maven investor documents published at the end of 2018). Maven expected to “profitably generate more than $50 million in revenue” in the year after acquiring TheStreet (before the SI deal); its annual report released earlier this year stated a 2019 revenue goal of $28.2 million.

But Maven isn’t the only other company on a buying spree; ABG now counts over 50 consumer brands and properties under its umbrella which it owns (partially or in full) or represents as an agent. Recent acquisitions by ABG in the last year include the Thomasville, Henredon, and Drexel furniture brands; footwear and accessories brands Nine West and Bandolino; and footwear authority the Camuto Group.


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