Despite backlash over layoffs, new SI operator stands by strategy

As with much of the media industry, it's been a tumultuous couple of years for Sports Illustrated. 

In 2017, Meredith acquired the magazine as part of a larger $1.8 billion deal for a series of brands under the ownership of Time Inc. Then in May, Authentic Brands Group, a PE-backed marketing and brand-development company that recently received $875 million from BlackRock, purchased SI for a reported $110 million.

The next month, ABG licensed SI's publishing rights over 10 years to The Maven, a Seattle-based digital media publisher, for a $45 million payment against its future royalties. 

Then came the news Thursday that The Maven conducted massive layoffs as part of a restructuring plan that also includes hiring 200 contractors to provide hyper-local sports coverage across the US. The plan was immediately panned on social media, with allegations that SI was being turned into a content farm that valued clicks over the in-depth storytelling that helped the company rise to prominence. 

The exact number of layoffs wasn't immediately clear, though a source close to the situation said it was roughly 35% of employees, including 13 of 41 writers. They were carried out Thursday afternoon, after management invited employees to two separate meetings, one for those who would keep their job and one for others who would not. The meetings were subsequently canceled—staffers launched a last-ditch appeal—but they were rescheduled for the end of the day, when the layoffs finally occurred. 

The news set off a social media firestorm, with writers ripping new management and offering condolences to those who had been laid off. But SI's new operator maintains that the moves aren't meant to simply cut costs to increase profits. Instead, the majority of the new contract writers are expected to be paid journalists who will be offered a stake in the company. 

"Approximately 300 distinct voices, the majority of which are journalists, will be producing stories for SI by January 2020, which will help drive an increase in SI content production," The Maven said in a statement.

Changes at SI were much needed, at least from a financial perspective. The company has lost roughly 1 million magazine subscribers and 50% of its revenue over the past three years, while profits have dwindled, according to a source. And with an outdated website, it has lost its once enormous influence to upstart national sports websites such The Athletic, which was valued at roughly $200 million in its last public funding round in October 2018.

Whether SI ultimately rebounds will now depend on The Maven, which is led by longtime digital media veteran James Heckman. The company oversees over 300 brands, including Maxim, History and Yoga Journal.

Their first order was to install Ross Levinsohn as CEO of SI and president of Maven Media Brands, a Maven subsidiary that in June purchased The Street, a financial news site founded by Jim Cramer. The decision was not popular with some, given Levinsohn's controversial tenure at Tronc, where he was accused of sexual harassment but later cleared of the charges.

The firm has also installed longtime SI veterans Steve Cannella and Ryan Hunt as the new co-editors in chief, replacing Chris Stone after he resigned earlier this week. Ultimately, that duo will be tasked with remaking SI for the digital world. The company has already signed agreements with 80 news publishers to help it produce local sports content, while a source said it also plans a heavy investment in revamping its website, mobile platform and increasing its focus on video.

Deadspin has already released an investigative piece lampooning the strategy. But The Maven said it believes it can recapture what once made SI arguably the most influential sports magazine of the 20th century: "The commitment to quality journalism, long-form storytelling and print and digital experiences will expand."

Featured illustration by Conor Hamill/PitchBook