KRK
  • KRK
  • Veteran Member Topic Starter
3 years ago
I thought this was kind of interesting...from Pitchbook, a financial database service....

As games resume, sports media tries to rebound from advertising 'wasteland'
By Adam Lewis July 13, 2020

The COVID-19 pandemic has put live sports in the US on pause for more than four months, creating an unexpected challenge for sports media companies that were searching to find viable business models. But with MLS returning last week, MLB beginning a 60-game season July 23 and the NBA returning July 30, there will soon be an avalanche of games to cover, unless the now-surging virus prompts another shutdown.

The last few months have already resulted in lost advertisers, layoffs, sudden shifts in strategy and other cost-cutting measures at Sports Illustrated and The Athletic, two of the industry's biggest names—one an iconic brand that dates back 66 years, the other a brash newcomer that has emerged as perhaps sportswriting's best hope for a sustainable future.

The moment marks the first real stress test for The Athletic, which has rocked the sports media world in recent years by poaching writers with huge followings across the US and Europe. And at Sports Illustrated, it's just the latest dramatic moment of transition after ownership turnover, prior job cuts and a new digital-first strategy.

'Tremendous growing pains' at SI

Last year, a media investment group called Maven paid $45 million to acquire Sports Illustrated's licensing rights from private equity-backed Authentic Brands Group, which had purchased the brand from longtime owner Meredith for $110 million a few months prior. Under the direction of CEO James Heckman, a veteran sports-media entrepreneur who founded Maven in 2016, the company planned to boost revenue by creating more video content and hiring an army of independent contractors to complement SI's long-form storytelling and print product.

Before the onset of the pandemic, Maven expected to turn a profit in 2020, according to Heckman. When the NBA, MLB and other sports leagues went on hiatus, though, SI's usual coverage areas vanished.

The site has done its best to adapt, Heckman said, writing more cultural and historical stories and focusing more than ever before on forward-looking content areas like the NFL draft and college recruiting. But it hasn't been enough to stop an advertising exodus.

"March through August was a wasteland," Heckman said in an interview last month." A lot of advertisers just exited the sports advertising arena."

In June, the company reduced its annual revenue forecast from about $160 million to around $115 million.

The strategy shift and ensuing pandemic have also led to job cuts and controversy. SI laid off about 40 workers last October, then trimmed another 9% of its staff and instituted temporary 15% pay cuts in March, citing a steep drop in advertising revenue due to COVID-19. In April, Heckman drew the ire of the SI Union for the controversial firing of soccer writer Grant Wahl after Wahl accused management of using the pandemic as an excuse to cut Wahl's $350,000 salary.

"We're going through tremendous growing pains teaching people who have been running the wishbone for the last 20 years on how to run the spread offense," Heckman said, using an industry-appropriate football metaphor.

Rapid growth stalls at The Athletic

The Athletic's model is based on subscriptions rather than advertising. Before the pandemic, the company's plan of enticing readers to pay up to $60 annually for largely ad-free sports news appeared to be working.

Last July, co-founders Mather and Adam Hansmann told Bloomberg the company would soon eclipse 1 million subscribers and that they expected to turn a profit by the end of 2020. And in January, The Athletic reached a $500 million valuation with a Series D round led by Bedrock Capital, taking its VC fundraising total to $130 million, according to PitchBook data.

"I was very skeptical at first with The Athletic," said B.J. Schecter, a former executive editor at Sports Illustrated who is now a sports journalism professor at Seton Hall University in New Jersey. "I have a lot of friends, including my old boss at SI, who work there, and so I took some heat for questioning their business model. … But they've managed to, unbelievably, get more investment and produce some really good stuff."

During the pandemic, that's taken the form of an array of retrospective content, including a focus on "oral histories" where numerous players and coaches recount a famous sporting event. The Athletic has also played up the silly side of sports. For instance, Seattle Mariners beat writer Corey Brock recently went in-depth on the night the team's mascot broke his leg in 1995 by slamming into the outfield wall on roller skates while pulled by an ATV.

The Athletic hasn't seen an onslaught of canceled subscriptions, according to sources. But there have been other signs of struggles. In June, The Athletic laid off 46 people, or roughly 8% of its staff, and instituted pay cuts of at least 10% for most other employees through the end of the year. The company didn't respond to multiple requests for comment for this story.

To boost the bottom line, Schecter hypothesized that The Athletic might put more emphasis on developing local partnerships and selling more advertising for its podcasts once sports return. Despite the downturn, he remains bullish.

"One thing that The Athletic has shown is people are willing to pay for good content," he said. "You look at the number of subscribers and they’re up somewhere around 1 million. I think they're not even close to their ceiling right now."

SI hopes that both sports and its advertisers will return by Q4, though any uptick in ad money will likely be moderate. However, their overall bottom line could benefit from projections that digital ad spending in H2 2020 is expected to increase from the same period year-over-year, according to a June survey from the Interactive Advertising Bureau. In the meantime, Heckman said the company will continue to focus on upping video advertising revenue, which can pull in seven to 10 times the traffic of a typical programmatic display ad.

SI is also offered a bit of a cushion by Maven's larger media portfolio. The company owns TheStreet, a financial news website founded by "Mad Money" host Jim Cramer, which has nearly doubled monthly revenue during the pandemic and the ensuing market turmoil. It also owns Yoga Journal, the History Channel's website and a host of other media brands.

"Our finance revenue is paying for our sportswriters right now," Heckman said.

The idea of a pivoting to video has a fraught history in digital media, particularly sports media. That strategy didn't work for Fox Sports, which lost 88% of its audience after laying off virtually its entire writing staff in 2017. And it didn't work for The Athletic, which hired "60 Minutes" veteran Armen Keteyian to lead its video push in 2018, only to later abandon the strategy and get rid of its video staff in its recent round of layoffs.

Schecter, the former SI editor, is among the skeptics about SI's new plan.

"It's very expensive to produce good video," he said. "It's not going to work. They are going to run out of money, declare bankruptcy, and it's going to be sold in bankruptcy. It's going to get ugly."

Heckman pushed back against such predictions, arguing that the scale of his plan is part of why Sports Illustrated's business model will work where others have failed. The size of Maven's portfolio—combined, its sites pull in around 150 million monthly visitors—allows it to rely on direct relationships with major advertising agencies, unlike smaller media brands that have to share digital ad revenue with tech giants like Google.

"I realize the improvements that needed to be done, the obvious changes in the business model. New York executives were afraid to make them," he said. "Old-school media were afraid of being criticized. … They don't want to do the right thing for investors. They don't want to do the right thing for employees. They just care about their personality and having people like them."
In Luce tua Videmus Lucem KRK
Fan Shout
dfosterf (10h) : Maybe
Mucky Tundra (11h) : Yes
Zero2Cool (12h) : No.
Mucky Tundra (14h) : End of a Degu-era
dhazer (15h) : Steelers sign Patterson because of new kickoff rule interesting
Zero2Cool (17h) : Former #Packers TE Josiah Deguara is signing a 1-year deal with the Jaguars, per source.
Zero2Cool (18h) : They do not do it for "content sake".
dfosterf (28-Mar) : For the record, I enjoy Beast and Mucky drafts
Zero2Cool (27-Mar) : Haha
Mucky Tundra (27-Mar) : No time for talking! Back to work beast!
beast (27-Mar) : You saw only 4,201 of my mocks? 🥺 I think that means you missed more than half of them 😢
dfosterf (27-Mar) : Does anyone know what Lambeau field improvements got put on hold? My guess would be for the 2025 draft
Zero2Cool (27-Mar) : It's like listen, you made 4,201 mocks, no shit.
Zero2Cool (27-Mar) : Cuz during the draft "I had them mocked there!" as if it's amazing.
Zero2Cool (27-Mar) : They're fun to do once in awhile. It's people who think they are "content" that annoy me.
dfosterf (27-Mar) : Against tbd
dfosterf (27-Mar) : Answer to your question is yes, it's a Thursday, will be the Chiefs aga
dfosterf (27-Mar) : Luckily for all concerned, I don't post them. I did one, but that was like 25 mocks ago
Zero2Cool (27-Mar) : NFL 2024 gonna start Sept 5th isn't it???
Zero2Cool (27-Mar) : Ugh... kids these days!
dfosterf (27-Mar) : I'm gonna go do some more mock draft hell instead 🤪
Zero2Cool (27-Mar) : Did we do one of those prediction threads yet for 2024 season?
dfosterf (27-Mar) : In my city, they are playing the nimby game, in order to keep some railroad tracks vs. 2 professional sports teams and a concert venue.
dfosterf (27-Mar) : And/Or a city council, of which I haven't seen a good one in a very long time
dfosterf (27-Mar) : That sounds like a Mayor, not a city.
buckeyepackfan (26-Mar) : Packers halt scheduled 80mil upgrade of stadium until lease agreement talks are restarted
Zero2Cool (26-Mar) : City of Green Bay puts Packers' Lambeau Field lease talks on hold
buckeyepackfan (26-Mar) : Packers 1 of 3 teams to vote no on new kickoff rule.
Zero2Cool (26-Mar) : Packers sign another Kicker
dfosterf (26-Mar) : Lengthy explanation at PFF if you click the link
dfosterf (26-Mar) : Kickoff rules officially changed.ngthy explan
Zero2Cool (26-Mar) : lol
Cheesey (26-Mar) : 2009? No thanks! One open heart surgery is enough!
dfosterf (26-Mar) : Good for you!
Zero2Cool (26-Mar) : Yes. That's the one.
dfosterf (26-Mar) : Is that "Lady Dugan" per chance?
dfosterf (26-Mar) : Crystal?
dfosterf (26-Mar) : Please refresh my memory
Zero2Cool (26-Mar) : Alan posts. Crystal back in my life. It's 2009 all over again! Lol
Mucky Tundra (26-Mar) : BAH GAWD! THAT'S CHEESEYS MUSIC!
Zero2Cool (25-Mar) : Gutekunst said early stages of Jordan Love contract being discussed.
Zero2Cool (25-Mar) : Shouldn't be penalized cuz official screwed up
Zero2Cool (25-Mar) : Yeah, challenge until you are incorrect twice.
Zero2Cool (25-Mar) : Fining them is the goal, per the people who made the rule anyway.
dfosterf (25-Mar) : Still waiting on the kickoff rule changes. Did hear yesterday that the touchback proposal will now be the 30 yard line, not the 35
dfosterf (25-Mar) : Probably speed of game issues with your proposal
dfosterf (25-Mar) : Hopefully the refs don't get in the habit of throwing flags on this
beast (25-Mar) : I think when it comes to Challenges should get two strikes, so unlimited challenges as long as they keep winning them, but 2 wrong then done
dfosterf (25-Mar) : Still subject to the fines etc
dfosterf (25-Mar) : Yes, I should have been more specific. Also, they are now saying it would be a 15 yard penalty. That makes more sense .
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