KRK
  • KRK
  • Veteran Member Topic Starter
4 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
Mucky Tundra (11m) : NFL posted the Orens hit as a highlight on Twitter; deleted now. Really sums things up.
Martha Careful (15m) : watching both the Kansas City and Houston pass rush makes me glad we fired our defensive line coach
Martha Careful (15m) : this was not our year… especially from New York
Zero2Cool (16m) : It's not like there was a plethora of games distracting New York from calling in the penalty
TheKanataThrilla (34m) : A little salt in the wound to fine Burks now
Zero2Cool (46m) : Bears interview Adam Stenavich for HC
Zero2Cool (52m) : Oren Burks fined $8,333 for unnecessary roughness on Nixon hit that caused fumble
Mucky Tundra (1h) : if it's gonna happen here, it'll be the Texans pass rush making Mahomes miserable
Mucky Tundra (1h) : There's usually a road upset win in the divisional round
Martha Careful (1h) : I don't see it happening but I would sure love to see Houston pull the upset here
Mucky Tundra (1h) : *rebuffed
Mucky Tundra (1h) : Bears coaching search in trouble? Bears reached out to the Steelers about trading for Mike Tomlin and rebuffes per Schefter
Mucky Tundra (2h) : This is one of the reasons I find the MNF wildcard games annoying
Martha Careful (3h) : Beast, your is a very strong point...for a change 😊😊😊
beast (3h) : More consistent with their time and rest between games.
beast (3h) : I think all the AFC games should be on Saturday and all the NFC should be on Sunday (maybe reverse the order every year), to more consistent
Martha Careful (4h) : Don't you think teams with the byes should play Sunday? It is fairer to opponents to give an additional day. instead of short week.
beast (17-Jan) : You have a point, it's a very wise move, therefore, that can't be what the Jets are doing.
Zero2Cool (17-Jan) : It'd be a wise move.
beast (17-Jan) : I think Jets are just killing time, and picking up information as they wait for their guy to get done with the playoffs.
Zero2Cool (16-Jan) : Brewers icon & Baseball Hall of Famer Bob Uecker passed away today at the age of 90
Zero2Cool (16-Jan) : Jets wanna interview Jeff Hafley for their HC spot. W. T. F.
beast (15-Jan) : A more aggressive QB, potentially could of hit the WRs more often, taking some risks, but also potential get an INT.
beast (15-Jan) : So Hurts didn't take many, if any risks, and wasn't throwing into Cover 2, which I think helped the Packers. Where a more aggressive QB o
beast (15-Jan) : Cover 2, keep a CB and Safety over top of both WRs... and Hurts (like Rodgers) is overly careful and doesn't like any risk in his throws.
joepacker (15-Jan) : new to this maybe question n wrong place?
joepacker (15-Jan) : how did the packers mostly shut down the eagles passin attack and specifically how did they manage such a good job on aj brown?
Zero2Cool (15-Jan) : Per his dad
Zero2Cool (15-Jan) : Watson to have his surgery soon, and should be back around Week 12, with a normal rehab.
beast (15-Jan) : More likely to listen if the guy controlling the ball is the one telling them
beast (15-Jan) : Apparently because players aren't doing the small things when the coaches tell them, and LaFleur believes they're more likely
Zero2Cool (15-Jan) : Jordan isn't a vocal guy. Why not let him lead his way?
Zero2Cool (15-Jan) : I'm not sure it ever bodes well when you have to tell your team leader to be more vocal.
Zero2Cool (15-Jan) : CFL. Nice.
packerfanoutwest (15-Jan) : good luck with that
packerfanoutwest (15-Jan) : Matt LaFleur looking for Jordan Love to be more of a vocal leader
civic (14-Jan) : I’m old enough to remember watching him play in the CFL
civic (14-Jan) : Clements is taking a lot of experience and knowledge out the door with him
Zero2Cool (14-Jan) : Longtime Packers QB coach Tom Clements is retiring, Matt LaFleur says.
Zero2Cool (14-Jan) : Didn't watch the game so can't say
Mucky Tundra (14-Jan) : Anyone else abhor MNF wildcard games?
Martha Careful (14-Jan) : Why is it that the Rams rookies can contribute right away but our first and second year guys are too young to contribute in a meaningful way
Martha Careful (14-Jan) : Yes, Saquon Barkley had a very nice game. But he has a much better offensive line in front of him. I'll take Josh Jacob's. I love the guy
buckeyepackfan (13-Jan) : Rumor has Mike going to The Bears.
Zero2Cool (13-Jan) : Mike McCarthy is out as Cowboys coach
Mucky Tundra (13-Jan) : DOINKED IN FOR THE WIN!!!!!
Mucky Tundra (13-Jan) : Cardiac Commanders
TheKanataThrilla (13-Jan) : Don't like that call Washtington on 4th down
TheKanataThrilla (12-Jan) : The Bills really need to improve their D. The have the ability to score at will, but if they stumble this D will not save them.
Zero2Cool (12-Jan) : LET'S GO
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