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Meredith sold Sports Illustrated to Authentic Brands for $ 110 million. The first instinct is that the number seems very low for a brand that has the SI historic cachet and remains a digital force in both news stories – they have recently broken the great stories of Jerry Richardson and members misconduct from the front office of Mavs – and in Distribution. The sale has also dragged on forever; Last June, Meredith officials said the bids had been received in the $ 200 million.
The strangest part, however, is not the purchase price, but the fact that Meredith pays Authentic Brands an undisclosed amount to license the Sports Illustrated brand and continue to publish the magazine and the website. . This means that Authentic does not buy the main product SI; they buy the brand, the intellectual property and the photo library.
What does it mean? The variety explained:
In a large-scale discussion, [Authentic Brands founder, chairman, and CEO Jamie] Mr. Salter envisioned a variety of possibilities, ranging from Illustrated Sports medical clinics to sports training courses to gambling and the best use of the magazine's extensive library. "We are always close to DNA and the brand's legacy," he said. "Certainly we will go beyond that, but we will always remember how we go."
While Meredith has what Salter has described to the Washington Post's Ben Strauss as "an obligation" to continue investing in people writing for SI, Salter has avoided Strauss's direct question about whether the journalism of 39 – investigation – which gives relevance, also costs a lot and potentially alienates brand partners – would continue to be a priority. The CEO said:
"Sports Illustrated will continue to be a resource for its readers, providing up-to-date news and sports coverage, in-depth analysis and entertaining stories. Our partnership with Meredith is essential to continue rebuilding Sports Illustrated into a global platform while delivering information with integrity and respect. "
It is also instructive to understand how these two companies managed to reach their respective positions. Meredith is an Iowa-based magazine company backed by the Koch Brothers, described in a recent Wall Street Journal article as particularly "derogatory". They lead publications on women's lifestyle such as Better houses and gardens and Allrecipesand bought Time Inc. for $ 1.85 billion with the express intention of selling legacy securities such as Time, Fortune, and IF, while seeing the opportunity to capitalize on People.
As described by the Washington Post on the acquisition of SI, Authentic Brands "holds the license and trademark rights of celebrities such as Marilyn Monroe, Elvis Presley and Muhammad Ali. The company has also signed licensing agreements with former golfer Greg Norman and retired NBA star Shaquille O. Neal. They also have licensing rights for fashion brands such as Nautica and Juicy Couture.
The quirk of all this transaction gives the impression that it is a shotgun wedding. Meredith has neither an attractive selling price nor a clear break from the publication it has been seeking to sell for over a year. Their stock price fell more than 4% Monday to news. Authentic Brands is probably a good deal, but the very nature of the transaction shows that they do not have enough interest in exploiting the main assets, but they do not know it.
SI still produces a lot of relevant work. The annual swimsuit issue remains a major revenue factor. We will have to see if this arrangement is crazy enough to work.
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