Meredith Corp, of the US, has sold the intellectual property of Sports Illustrated to Authentic Brands for $110m, lower than the $150-200m it had reportedly been looking for after seeking a buyer for almost a year since it was acquired as part of Time Inc. Authentic Brand (AB)s is a brand licensing company. In a slightly curious announcement, Meredith said AB will take over marketing, development and licensing of the title with the publisher continuing to operate the print magazine and the website. AB’s portfolio includes the rights to Marilyn Monroe, Elvis Presley and Muhammed Ali. The acquisition includes the magazine’s archive of more than 2m images, and its Swimsuit issue and Sportsperson of the Year brands.
The two companies said they aimed to build a platform around the brand across all media. Meredith will pay a licence fee to continue its editorial operations; Authentic Brands expects to leverage the brand through events, gambling and gaming. It looks like a deal which Meredith has had to stretch to get over the line, hence the convoluted arrangements. AB was founded in 2010 by CEO Jamie Salter with $250m of backing from private equity and individuals including George Soros. Given Meredith’s long-term success in brand licensing (not least through its Better Homes & Gardens magazine), it is assumed that these activities will figure in the development plan for Sports Illustrated which has been struggling, like many other print magazines, to compete with (or monetise) the web.
The Sports Illustrated sale completes Meredith divestment of the unwanted Time Inc assets which included Time magazine (sold to Marc Benioff, CEO-founder of Salesforce) and Fortune (sold to Chatchaval Jiaravanon, of Thailand), while Money has been closed. Total proceeds of the three deals are $450m which is thought to be some $150m less than the company had expected when it paid a total of $2.8m (including debt) for Time Inc in 2017. The Des Moines, Iowa-based company is also believed to have over-estimated the net proceeds from the sale of Time Inc UK (now TI Media) which were, ultimately, less than 50% of revenue.
The disappointing sale proceeds (underlined by the non-standard Sports Illustrated deal) will prompt investors to scrutinise closely Meredith’s progress with the retained Time Inc assets, not least People, which remains America’s most profitable magazine. For all the talk of People’s collaboration with Allrecipes, justifying the $2.2bn spend on Time Inc (net of disposals in the US and UK) may now be much more challenging than expected, even for the famously low-cost publisher.
Meredith’s commitment to deliver at least $550m of cost savings by 2020 is just the start. As Reed Phillips, chief executive of media investment bank Oaklins DeSilva+Phillips, told the Wall Street Journal: “When they bought Time Inc, it was a very big bet that they could transform the business. The jury is still out. They probably have two to three years to prove that they have a strategy that makes the business much less dependent on print.”