Arena Group Holdings Inc, the media company that runs Sports Illustrated and TheStreet, said on Friday that interim CEO Manoj Bhargava had resigned to avoid potential conflicts, that it had fallen behind on some payments and had turned to a consulting firm to help support its business. Finance.
Arena,
Shares fell 27.9% after hours on Friday, after closing down 17% at the close of the trading session. The stock is down 74.4% in the past 12 months.
These moves come at a time when the company is trying to transform itself amid difficulties in managing the famous and beleaguered sports publication. In a regulatory filing on Friday, Arena said it has engaged business advisory firm FTI Consulting to help with the turnaround and “formulate an accelerated path to sustainable positive cash flow and earnings to create shareholder value.” As part of those efforts, Jason Frankel, a senior managing director at FTI, has been named Head of Business Transformation at Arena.
The company said Bhargava will step down from his position as CEO to avoid conflicts of interest that may arise as part of pending or potential deals.
Arena said in a regulatory filing that it failed to pay approximately $2.8 million in interest related to a securities purchase agreement held by Renew Group Private Limited. The principal amount outstanding on the bonds was about $110.7 million at the end of last year, creating an “event of default.” Arena said it is in discussions with Renew to restructure the debt.
Arena also said it failed to make a quarterly payment of about $3.75 million owed to Authentic Brands Group, the company from which it licenses the rights to Sports Illustrated's editorial operations.
Sports Illustrated has dealt with multiple rounds of layoffs, along with struggles to increase syndication and questions about Arena's oversight of the publication.
In November, a report by technology news site Futurism alleged that Sports Illustrated created and published AI-generated content under the guise of fake writers. Stocks were hit hard after that. A New York Times report in the same month said that staff accused Arena of “ignoring concerns about article quality and lack of editors.”
Last month, Arena fired its former CEO, Ross Levinson, and fired two other executives.
Earlier this week, the New York Post reported that James Hickman, the former publisher of Sports Illustrated and former CEO of the company that became Arena, had hatched a plan to take over the sports publication. The newspaper said that this effort was supported by cryptocurrency entrepreneur Brock Pierce.
