Ever since Seattle entrepreneur Jim Heckman launched a multimillion-dollar turnaround of Sports Illustrated last June, critics have raised doubts about the future of the iconic magazine and the agenda of its would-be savior.
That skepticism escalated sharply this month on news that more than 50 Sports Illustrated writers, editors and other staff had lost their jobs and that Maven, Heckman’s three-year-old Seattle-based digital publishing startup, was busily recruiting 200 independent “publishers” to expand the magazine’s local coverage of professional and college sports.
For some in the media business, the news raised fears over what Heckman had in mind for Sports Illustrated, with one rival site saying that the 65-year-old publication famous for quality sports writing was going to become “a rickety content mill.”
Heckman has rejected such criticism as “ridiculously inaccurate” and “fraudulent.” In recent interviews, the former Yahoo and Fox exec said that Maven is recruiting only “professional, credentialed journalists,” and is providing a failing publication with the tech savvy necessary to “bring it into the 21st century.”
For longtime Seattleites, the controversy may hearken back to Heckman’s earlier travails.
Two previous publishing ventures — Rivals and Scout — ended badly, and in the early 1990s, Heckman, who was briefly married to Husky football coach Don James’ daughter, Jeni, was caught up in allegations of recruitment violations, which he has repeatedly denied.
But the current controversy has larger implications — both for Maven, which has borrowed heavily to pay for the Sports Illustrated deal, but also for the broader magazine industry, a business that is still struggling to find its way in the digital age.
Maven bills itself as a high-tech refurbisher for “flagship” publications, such as Sports Illustrated, that still have brand power but lack the scale and tech skills for an industry now dominated by social media and search engines.
By the time Maven arrived at Sports Illustrated, the publication was attracting just 17 million unique online monthly visitors, according to Comscore. That’s barely a fifth of ESPN’s online traffic, and too small to attract big advertisers. “Being small means you’re not at the table,” said Heckman.
Maven has promised a total makeover, declaring that its engineers will keep Sports Illustrated’s content showing up high in Google searches and Facebook feeds while its army of writers will deliver Sports Illustrated branded coverage of local teams.
Maven could also bring Sports Illustrated much-needed marketing scale. The company, headquartered near Westlake Park, has bulked up by acquiring other online platforms, including HubPages, Say Media, and The Street, a financial site founded by stock guru Jim Cramer.
With the Sports Illustrated deal in June (which lets Maven operate the print magazine, website, and other digital applications for its owner, Authentic Brands Group), the Maven “platform” now boasts some 100 million unique monthly users, Heckman said.
He said each new Maven makeover (a news and politics flagship is being considered) will bring even more users and steadily more ad revenues, of which Maven takes a cut. For 2020, Maven projects a total revenue target of $160 million.
But those bold predictions have raised questions.
A strategy that equates more users with more ad revenue may be losing relevance at a time when the overall ad revenues going to traditional publications are falling, said Samir Husni, who runs the Magazine Innovation Center at the University of Mississippi School of Journalism and New Media. Today, as much as 70 percent of the ad spend that once went to magazines and newspapers goes instead to Facebook, Google, and other mega-platforms.
Husni thinks Maven should be prioritizing paid subscribers, who have delivered more stable revenues for some online publications in recent years. “Instead of counting customers, you have to go for customers that count,” Husni said.
Maven, though it expects to get “more overall revenue from advertising” in the near term, does get some online subscription revenue currently and plans to emphasize digital subscriptions more in the future, said executive vice president Bill Sornsin.
But that plan points to another, possibly more fundamental challenge.
Users willing to pay for online content are relatively rare — just 16 percent of Americans paid for online news in the past year, according to the Reuters Institute. They are also quite picky, said Joshua Benton, who runs the Nieman Journalism Lab at Harvard University. “If you’re going to target that 16 percent, then you better have really high-value content,” Benton adds.
It’s not clear whether Maven is actually doing that.
Maven says its 200 independent publishers (more than 80 are already live, including SI Seahawks Maven) will be highly experienced and handsomely paid: each will receive a guaranteed minimum share of the site revenue, which for high-traffic teams could be “millions of dollars” a year, Heckman said.
But some critics have pointed to what they see as the uneven quality on some Maven sports sites, such as SI Irish Maven, which they say seem little different from the Maven’s lesser known, and often bizarrely themed, non-sports sites, such as The Intellectualist and BlueLivesMatter.
That criticism has added to Maven’s challenges as it tries to reassure Sports Illustrated’s roughly 110 remaining full-time staffers.
Although Maven says most of the magazine’s top writers will stay on (big names like S.L. Price, Tom Verducci and former Seattle Times staffer Greg Bishop are still on masthead), some staffers say newsroom morale is low.
At a meeting after the layoffs, staffers say, Maven executives gave a presentation on the company’s plans that was by turns upbeat and “extremely defensive,” as one attendee put it. “I think they’re worried that people who are left are going to leave.”
Such concerns have fed into the larger media narrative around Maven and Sports Illustrated, which has focused, understandably, on the more dramatic elements.
These include media reports about Sports Illustrated’s new CEO — Ross Levinsohn, who was placed on unpaid leave from his post as publisher of The Los Angeles Times in 2018 following allegations of inappropriate conduct while he had been an executive at previous companies. Levinsohn was later cleared in an outside investigation initiated by Tronc, which then owned the LA Times, and given a new role at Tronc before leaving for Sports Illustrated.
But Maven has taken heat over more conventional business concerns.
The company’s expansions have cost nearly $83 million, much of it funded with high-interest debt. The deal for Sports Illustrated alone will cost $15 million a year for at least 10 years; Maven’s 3-year, $45 million June prepayment was financed at 12 percent.
Just what all that spending has yielded, meanwhile, isn’t entirely clear. Although Maven is publicly traded on the loosely regulated OTC Market, it’s nearly a year behind in filing annual or quarterly reports with the Securities and Exchange Commission. Its most recent filing, for the quarter ended in June of 2018, showed an operating loss of $3.9 million on revenues of $216,356.
Maven execs have said that the reporting delays were necessary to allow Maven to properly audit all its new acquisitions.
This would not be the first time Heckman has bet heavily that he can disrupt the publishing world.
In 1998, Heckman founded Rivals.com, a sports site that grew to 200 staffers and some 700 independent websites, but reportedly burned through $70 million in venture capital before being liquidated in 2001 after the dot-com bust. It now is part of Yahoo.
Heckman bounced back with another sports news site, Scout.com, which he sold in 2006 for $60 million to Fox Interactive Media (FIM) and became a Fox Interactive executive.
But in 2013, Heckman reacquired Scout and tried to merge it with another firm, North American Membership Group. The venture ended in bankruptcy and a lawsuit by investors who claimed Scout executives hid financial problems and left some of its publishers unpaid. (Some of those claims were settled for $3.2 million, and Scout is now part of CBS Sports.)
Heckman has blamed Scout’s problems on a hostile board and massive debts that had come along with North American Membership Group. He also argues that the strategies developed at Rivals and Scout, as well as during management stints at Fox and Yahoo, are already paying dividends at Maven.
But for some industry observers, the real lesson from Scout especially is the difficulty of creating a genuinely new publishing strategy in a business increasingly ruled by Facebook and Google.
If Maven can preserve Sports Illustrated’s reputation for quality content and appeal to enough premium users, said Husni, the iconic magazine might get a second life.
But if Maven’s turnaround strategy winds up emphasizing high-volume, low-quality content aimed at users accustomed to free content, the “new” Sports Illustrated may already be obsolete.
“If you’re not going to be charging your readers, if you’re just going to be aiming for scale, you’re likely going to produce as much content as possible as cheaply as possible,” said Nieman’s Benton. “And you’re still probably going to get swamped by Facebook and Google.”
The article has been corrected to note that Ross Levinsohn was put on unpaid leave over allegations of inappropriate conduct, not sexual harassment.