- A little over a year ago, Jim Heckman was sermonizing about his plan to save the publishing industry from Facebook.
- Now, after overseeing deep cuts at Sports Illustrated, he just might be one of the most-despised men in sports media.
- Heckman isn’t done, though. He wants to add a news site to his portfolio.
- But he’s funded his latest startup Maven with massive amounts of debt financing, a type of funding that typically comes at a high cost, and raising money for media generally is getting harder.
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A little over a year ago, Jim Heckman was sermonizing from a mountaintop in Canada about his plan to save the publishing industry from Facebook.
Now, he just might be one of the most-despised men in sports media.
Heckman is a serial entrepreneur who’s started and sold various digital ad and media companies over the years. His latest is two-year-old Maven, a tech and ad platform he pitches as a way to help niche publishers claw back some of the digital ad revenue from Facebook.
Read more: ‘All three companies do the same thing:’ Digital publishing mashup Maven cut $5 million and laid off 17 Say Media staffers to reach profitability
The platform flew under the radar when it was just a coalition of mostly obscure publishers like Mom Trends and horseandrider.com. But then Maven took over Sports Illustrated’s media operation last week and laid off 40 of the 150-person staff and announced plans to use contractors to supplement the permanent staff.
Employees of the publication took the dramatic step of putting out a statement begging SI’s former and new owner, Meredith and Authentic Brands Group (ABG), to save them, saying they questioned Maven’s ability to manage the iconic magazine.
The next day, the reliably scathing Deadspin dropped a 4,000-plus word takedown calling Heckman a “notorious scumbag” who’s “gutting and reinventing a revered publication.” The New York Post called the layoffs “brutal.”
On Twitter, the insults flew.
“In sports media, I find it impossible to believe there is a more despicable awful person than Jim Heckman,” tweeted Brian Snow, an analyst for 247Sports, a network of sports sites owned by CBSInteractive.
Heckman chafed at the article and lamented that his 80-year-old father had to see it.
“We spent a year on this, we made the move, we were literally sitting around [waiting] for the nasty stories,” he told Business Insider. “‘Okay, well, who’s going to hit first?’ And, you know, we thought tomatoes would be thrown at us.”
Media is in a panicky time
These are jittery times for the media business. Venture capitalists poured money into new media companies, only for many of those companies to collapse, resulting in thousands of job losses this year alone and leaving others worried for their future. Companies are dumping magazines with rich legacies and digital startups are being sold for a fraction of their onetime value.
Sports Illustrated’s situation was especially bizarre. Meredith inherited it as part of its purchase of Time Inc., but SI, along with Time and Fortune, didn’t fit with Meredith’s portfolio of women’s magazines.
Moguls swooped in to rescue journalistic treasures like Time and Fortune. But there would be no such billionaire to step forward to buy Sports Illustrated, which, despite its proud history in sports journalism, doesn’t have quite the same image-burnishing cache. Long story short, Meredith sold it to ABG, a branding, marketing and entertainment company. ABG doesn’t have experience running media, so it licensed the operation to Maven.
Now SI is in the hands of Heckman and his longtime pal and business collaborator Ross Levinsohn, whose pasts are littered with controversies including accusations of financial mismanagement in Heckman’s case and inappropriate workplace behavior in Levinsohn’s case that have been chronicled by NPR and others.
Shiny suits, Russian connections
Many in the media establishment turn up their noses at Heckman, with his shiny suits, Russian financial connections, and party life documented in photos online.
“I think people were expecting some kind of white knight to save SI,” said Ben Koo, who runs Awful Announcing, a sports blog, and who has followed Heckman’s media career from the sidelines. “They’ve gone through a lot of bad things. So it’s a double shot of bad news.”
Heckman has a history of starting and selling companies — often with help from Levinsohn — and leaving a trail of failed companies and accusations of malfeasance.
He raised $70 million in venture capital to found Rivals.com, an online sports network, in 1998, but it collapsed in the dot-com bubble.
In 2001, Heckman went on to start Scout Media, raising $6 million. In 2005, Levinsohn, then heading Fox Interactive, led the purchase of Scout Media for a reported $60 million. Heckman bought back Scout in 2013 and it went bankrupt three years later.
In 2009, he helped start 5to1, an online ad sales platform, raising $19.3 million from Fuse Capital and Prism Venture Management, among others. In another Levinsohn-encouraged deal, Yahoo bought it in 2011 for $28 million.
Heckman has a plan
To hear Heckman tell it, his experience has been one success after another, and that now he’s going to apply that digital media know-how to fix Sports Illustrated.
The case he’s been making while doing the rounds with media reporters this past two weeks is that SI is in terrible financial shape after years of being neglected by its past corporate parents and leapfrogged by nimbler digital rivals. Scribbling his plan on a piece of paper, he said he sees a “big opportunity to correct the deficiencies.”
His goal is to double revenue to $40 million and traffic to 30 million unique users by the end of 2020.
“Their strategy for content has not worked,” he said. “Their journalists are good, but nobody’s reading their stuff. The company was nose-diving into oblivion. Their users have collapsed to 17 million, their print distribution is below 2 million. So, when people are saying, ‘Save it,’ can you imagine, ‘Hey, here’s our plan, we’re going to keep doing the same thing?’ I mean, it’s comical.
“We’re on a hiring frenzy right now. You’re going to see press releases. We’re going to try to bring SI back to its glory. We put a big, six-figure offer out to one of the top journalists of America yesterday. I think he’s going to take it.”
Heckman has a point that SI has seen better days. Like the rest of print publishing, it’s fought for relevance in the digital era.
It also doesn’t help that Sports Illustrated has to fight comparisons with The Athletic, a heavily funded and fast-growing string of subscription sports sites. But there’s no guarantee that company will hit its lofty goals, either.
Everything about this is so infuriating. “The Maven” is destroying Sports Illustrated to institute a clickbait, quantity-over-quality model that has repeatedly failed spectacularly. (See: SEC Country).
— Stewart Mandel (@slmandel) October 4, 2019
But the contributor model he’s proposing — which echoes one Levinsohn planned to try at The Los Angeles Times — is the product of a bygone era that publishers and advertisers have moved on from.
And Maven, precariously, relies on online advertising for the vast majority of its revenue and has yet to become sustainable, according to a recent SEC filing.
Will a news site be next?
With TheStreet and Sports Illustrated under his belt, Heckman isn’t done. He’s now on the hunt for a news site to round out the offering.
“You know, if you’re an ad agency or consumer, I think those are national pillars of journalism. And so, we want to make sure that we control the quality and get behind some brands. So we’re looking for a news brand,” he said.
But Heckman’s more recent sources of money have been unconventional. He’s funded Maven’s acquisitions — which included Say Media, TheStreet for $16 million, and a $45 million payment to ABG — with massive amounts of debt financing, a type of funding that typically comes at a high cost, by a subsidiary of a firm that’s little-known in media circles, B Riley Financial.
Before Scout went bankrupt, Heckman’s board forced him out in 2016, accusing him of using company money for his personal use, and Heckman talked of “Russian investors” that brought down the company.
According to Heckman, Scout itself was actually doing just fine; it was Bob Pittman’s North American Membership Group which joined with Scout to buy it back from Fox that was failing, leading to money and a messy situation with the Russians.
“Now with Trump, people know better,” Heckman said of the decision to take that money. “This was when Russians were buying things like crazy. It was easy money. It came in fast. It was a terrible thing. It was the worst thing that happened to me.”
With doors closing rapidly for media deals in general, the question is: will backers keep buying Heckman’s vision?
SEE ALSO: ‘We’re an anomaly’: Complex Networks ignored the digital-media playbook, and now it’s set to have another profitable year, with at least $200 million in revenue
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