Manoj Bhargava, the Indian American founder of 5-hour Energy drink, has acquired a media empire buying a two-third stake in The Arena Group, publisher of Sports Illustrated, Parade, Menâ€™s Journal, The Street, Hubpages, Surfer and other properties.
In addition, Bhargava has signed an agreement to combine the broadcast networks of Simplify Inventions with The Arena Group Holdings and its properties.
The Arena Group, a technology platform and media company home to more than 265 brands, announced Monday that it has signed a binding letter of intent with Bhargava to acquire certain assets of its subsidiary Bridge Media Networks.
The deal is aimed at â€œcreating a well-capitalized, growing media leader with digital, commerce, print and video capabilities all supported by a unified technology platform,â€ according to a media release.
The deal is expected to close in the fourth quarter of 2023. The Company anticipates that integration of the respective businesses will be completed in early 2024.
â€œThis combination of broadcast, digital and brands will be â€˜one plus one is elevenâ€™ â€“ not two or even three. And weâ€™re just getting started,â€ commented Bhargava.
“Media companies have become so enamored of delivery technology that they have forgotten the basics â€“ advertisers (their customers), their most valuable audience and even content gets a back seat. Sounds like a great opportunity to me,” he was quoted as saying.
Besides Innovations Ventures LLC, the company known for producing the 5-hour Energy drink, Simplify Inventions LLC, IV Media LLC and Bridge Media Networks LLC are all founded and led by Bhargava.
He is a global philanthropist and is dedicating most of his wealth to help the poorest third of the world. He also owns or is a major investor in other companies, including HANS Premium Water, Diagnostic Green, Stage2 Innovations, and Bleecker Street Entertainment.
â€œThis strategic combination dramatically accelerates our planned expansion across the video ecosystem. Our immediate opportunity to create, distribute and monetize premium video content across all linear, digital and connected ecosystems provides a lucrative opportunity for The Arena Group. The production capabilities and opportunities with advertisers will further diversify our offerings,â€ commented Ross Levinsohn, Chairman and Chief Executive Officer of The Arena Group.
In 2022, The Arena Group doubled its verticals through organic and inorganic growth, including acquiring Parade, Menâ€™s Journal, Fexy Studios, and the Adventure Network, and grew annual revenue growth from $53.3 million in 2019 to $220.9 million in 2022.
Despite a challenging advertising market, The Arena Group delivered improved second quarter financial results across key operating metrics, including top-line revenue growth, the release said.
Highlights of the proposed combination include:
The existing assets of The Arena Group will be combined with the video programming, distribution, and production assets of Bridge Media Networks, including its two 24-hour networks, NEWSnet and Sports News Highlights, as well as the automotive and travel properties Driven and TravelHost, further expanding The Arena Groupâ€™s vertical business ecosystems.
As part of the transaction, The Arena Group will receive a $50 million cash investment, a five-year guaranteed advertising commitment of approximately $60 million from a group of consumer brands also owned by Simplify, including 5-hour ENERGYÂ®, and the Bridge Media Networks operations. As consideration, Simplify will receive $25 million of preferred stock at a 10% non-cash payment-in-kind (â€œPIKâ€) coupon with a term of five years from the closing date, and common equity which will represent approximately 65% ownership of the combined company on a fully diluted basis based on $5 per share.
The Arena Group intends to use a portion of this cash to reduce its debt by $20 million from current levels.
B. Riley Financial has agreed to extend the maturity of the remaining debt held by it from December 31, 2023 to December 31, 2026 at a fixed rate of 10%.
The addition of Bridge Media Networksâ€™ assets is expected to be accretive to The Arena Groupâ€™s earnings in 2024 and beyond, the release said.