The Arena Group Holdings, Inc. (NYSE American: AREN) (“we,” “us,” “our,” the “Company” or “The Arena Group”), a technology platform and media company home to more than 265 brands, including Sports Illustrated, TheStreet, Parade Media (“Parade”), Men’s Journal, and HubPages, today announced that it has signed a binding letter of intent with Simplify Inventions, LLC (“Simplify”) and its founder, Manoj Bhargava, founder of 5-hour ENERGY®, to acquire certain assets of its subsidiary Bridge Media Networks, a dynamic and innovative, privately held media group with two national television networks distributed across more than 100 owned and affiliated Over-The-Air (“OTA”) stations, 35 OTT, CTV agreements, and multiple MVPD and cable agreements, creating a well-capitalized, growing media leader with digital, commerce, print and video capabilities all supported by a unified technology platform.
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 Group’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 ENERGY®, and the Bridge Media Networks operations. As consideration, Simplify will receive $25 million of preferred stock at a 10% non-cash payment-in-kind (“PIK”) 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 Networks’ assets is expected to be accretive to The Arena Group’s earnings in 2024 and beyond. The proposed transaction is subject to finalization of a definitive agreement, the completion of due diligence, approval by The Arena Group’s shareholders, the receipt of any required regulatory approvals, and certain other closing conditions. Closing is expected in the fourth quarter of 2023.
“This 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,” commented Ross Levinsohn, Chairman and Chief Executive Officer of The Arena Group. “By combining with two established networks with significant linear and digital distribution, The Arena Group will have a significant presence in OTT, CTV, and Free Ad Support Television (“FAST”) channels, some of the fastest-growing segments of the video market. The production resources of Bridge Media Networks will provide a dramatic boost to our video capabilities which we believe will unlock significant revenue opportunities for the combined company. The result will be a more diverse and distributed organization with additional ways to reach consumers and support advertising clients across video platforms.”
“Simultaneously, this proposed transaction will extend the maturity of our debt by three years at a very favorable rate, providing us optionality and a more stable foundation from which to operate,” added Levinsohn. “Combined, we expect to have a diversified, multi-platform, well-capitalized organization, with greater scale, expanded margins, and an accelerated path to profitability.”
“This combination of broadcast, digital and brands will be ‘one plus one is eleven’ – not two or even three. And we’re just getting started,” commented Manoj Bhargava, the founder and CEO of Innovations Ventures LLC (dba Living Essentials 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.
Bryant Riley, Chairman and Chief Executive Officer of B. Riley Financial, currently the largest equity and debt holder of The Arena Group, added, “We believe this is a transformational transaction for The Arena Group, combining an experienced management team with a history of making accretive acquisitions with a well-financed partner who shares the vision that the media space is ripe for investment and opportunity.”
In 2022, The Arena Group doubled its verticals through organic and inorganic growth, including acquiring Parade, Men’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.
Proposed Transaction Timeline
- The transaction is expected to close in the fourth quarter of 2023, subject to negotiation of definitive agreements, the completion of due diligence, the approval of The Arena Group’s shareholders, the receipt of any required regulatory approvals, and certain other closing conditions.
- The Company anticipates that integration of the respective businesses will be completed in early 2024.
- Additional details regarding the transaction are available in the Form 8-K filed with the Securities and Exchange Commission (“the SEC”) today, August 14, 2023.
Conference Call
Ross Levinsohn, The Arena Group’s Chief Executive Officer, Doug Smith, Chief Financial Officer, and Andrew Kraft, Chief Operating Officer, will host a conference call and live webcast to review the Company’s second quarter financial results and discuss select details of this proposed transaction. The call will take place at 4:30 p.m. ET today. To access the call, please dial 800-285-6670 (toll free) or 713-481-1320. The conference call will also be webcast live on the Investor Relations section of The Arena Group’s website at https://investors.thearenagroup.net/news-and-events/events.
Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company’s website for at least 90 days. A telephonic replay of the conference call will also be available from 7 p.m. ET on August 14, 2023 until 11:59 p.m. ET on August 28, 2023 by dialing 877-481-4010 (United States) or 919-882-2331 (international) and using the passcode 48775.
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