The suit comes more than a year after Meredith, which publishes dozens of titles, including People and Better Homes and Gardens, sold Sports Illustrated to licensing company Authentic Brands Group for about $110 million. Meredith continued to operate parts of the Sports Illustratedbusiness to give ABG some time to find a new publisher.
ABG later licensed Sports Illustrated to Maven, giving the digital media company the rights to publish the magazine's print and digital versions for at least 10 years in exchange for a $45 million upfront payment and future royalties, as Publishing Insider reported last year. To help Maven manage the transition of Sports Illustrated's operations, Meredith agreed to provide certain services, such as website support, accounting services and consumer marketing, in exchange for a series of payments.
After the companies arranged for Meredith to apply some accounts-receivable balances to the bill, Maven still had a past due balance of $3.9 million by early April. Meredith last month terminated its outsourcing agreement with Maven, claiming the company still owes $1.1 million.
The lawsuit doesn't inspire much confidence in Sports Illustrated's operations, which likely suffered a steep drop in revenue during the coronavirus pandemic as professional sports leagues suspended operations and advertisers cut or delayed media spending.
Maven this year cited the pandemic as a source of uncertainty that may affect its ability to stay in business after April 30, unless it finds additional sources of financing, according to a regulatory filing. The company forecast its revenue will almost double to $115 million this year from 2019, though the postponement of college football is likely to dampen the outlook. It received a $5.7 million Paycheck Protection Program loan from the U.S. government's pandemic relief plan, and it remains to be seen how much of the loan will be forgiven.