- Manoj Bhargava has got rich from 5-Hour Energy. Now he's buying TV and digital media.
- He took control of Sports Illustrated publisher Arena Group in late 2023, laying off dozens.
- However his erratic behavior and failure to pay bills meant he lost control of SI to Minute Media.
Update: On Monday, Minute Media said it had been awarded the license to publish Sports Illustrated "across digital and print platforms." The New York Times reported that it would hire an unspecified number of journalists laid off by Arena Group, and the SI union said that it welcomes the change and looks forward to discussions with Minute Media. Representatives for Arena Group, Bhargava, and Authentic Brands Group didn't immediately reply to comment requests.
Employees of the Arena Group, which publishes Sports Illustrated and other news and lifestyle websites, weren't sure what to expect when Manoj Bhargava, who had just bought a huge chunk of the company's shares and debt, called an all-hands meeting last December.
Bhargava had made his fortune with gas-station staple 5-Hour Energy. A week earlier, he had become a large minority shareholder at The Arena Group, but had no official title. Nevertheless, he had already directed the head of HR to fire three executives the day before.
Now, Bhargava was hosting an in-person and Zoom meeting to outline his vision for Arena. It didn't get off to an auspicious start. Audio issues meant those attending by Zoom — the majority of the company — couldn't hear anything. When the audio finally turned on, Bhargava's mind was apparently elsewhere.
"He was talking about purifying water and he has some device he distributes to Third World countries, like an internet device," said a current Sports Illustrated employee. "I was like, 'I don't know what this has to do with us.'"
Bhargava eventually turned to the company he was attempting to take over. The verdict was not kind.
"The amount of useless stuff you guys do is staggering," he said. The company Bhargava claimed to be taking over was so poorly run that he questioned the intelligence of those in the meeting. "I'm surprised you're still here," he said. "You're not very smart to stay at this company."
Steve Janisse, a spokesman for Bhargava, said he was joking. He also said Bhargava was talking about his charitable endeavors in order to underscore his priorities to Arena Group employees.
Media, Bhargava said in the meeting, was "biased." In an exchange that raised the eyebrows of several people BI spoke to, he asked, "Why should the story be 'White cop kills black man?' It should just be 'Cop kills man.'"
Vince Bodiford, a spokesman for Bhargava, said he was recounting a discussion about editorial values and priorities that took place at NewsNet, a media property he acquired in 2022. He didn't mean to express a preference or dictate an editorial stance at Arena, Bodiford said.
Bhargava said he was reorganizing the company, getting rid of some "big names" to make the company more effective, and that "tasks, not titles" were what was important.
"No one is important," he said."I am not important."
Days later, Bhargava sacked Arena Group CEO Ross Levinsohn, too, causing Levinsohn to angrily resign from the board. One of the fired executives, Rob Barrett said in a lawsuit that he didn't get severance, and three people told Business Insider that more lawsuits are likely on the way.
Arena has an unusual arrangement with its most important title: While the publisher employs Sports Illustrated's staff of editors and writers and produces the magazine and associated web site, it doesn't actually own the globally recognized voice in sports journalism. It licenses the right to use the Sports Illustrated name from Authentic Brands Group. Not long after the executive bloodbath, Arena failed to make its quarterly $3.75 million licensing payment to ABG, resulting in the publishing license being yanked.
Some writers say they fear the missed payment was a bad-faith pretext to scrap their union contract; one former Arena employee called it a game of "billionaire chicken." On January 19, the Sports Illustrated notified at least 80 staffers that they were being laid off.
Now ABG is actively negotiating with Arena and others about the SI brand's future. ABG had misgivings about Bhargava even before the default, according to someone with knowledge of the situation. ABG has said Sports Illustrated would endure; in a January interview with the Washington Post, ABG's CEO Jamie Salter was blunt about his talks with Bhargava, saying, "I told him to fuck off."
"No one really knows what Manoj's angle is," said a fourth person familiar with the situation. "He benefits from this perception that he's crazy like a fox."
A 5-Hour empire expanding
Born in India, Manoj Bhargava had an eccentric trajectory before striking it rich with 5-Hour Energy, including a brief stint as an undergrad at Princeton, a decade spent with an Indian ashram, and a period acquiring and turning around small plastics manufacturing companies (the same business his father had gone into). At a trade show in 2003, he tried an energy drink and felt great — and realized there would be a market if he made the drink smaller.
In 2012, Forbes profiled him, characterizing him as a "reclusive monk," and concluding that his ownership of 5-Hour Energy had turned him into a billionaire. The article highlighted his commitments to charity, though it raised questions about how his charities were funded and what they do. Some of those transactions have been scrutinized by the IRS and wound up in United States Tax Court.
More recently, he has been investing in media. He acquired NewsNet, a Michigan broadcasting company, in 2022, and said he invested $50 million to build new studios and acquire over-the-air television stations. NewsNet's CEO, Bodiford, is also Bhargava's personal spokesman and a nominee to be on Arena Group's board. The move into media was motivated by the growing cost of advertising for 5-Hour Energy, said Janisse, the spokesman for Bhargava who is also a contributor to NewsNet.
"He said, 'If it's getting more expensive, maybe that's a business I should get into,'" Janisse said.
NewsNet, with the motto: "News…as it used to be," and its parent company, Bridge Media, are due to merge with Arena, which likely has a much larger reach than any of Bhargava's pre-existing holdings. Janisse said some of its local TV stations have only recently begun contracting with Nielsen to measure their audiences.
Arena, despite the reach of brands like SI, Mens Journal, The Street, and Parade, has been losing money for years and its reputation has been hammered. In 2023, three of its publications were caught publishing deceptive or wrong AI-generated content. Such stories even ran in Sports Illustrated, whose covers still carry cachet even as it has been pared back and competing sports media outlets have scaled up.
Arena's losing streak was Bhargava's opportunity. In August, he signed a letter of intent to acquire Arena, which had more than $110 million in high-interest debt, with $50 million in cash and $60 in advertising commitments. It was cemented in a series of agreements struck in early November.
Oddly, the Hans Foundation, a non-profit where Bhargava was president until 2021 and remains the primary funder, agreed to purchase $25 million in preferred stock alongside the 5-Hour International Corporation.
"As many charitable trusts do, they make their own investments, and they felt that this was a good investment, and that's why they put their money into the deal," said Janisse.
Rather than waiting for the deal to close, however, on December 1, Bhargava made a separate attempt to control Arena through the side door, moving to acquire a large chunk of shares and all Arena's debt from B. Riley, an upstart investment bank that is dealing with its own crises. Asked why Bhargava did this, Janisse declined to comment.
Since then, he has invested more money into Arena and now controls an outright majority of its shares. Bhargava's company still has not invested based on the terms outlined in the November agreements from August 2023, though it has until August 2024 to fulfill that obligation.
Bhargava has said Arena was in worse financial shape than he originally believed. In an email, Janisse said the November agreements are "still in flux." He said the choice in early January was to make payroll or to pay the license fee, and he chose the former. Some are skeptical.
"I think he dragged his feet intentionally on the original Arena deal because he saw an opportunity," said a source close to the negotiations, theorizing that Bhargava saw Arena's falling stock price as an opportunity to acquire the company cheaply and renegotiate terms struck in August. "I think he's always looking for an angle."
The scrutiny that comes with controlling Sports Illustrated
While Arena Group controls over two hundred media brands, there's no question SI is Arena's crown jewel. Janisse said it gets about 80 million unique visitors a month. Other properties, like The Street and Parade, get about 20 million uniques each, he said.
He said the company has made several proposals to ABG and is awaiting a response. Arena said it plans to shutter the print magazine in May, according toh e New York Times, although two people familiar with the situation say managers have already walked that back. Janisse said in a Sunday email that Arena had "given the SI print edition and SI SWIM back to Authentic."
"We are willing to help them find a solution so they can continue to print the magazine if they wish," he wrote.
Two other people familiar with the situation say Bhargava is focused on being able to license the "SI TV" brand, as previously reported by the New York Post.
"What's most interesting to Manoj and Arena is the digital side, the website, and the multimedia portion," Janisse said. "That doesn't mean there won't be good storytelling happening, but that's the part that Arena is most interested in."
Other companies in the running for parts of the Sports Illustrated license include Minute Media, which publishes The Players' Tribune, and Front Office Sports, a sports media company that specializes in newsletters.
Many who spoke with BI said they believe Minute Media is the frontrunner to gain the rights to SI. At an Arena Group planning meeting for Sports Illustrated held in Michigan last week, Bhargava seemed "defeated," according to a source with knowledge of the meeting.
Losing the rights to Sports Illustrated would represent a setback for Arena Group, which has already seen its market cap sink from a high of $288 million in December 2022 to $31 million at the end of trading on Friday.
Multiple people BI spoke to said it was never clear why Bhargava wanted to acquire and operate Arena in the first place, and that he lacked a coherent vision for what he would do with SI or Arena Group. His experience to date has been mainly running private companies, a current Arena Group employee said, and he may have been unprepared for the scrutiny a public company like Arena, or being associated with Sports Illustrated, would bring.
"If he introduces a new 5-Hour Energy flavor, that's his call," said the current Arena employee. "I think he's finding out that there's just a higher level of scrutiny to his actions, especially when there's a beloved brand."