Group Black is reportedly in discussions to buy a majority stake in media company The Arena Group Holdings (NYSE American:AREN), the Wall Street Journal reported. Shares of Arena Group, the publisher of Sports Illustrated, were up 7% in Tuesday’s pre-market trading following a 12% spike on Monday.
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Rationale Behind the Potential Deal
The talks with Arena, home to over 265 brands and publications, like TheStreet, Parade, and Men’s Journal, are part of Group Black’s strategy to sign new deals that would enable it to sell its advertising space. Sources said that discussions between the two parties are ongoing and cautioned that a deal might not materialize.
Co-founded in 2021 by Black entrepreneurs Travis Montaque, Richelieu Dennis, and Bonin Bough, Group Black strives to “bring investment, opportunity and advancement to Black ownership in the global media industry.” It is associated with over 200 companies and has garnered about $500 million in ad-spending commitments from the likes of Procter & Gamble (NYSE:PG), as well as ad-holding companies WPP and Dentsu.
Last week, Group Black and Comcast’s (NASDAQ:CMCSA) entertainment arm NBCUniversal entered into an agreement under which Group Black will sell ads in shows on NBCUniversal’s Peacock streaming service that are popular among Black audiences.
Is AREN Stock a Buy, Sell, or Hold?
Last month, Arena reported better-than-anticipated first-quarter results, with revenue rising 7% to $51.4 million. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss increased to $4.5 million from $1.1 million in the prior-year quarter, partly due to the expenses related to Men’s Journal and Fexy Studios, acquired in December 2022 and January 2023, respectively.
Wall Street is cautiously optimistic on Aren, with a Moderate Buy consensus rating based on one Buy. The average price target of $11 implies about 168% upside. Shares have plunged over 61% year-to-date.
