Sports Illustrated AI Scandal Sends The Arena Group Stock Plunging
Fake sportswriters, it seems, create real consequences.
Shares of Sports Illustrated publisher The Arena Group plunged 28% Tuesday after revelations that SI allegedly used artificial intelligence to write content under fake bylines. The drop sliced $20 million off the market cap of The Arena Group, putting the business firmly in micro-cap territory with a market cap of $48 million.
More from Sportico.com
Shares closed at $2.01 on the American Stock Exchange Tuesday. They were up about a penny in early trading Wednesday. In addition to Sports Illustrated, The Arena Group owns Hockey News, TheStreet.com and Men’s Journal, among dozens of publications.
A Monday report by Futurism said that the publication used computer-generated copy to create content such as a volleyball buying guide authored by staffers that don’t exist. Their author pages were accompanied by photos sold on an AI image-generating website. Creating buying guides like that one has been a major focus for The Arena Group to increase the company’s revenue. Management said in its earnings report, which came out two weeks ago, that its e-commerce revenue from such efforts rose 637% in the latest quarter.
In a statement Monday, SI said the product reviews came from third-party company AdVon Commerce and that “AdVon has assured us that all of the articles in question were written and edited by humans.”
The delayed drop in The Arena Group stock also suggests there may be more complications resulting from the AI usage not disclosed in the marketplace. In August, The Arena Group signed a definitive deal to effectively be bought by Bridge Media Networks, a U.S.-focused media group owned by 5-Hour Energy billionaire Manoj Bhargava. That deal is slated to close this quarter or early 2024, according to an early November call with investors.
A spokesperson for The Arena Group didn’t immediately respond to a phone call asking for comment on the stock drop and the status of the Bridge merger.
Best of Sportico.com
