New York Times Co to buy The Athletic for $550 million in cash

The New York Times Co has reached an agreement to buy The Athletic, an online sports news outlet with 1.2 million subscriptions, in an all-cash deal valued at $550 million, the Times said Thursday.

>> Lauren Hirsch, Kevin Draper and Katherine RosmanThe New York Times
Published : 7 Jan 2022, 06:36 AM
Updated : 7 Jan 2022, 06:43 AM

The deal brings the Times, which has more than 8 million total subscriptions, quickly closer to its goal of having 10 million subscriptions by 2025, while also offering its audience more in-depth coverage of the more than 200 professional teams in North America, Britain and Europe that are closely followed by The Athletic’s journalists.

Times Co CEO Meredith Kopit Levien called The Athletic “a great complement to the Times.”

“We are now in pursuit of a goal meaningfully larger than 10 million subscriptions and believe The Athletic will enable us to expand our addressable market of potential subscribers,” she said. Levien told analysts Thursday evening there was “relatively modest” overlap in subscribers of the companies.

Under Times ownership, The Athletic will be operated separately from the Times’ newsroom and its sports section, the company said. The publisher will be David Perpich, a longtime senior executive at the Times who has been a leader of its Cooking and Games apps, as well as the product recommendation site Wirecutter.

Alex Mather and Adam Hansmann, who started The Athletic in 2016, will stay on after the acquisition. Mather, the site’s CEO, will become general manager and co-president; Hansmann, The Athletic’s president, will be its chief operating officer and co-president.

“We started The Athletic to bring fans closer to the teams, players and leagues they love through deep, immersive journalism and storytelling,” Mather and Hansmann said in a statement Thursday. “Today marks a thrilling milestone for that dream, one realised because of the hard work of every single one of our employees. We are proud to have The Athletic become part of the Times Company’s family of subscription products.”

Mather and Hansmann, formerly colleagues at fitness tracking app Strava, started The Athletic in the belief that die-hard fans were not finding the coverage they craved at a time when newspapers were in decline, Sports Illustrated was undergoing an ownership change and ESPN began laying off journalists.

They hired prominent sports journalists from across the country and expanded quickly, bringing coverage of games and the latest sports developments to readers who had grown accustomed to getting news online. The Athletic had a reporter covering nearly every major professional sports team in North America, as well as several top European soccer clubs, while also serving up magazine-length feature articles and podcasts.

The site has about 600 employees — roughly 400 in its newsroom, making it the second-largest employer of sports journalists in the country, behind the Disney-owned ESPN. Like a number of digital media companies that have found success in recent years, The Athletic relies on subscribers, rather than advertisers, as its main source of revenue.

Recently, as its subscription growth began to slow, The Athletic explored various options, including selling a minority or majority stake in the company, with private equity firms and corporations as potential buyers.

The Athletic brought in about $65 million in revenue last year, with operating losses of roughly $55 million, Levien told analysts Thursday. Levien said The Athletic would eat into the Times’ profitability over the next three years, before adding to the bottom line, as it adds new subscribers and more advertising revenue. The New York Times will offer The Athletic as an independent subscription — and will ultimately make it a part of a New York Times package.

“The future growth of The Athletic and of the combined New York Times and The Athletic — and the broader bundle and portfolio of products — depends on things that we have literally spent the last half decade, maybe longer, learning how to do,” Levien said in an interview, citing the Times’ experience with marketing and advertising, among other things.

When asked about potential layoffs at The Athletic, she said, “at this point, that’s not our plan.”

Last summer, there was speculation that gambling platforms like FanDuel and DraftKings might acquire The Athletic. Levien said gambling could be a business opportunity for the company.

“We did not buy The Athletic to build a giant betting platform, but I don’t rule out that there will be ways that we work with gambling companies over time,” she said.

The Times’ acquisition of The Athletic is expected to close by April 1. For the Times, the addition will bring an infusion of paying readers. Since taking charge of the business in 2020, Levien has consistently emphasised the importance of adding digital subscribers. At the end of the third quarter of 2021, the Times Co. had reached 8.4 million total subscriptions.

The Times’ growth in recent years has included other big-ticket acquisitions. In 2016, the Times Co. bought The Wirecutter and its sibling site, The Sweethome, for more than $30 million. In 2020, the Times bought Serial Productions, the company behind the “Serial” podcast, for more than $25 million. The same year, it acquired Audm, an app that offers listeners articles read aloud. The Times had about $1 billion in cash on its books as of the third quarter of last year, according to company filings.

“If we were to have tried to build something, it would have been The Athletic,” Perpich said. “And so when we saw it, we just said, ‘We should acquire it as opposed to trying to replicate what they’re doing.’”

When Mather and Hansmann started The Athletic, they said much of the nation’s sports coverage was “empty calories” produced by slowly dying newspapers, adding that a media company focused on journalism for sports fans would be better for readers.

Early on, Mather boasted in an interview with the Times that The Athletic’s goal was to let local newspapers “continuously bleed until we are the last ones standing.”

©2021 The New York Times Company

Toufique Imrose Khalidi
Editor-in-Chief and Publisher