The New York Times announced on Thursday that it plans to acquire The Athletic, a subscription-based sports website. The Times hopes the deal will usher in fresh subscribers to its publication while enhancing its sports coverage.
The deal is valued at approximately $550 million, and the parties expect to close it in the coming months.
The Times has previously said that it hopes to reach 10 million digital and print subscribers by 2025.
According to an undisclosed person familiar with the deal, both companies had discussed the possibility of an agreement at an earlier date, but the talks temporarily came to a close after The Athletic felt the Times low-balled an offering price. After that, Liontree was hired to broker the deal, which resulted in a higher purchase price for The Athletic.
The San Francisco-headquartered sports site will continue to be operated independently. Meredith Kopit Levien, CEO of the New York Times, told investors that the Athletic would initially be offered as a separate subscription, but that later on, it planned to offer it as part of its Times bundle. She added that the vertical would provide subscribers with more extensive sports coverage. Currently, she said the Times offers “sports coverage for a general-interest audience.”
Acquisition of The Athletic potentially signals a strategy by the New York Times to focus on its niche and community-based journalism ambitions to capture high-interest, subscription-based audiences. An unidentified spokesperson said the Times is also interested in acquiring sites specializing in tech, science, and other interests.
Levien said the company has a “goal meaningfully larger than 10 million subscriptions and believe The Athletic will enable us to expand our addressable market of potential subscribers.”
As of the third quarter of 2021, the Times had 8.4 million subscribers, with a “modest overlap” in the subscriber base.
The Athletic was launched in 2016 and announced late in 2020 that it had 1 million subscribers. The publication said it had reached a profit through ad sales and subscription revenue. As of December 2021, The Athletic had a subscription base of 1.2 million subscribers, according to the Times.
Levien said that operating losses for the Athletic in 2021 were nearly $55 million with revenue of around $65 million.
The Times anticipates that its acquisition of The Athletic will instantly grow its revenue, although the deal may dilute its operating profit for around three years.
The Athletic was founded by Adam Hansmann and Alex Mather. They both plan to remain once the deal is completed and will act as co-presidents. Mather will also serve as general manager, while Hansmann will serve as chief operating officer. The Time’s chief of standalone products, David Perpich, will serve as publisher of The Athletic.
After news of the deal became public, New York Times shares fell slightly during after-hours trading.