The newspaper giant’s stock price dropped nearly 11% on Friday after the acquisition of the sports-news site was announced
Many experts still consider the purchase smart. It will allow the company to expand into local markets, and accelerate its goal of reaching 10 million subscribers. This is a time when content producers are being urged to use subscriber-based business models. (The Athletic’s 1.2 million subscribers will join the paper’s existing stable of 8.3 million subscribers.)
“The NY Times’ decision to acquire The Athletic is a solid financial maneuver,” Mike Woosley, COO of data company Lotame, told , noting that the purchase price may be a bargain given the company’s current $7.13 billion market cap. “They’ll spend 6% of their market cap for a 12% overnight increase in paid subscriptions. With its reach, portfolio and brand recognition, the New York Times will inevitably make those subscribers much more valuable.”
The Athletic is a six year old sports site that provides coverage of more than 200 clubs and teams. This has been a great success story. SimilarWeb reports that the number of visitors to the subscription-based sports news site increased by 70% in 2021 and the total number of unique visitors increased by 70% compared to the previous calendar year. Moreover, the site’s bounce rate — or the number of people who left after being on one page — fell in 2020 and again in 2021.
“They grew significantly faster than the rest of the group,”Seema Shah, senior researcher and analyst at Similarweb, said that. The Athletic saw an increase of more than 70% while Sports Illustrated experienced a 37% increase. Bleacher Report suffered a decline of 12% in unique users compared to 2020. The Athletic also saw the most year-overyear visitor growth in 2021 compared to other sports sites like Sports Illustrated, Barstool Sports and others.
Shah attributes the low bounce rate and significant traffic growth of The Athletic to its specialized coverage of unique teams, which appeals to diehard fans more than the wider sports coverage of big-name outlets — like the New York Times. With a group of dedicated, smaller audiences, the Athletic acquisition could help diversify and appeal to a larger audience.
The price tag for $550million is considerably lower than that of the $750-plus deal The Athletic was seeking last year, after talks with Axios as well as the Times.
For what it’s worth, The Times’ own sports coverage saw a traffic increase of 30% in 2021 and a unique visitor increase of 20%, Shah said, but also reported an increased bounce rate. “So that was sort of a negative sign,”She spoke. “They also looked like they were gaining some traffic share and this will probably accelerate that, which is obviously what they want to do,” she said, adding that the Times would benefit from The Athletic’s international sports coverage.
The Times has also developed products such as New York Times Cooking and Wirecutter, and its news-audio app Audm. The paper’s acquisition will allow it to expand its news offerings and reach more sports-loving areas. And as Levien noted, while The Athletic will remain a standalone brand, it will eventually become a part of the Times’ bundle of offerings — giving readers more value to their subscriptions.
Media companies are becoming more focused on consolidated subscription models just like video streaming services, Anthony Gonsalves (senior vice president of publisher development at Connatix) explained. “Similar to the way Hulu, ESPN+ and Disney+ are bundling their subscriptions, this deal brings together diverse audiences across verticals to cross-promote and grow loyalty,” Gonsalves said. “As the industry continues to shift toward subscription-based strategies, we can expect to see more bundled offerings and acquisitions like this, but the publishers who foster trusted relationships with readers through enriching, quality content across verticals will see the most success.”
Although discounted subscriptions and bundles will be popular, it is possible that the Times will not add The Athletic to its mix. “Don’t expect The Athletic to be included in your unescalated NY Times subscription right away,”Woosley stated. “Conveying a distinct subscription decision and value proposition is the smartest way for The Times to discipline itself in unlocking the value of these subscribers and this transaction.”
