The New York Times has a new year's resolution — to get in shape.
It plans to do so by splashing $550m in cash on acquiring The Athletic, the sports media start-up founded back in 2016.
Pay to read about sports?
The idea that millions of people would be willing to pay $5 or even $10 a month for coverage of their favorite sports was a fairly wild one back in 2016. After all, there were already plenty of free opinions to read on the internet - particularly about sports. But, The Athletic didn't listen to any of that conventional wisdom, building a 1.2 million strong subscriber base in the last 6 years.
To get there The Athletic took a leaf out of the early Facebook growth model, targeting specific sports city by city. It first launched in Chicago in 2016, covering mostly baseball and ice hockey. Then it added Toronto, covering the 3 major teams there, using funding from early investors, before expanding further afield. Going deep in one local area, before branching out.
Subs, subs, subs
The Athletic has 550 million obvious reasons to take this deal, and from the NYTimes perspective this deal is a big step towards achieving the company's target of 10 million paid subscribers by 2025 and (obviously) strengthens their sports coverage. Those are both great, but the payoff for the NYTimes is likely to take at least a few years.
Apart from the obvious upfront payment, The Athletic is also still a pretty big money pit — spending roughly $120m on its operations last year, while only bringing in ~$65m in revenue. The NYTimes can't put its checkbook away just yet.
