The New York Times Company announced Thursday that it has reached an agreement to acquire The Athletic, an online sports news organization, in an all-cash transaction valued at $550 million.
The Athletic, founded in 2016, had 1.2 million subscribers as of December and covers over 200 clubs and teams in the United States and throughout the world. In a private financing in 2020, it was last valued at $500 million.
The transaction would help the New York Times grow its digital capabilities as the 170-year-old publication focuses on its subscription-based economic model, which has aided the daily in weathering significant drops in advertising and print readership.
Additionally, the partnership moves The Times closer to its aim of 10 million subscriptions by 2025, while also providing its audience with more in-depth coverage of North America, the United Kingdom, and Europe, which is keenly followed by The Athletic's media network.
The Athletic earned $47 million in income in 2020 but was forced to decrease employees and pay during the early months of the global health crisis, when the majority of live athletic events were suspended.
According to the report, the company predicted sales of $77 million for 2021, with cash burn of $35 million. The New York Times' stock closed 4.7% higher at $47.82.
"By acquiring The Athletic, we position ourselves to be a global leader in sports journalism," Meredith Kopit Levien, Chief Executive Officer of The New York Times, stated.
As the print business struggles with severe drops in advertising and readership, the NYT has been extending its digital products, including the digital cookbook NYT Cooking and the product review website Wirecutter.
The Athletic will incur operational losses of around $55 million on revenue of approximately $65 million in 2021, Levien said during a Thursday analyst call.
Levien added that The Athletic had revenue of $65 million and operating losses of $55 million last year.
She stated that there is a slight overlap in the subscriber bases of the New York Times and The Athletic, and the company will assist The Athletic in growing its advertising revenue.
It intends to sell The Athletic subscriptions separately at first, before gradually incorporating them into a bigger bundle.
The Athletic will be operated independently from The Times' staff and sports section, the company disclosed.
David Perpich, a long-serving senior executive at The Times who oversaw the Cooking and Games apps, as well as Wirecutter, will serve as publisher.
Allen & Company advised the New York Times on the transaction, while LionTree Advisors advised The Athletic.
