The Athletic 220

The politics and culture podcasts of the New York Times are meeting the sports podcasts of The Athletic. After months of on-and-off again negotiations, the Times has agreed to buy The Athletic in an all-cash deal worth $550 million. The subscription-based sports media business will continue to operate independently, but the combination will allow the Times to cross-sell advertising on its podcasts with The Athletic’s lineup of shows that release more than 150 episodes each week. The sports site published more than 6,500 hours of audio content in 2021.

“While general interest news is and will remain our primary value proposition, we’ve been actively pursuing spaces where we can add value in people’s daily lives. Our view is that sports is among the biggest, particularly in terms of the potential for engagement with quality, original journalism,” said CEO Meredith Kopit Levien. “Sports occupies a huge place in the fabric of global culture, with deeply passionate fans and followers who want to consume everything there is to know about their favorite teams, leagues, and sporting events. The Athletic was built to serve those enthusiasts.”

The Athletic has 1.2 million subscribers with about $65 million in revenue last year. But it had a $55 million operating loss. Kopit Levien said they see a “slight improvement” in that loss outlook for 2022 as they plan to make additional investments in the brand that will mostly offset revenue growth. “In addition to subscriptions, we also see a big untapped advertising opportunity, much like the one we’ve built in our core business,” she told analysts during a conference call late Thursday. Kopit Levien did not, however, make any mention of the potential to leverage the two company’s podcast businesses.

The Athletic was founded in January 2016 by Alex Mather and Adam Hansmann. Both will remain with the company as it is folded into the Times.

Wall Street analysts are not sure about the deal. Barclays said with 450 staffers at The Athletic the deal is equivalent to $1.2 million per journalist, many who are potentially getting paid a lot more than New York Times journalists. It suggests the paper could have spent a fraction of the $550 million purchase price to build its own sports vertical similar to how it has scaled the Cooking and Parenting sections.

“While we agree with the strategic intent of the deal, we believe the valuation is too expensive versus alternatives. We also believe New York Times needs to consider using its brand to gain platform advantages, which could be significant untapped opportunity in news more broadly around the world,” said analyst Kannan Venkateshwar in a note to clients.

Shares of New York Times stock were trading down 9% on Friday in New York.