Mooted $500m+ bid for the sports-only newcomer shows that content-and-subscriptions plays are as appealing as ever when readers want what you have.
In a swift turn of events reminiscent more of tech start-ups than media, digital publishing's own Big Dog The New York Times seems poised to snap up one of its up-and-coming rivals with a reported $500m+ bid for sports subscription title The Athletic.
The Athletic provides ads-free sports news and features to subscribers. It was founded in San Francisco in 2016 with venture capital funding from outside traditional media, with $139.5m invested so far on a current valuation between $500m to $1bn.
It made waves for its aggressive recruiting of big-name sports writers in the US, UK, and Australia, and rapidly ballooned to 1.2m paid subscribers with a menu of high-quality sports writing on varied subjects including NFL, NBA, MMA, football, and motorsports. It's still growing consistently.
It has been a bright light of success in the world of subscription digital publishing and from day one based its business on the belief that good content and audiences go naturally together, and the focus should be on making it easy to buy.
The New York Times currently stands at around 7.8m total paid subscriptions including non-news products like cooking and puzzles, and the reported deal could be seen in a number of lights depending on the NYT's business motivations.
In a 'traditional' media merger view, there will be talk of growing combined audiences and rationalising costs where there is significant overlap: what will this mean for some of the 600 Athletic staff? Will subscriber pools be mixed? How many of each customer base will try some new offerings, or perhaps plump for new mega-deals? It's all about the ARPU.
If instead you look at it in the manner of a tech start-up, it seems more like a sector incumbent acquiring a fast-growing upstart rival (and its customer base) before it gets too big to deal with. There might not be a merger of audiences at all, and both entities continue to co-exist - but the NYT no longer fears the effect of a new non-media player or existing rival, say The Washington Post (3m subscribers), snapping up The Athletic to kick-start a subscriber war.
Either way, with The Athletic making some $80m annually - still not in profit, however - but without the complex ownership structure and legacy costs such as pension funds and supersized staff rosters of some similar-sized 'traditional' US media brands, it looks like a relatively safe decision for the NYT if it pans out.
Two things of note...
One: the story was revealed by Axios, who much like The Athletic are a recent start-up by investors and founders from outside media, with big ambitions to grow subscriber numbers for compelling content. How did Axios discover this juicy media morsel? Eh, well - the two organisations were discussing a merger before the NYT waded in with actual cash.
Two: the Athletic reportedly makes steeply growing revenue from sports betting affiliations. The NYT traditionally steers well clear of such business. Will the gambling loot throw a spanner in the works of this deal, or is having this growing new revenue stream, conveniently at arms length, in fact one of the primary motivations? Time will tell.