The New York Times Company (NYSE: NYT) will purchase sports media company The Athletic, for $550 million in cash in a deal that will help expand the New York Times’ sports coverage and subscription offerings.
According to the press release, The Athletic was founded in 2016 and is a “global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world.” Reportedly as of December 2021, The Athletic had 1.2 million subscribers.
The New York Times has been working to grow its subscription business, which has doubled to more than eight million paid subscribers across digital and print in the last three years, according to the filing. The acquisition should help to further grow The New York Times’ subscriptions.
“Acquiring The Athletic puts us in a position to be a global leader in sports journalism and offer English speakers around the world another reason to turn to the Times Company to meet their daily news and life needs,” Meredith Kopit Levien, President and CEO of The New York Times Company, said in a press release. “As a stand-alone product, The Athletic will enable us to offer much more extensive coverage for fans who seek a deep connection to and understanding of their favorite teams, leagues and players. … Strategically, we believe this acquisition will accelerate our ability to scale and deepen subscriber relationships.”
The deal, announced January 6, is expected to be immediately accretive to The New York Times’ revenue growth rate. However, the transaction will dilute The New York Times Company’s operating profit as it works to scale subscriptions and work on its advertising business, but will be accretive afterwards, according to the filing. The indemnity cap is set at $2.75 million, the equivalent of 0.5% of the transaction value.
The founders of The Athletic will stay after the acquisition. Alex Mather will be The Athletic’s general manager and co-president and Adam Hansman will be The Athletic’s chief operating officer and co-president; they will report to Times Company executive David Perpich, who will become publisher of The Athletic. As noted in the filings, The Athletic will be a subsidiary of the Times Company and will operate separately.
Mather and Hansman said, “We started The Athletic to bring fans closer to the teams, players and leagues they love through deep, immersive journalism and storytelling. Today marks a thrilling milestone for that dream … We are proud to have The Athletic become part of the Times Company’s family of subscription products. When we founded the company, we hoped to become the sports page for every city in the world. We’re excited to continue serving our avid subscribers as we grow and scale with the help of the most important journalistic organization and the leader in digital subscription news.”
The deal is expected to close in the first quarter of 2022, pending customary closing conditions.
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP is serving as legal advisor and LionTree Advisors LLC is serving as financial advisor to The Atlantic. Morgan, Lewis & Bockius LLP is serving as legal advisor to The New York Times and Allen & Co. is its financial advisor.
This acquisition follows The New York Times’ effort to expand into different areas and diversify its content, while also working on brand, design and other story-telling mediums. Previous deals include its acquisition of The Wirecutter and The Sweethome in October 2016, which in 2017 were combined under the Wirecutter brand. In 2016 the publisher also acquired design agency Fake Love and marketing agency HelloSociety. Moreover, in July 2020, The Times acquired Serial Productions, which produces the “Serial” podcast and it entered an alliance with “This American Life.”
Prior to the announcement, The New York Times’ shares were valued at $45.68 on January 5. When the deal was announced on January 6, the shares closed at $47.82. A few days later, on January 10, stocks closed at $42.50.
