The New York Times Co. (NYSE: NYT) has just bolstered its sports journalism arm by announcing its plans to acquire online media outlet, The Athletic.
The all-cash deal is valued at $550 million and will see the historic print media company gain 1.2 million valued subscribers.
But is this the right move for both companies?
The answer is a resounding yes. For the NYT, this deal offers a chance to strengthen its markedly weak sports offerings. The Athletic is widely regarded as having some of the most immersive and broad coverage of sports anywhere in the world.
The Athletic also works off a subscription-based model. The NYT has made it very clear that digital subscriptions are a key goal for the company, with 10 million paid subscribers being targeted by 2025. The influx of 1.2 million subscriptions from this acquisition will boost total numbers to 9.6 million while also injecting a much more youthful demographic into the subscriber pool.
For The Athletic, this deal couldn’t have come at a better time. The company made a name for itself by aggressively pursuing some of the top sportswriters in the U.S. and prising them away from print media outlets, often through lucrative deals. Now, despite bringing in roughly $65 million in revenue last year, the company also bled $55 million in losses. This deal gives the firm a chance to restructure under the guidance of a much larger outlet, where ad partners will be easier to come by.
For investors, this deal should be welcomed. It shows consistency with the NYT’s determination to further enter the digital market, enhances one of its historically weak journalistic arms, and adds a whole new demographic to its potential subscriber base.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.