The New York Times acquired The Athletic earlier this year for $550 million in a move that seemed most motivated by the Times looking to boost their subscriber count.
In an earnings call yesterday, the company revealed that on that front it’s worked; the Times has added 1.1 million subscribers through the deal. (Though it’s a questionable value tactic; acquiring entire companies for new subscribers feels a bit like buying airline points to get a free flight. Sometimes it makes sense, but you don’t want to make a habit out of it.)
Also on the call, though, Times executives revealed that since the takeover The Athletic has lost $6.8 million.
Thanks to A.J. Perez at Front Office Sports for the earnings call writeup here:
The sports news site lost $6.8 million in February and March after the $550 million acquisition closed earlier this year, which led The Times Company’s first-quarter adjusted operating profits, reported Wednesday, to dip 10.5% to $60.9 million. Operating profits were $68.1 million in the same quarter a year ago.
Also from the call, the Times plans to offer a bundled subscription package at some point this year. More notably, perhaps, is the fact that the Times is planning on introducing advertising in some form across The Athletic at some point this year.
The Athletic was founded in 2016 with an ad-free subscription model. Meredith Kopit Levien, president and CEO of the New York Times Company, told analysts on Wednesday that the company has “begun to lay the groundwork for introducing an array of advertising products to The Athletic later in the year.”
The Times will introduce a bundled subscription with The Athletic “in the back half of this year,” Levien said.
The Athletic lost $55 million on about $65 million in revenue in 2021, and the changes implemented by The Times will result in “a slight reduction in operating losses” this year, according to NYT executive vice president and CFO Roland A. Caputo.
Ads would be a major departure, but it’s felt inevitable. The Times might value the subscriber boost, but considering the current operating losses there’s no way they won’t try to extract every bit of revenue from the operation. Depending on how they’re implemented, though, it could be a turn-off for some paying customers.
Change is coming, and based on the financial data revealed, it’s coming for a defensible reason.