NY Times‘ (NYT) The Athletic Buyout to Boost Subscriber Base

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In a bid to scale up subscriber base and attain the target of 10 million subscriptions by 2025, The New York Times Company NYT has struck a deal to acquire a digital subscription-based sports media business, The Athletic. The transaction, which is valued at $550 million, is expected to conclude in first-quarter 2022.
The Athletic, which provides national and local coverage of more than 200 clubs and teams in the United States and worldwide, had 1.2 million subscribers as of December 2021. Undoubtedly, the acquisition would enable The New York Times Company to become a formidable player in sports journalism and expand its target audience.
The Athletic will be a subsidiary of The Times Company and continue to operate as a separate unit. Founders of The Athletic — Alex Mather and Adam Hansmann — will stay on, post the acquisition.
Management pointed that the addition of this San Francisco-based company to The New York Times Company’s media portfolio is expected to be immediately accretive to its revenue growth rate but dilutive to operating profit for approximately three years.
Meredith Kopit Levien, the president and chief executive officer of The New York Times Company, said, “Strategically, we believe this acquisition will accelerate our ability to scale and deepen subscriber relationships. We are now in pursuit of a goal meaningfully larger than 10 million subscriptions.”
Shares of The New York Times Company were up 4.7% during the trading session on Jan 6. This Zacks Rank #3 (Hold) stock has advanced 12.4% in the past six months compared with the industry’s rally of 13%.

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Few Facts Check

The New York Times Company has been making strides to grow the digital subscription business amid declines in advertising revenues and print readership. Evidently, acquiring The Athletic would help it expand the addressable market of potential subscribers and diversify offerings. The company has been adding revenue streams and utilizing technological advancements to reach the target audience more effectively. Its business model, with greater emphasis on subscription revenues, bodes well.
We note that the number of paid digital-only subscribers reached roughly 7,588,000 at the end of third-quarter 2021, rising 455,000 sequentially and 1,525,000 year over year. Of the 455,000 total net additions, 320,000 came from the digital news product and the remaining from Games, Cooking, and Wirecutter.
At third quarter-end, the company had approximately 8,383,000 subscriptions across its print and digital products.

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