The shares of The New York Times Company
The shares of the New York Times company wiped out its previous day trading session gains on Friday as the stock plunged to $42.47 within an hour of opening.
At 1:30 p.m. eastern time, the stock was trading at $43.60 apiece, down roughly 8.80% from its previous day close of $47.82.
The NYT stock opened the market at $47.42.
With this agreement, The Times, which currently has eight million total subscriptions, inches towards its goal of ten million by 2025, while also providing its audience with more in-depth coverage of over 200 professional teams in North America, the United Kingdom, and Europe that the journalists at The Athletic closely follow.
Meredith Kopit Levien, the chief executive of the Times Company, called The Athletic “a great complement to The Times.”
“We are now in pursuit of a goal meaningfully larger than 10 million subscriptions and believe The Athletic will enable us to expand our addressable market of potential subscribers,” she said.
Ms Levien, in conversation with analysts, on Thursday, said there was a “relatively modest” overlap in subscribers of the target and the Times.
The Athletic will be a subsidiary of The Times Company, and continues to run as a separate entity from The Times’s newsroom and its sports division, the company said.
David Perpich, a senior executive at The Times, who has led the Cooking and Games apps, along with the product recommendation site Wirecutter, will be the publisher.
The founders of The Athletic–Alex Mather and Adam Hansmann, will remain in the company. They will report to Times Company executive David Perpich. Mr Mather, the site’s chief executive at present, will handle the role of general manager and co-president; Mr Hansmann, who is now The Athletic’s president, will become its chief operating officer and co-president.
Mr Mather and Mr Hansmann founded –The Athletic in January 2016 that runs on a subscription-based business model, and had 1.2 million subscribers as of December 2021.
The San Francisco based company has over 600 employees, with almost 400 in its newsroom, the second-largest employer of sports journalists in the U.S, after the Disney-owned ESPN.
Mr Mather and Mr Hansmann, in a statement, 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, one realized because of the hard work of every single one of our employees. We are proud to have The Athletic become part of The Times Company’s family of subscription products.”
They added, “ 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.”
According to the report by The New York Times, recently, The Athletic, hit by a slowdown in the subscription growth, tried out various options, including offloading a minority or majority stake in the company, with private equity firms and corporations as possible buyers.
The Athletic attracted about $65 million in revenue last year, with operating losses concluding to roughly $55 million, Ms Levien told analysts.
The company wishes to sell The Athletic as a standalone subscription product initially, with plans to gradually add it to the New York Times package.
Ms Levien added, “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 and believe The Athletic will enable us to expand our addressable market of potential subscribers.”
“Alongside our core news report, New York Times Cooking, New York Times Games, Wirecutter and Audm, we’ll have a more robust offering to engage the millions of subscribers we already have and convert many more new ones among our 100 million-plus registered users.”
The Athletic, according to Ms Levien, will hamper The Times’ profitability over the next three years before adding to the bottom line by bringing in new subscribers and ad income.
On the question of the probability of potential layoffs at The Athletic, Ms Levin answered, “at this point, that’s not our plan.”
The acquisition deal is expected to close by the first quarter of 2022.
Allen & Company LLC acted as a financial adviser, while Morgan, Lewis & Bockius LLP acted as legal adviser to The New York Times Company on the deal.
For The Athletic, LionTree Advisors LLC was the financial adviser, and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP was the legal adviser.