Tue. Dec 7th, 2021

Since its debut in 2016, The Athletic has been heralded as a model for how sports journalism can survive on subscription revenue alone. Its founders now realize that only goes so far.

“When everything is paywalled, you’re limiting the audience you can reach every single day,” co-founder Alex Mather said in an interview last week. “For us to reach 5 million or 10 million subscribers, we’re going to have to reach more sports fans, give them a taste of our product, find ways to bring them into our universe and engage them and hopefully get them to become a paid subscriber.”

The Athletic, which currently has 1.2 million subscribers, is looking for new ways to keep growing in a rapidly evolving sports media landscape. Following the legalization of sports betting in the U.S., a number of aggressive sports gambling companies are pumping advertising dollars into the industry while also building media operations of their own. At the same time, the hunt for paying digital subscribers has grown even more fierce online, with everyone from newsletter upstarts like Substack Inc. to established incumbents like The Washington Post to newcomers like Defector Media, a sport and culture outlet started by former Deadspin employees, constantly beseeching readers to pay up for access to their content.

Last month, amid the crush of new competition, Jacob Donnelly, an employee at the newsletter company Morning Brew who writes about digital media, noted that The Athletic’s growth appears to have “slowed quite considerably and it is churning subscribers almost as quickly as it is adding new ones.”

“These next few months are critical for The Athletic,” Donnelly said.

Mather says The Athletic’s subscriber base continues to grow each month, and its audience has bounced back this year thanks to the return of live sports, following shutdowns early in the pandemic.

The San Francisco-based company, which is unprofitable and under growing pressure from investors to deliver a return, is currently exploring a sale, seeking a price of $600 million to $800 million, according to two people familiar with the matter. The New York Times did not reach a deal with the startup recently after crunching the numbers and assessing the value of The Athletic at less than $500 million, said the people, who asked not to be identified discussing private deliberations. Another reported suitor, the sports-betting company FanDuel, has also said it isn’t interested. (Disclosure: Bloomberg News previously had a subscription partnership with The Athletic, which is no longer active).

To date, The Athletic has raised nearly $140 million from a range of investors, including Comcast Ventures, Waverley Capital and Laurene Powell Jobs’ Emerson Collective. In October, The Information reported that The Athletic has enough cash to cover its needs for about the next eight months.

Mather declined to comment on the sale process and said his company is “well capitalized.”

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