Last year, The New York Times Company bought The Athletic for $550 million. It will never get that money back. Despite its revenue growth, The Athletic has lost money every quarter since the transaction. (These companies have the worst reputations.)
In the most recently reported quarter, revenue of The Athletic rose 0.52% to $30 million. This means its revenue for the year might be $140 million, which makes the $550 million price particularly rich, even if The Athletic were making money. Instead, it lost $8 million last quarter, compared with a $12 million loss a year ago.
The New York Times has decided to disband its sports desk and reallocate these people. That means about 50 people will have new jobs. The Athletic will take their place. It will be a messy transition, if it works at all.
Get Our Free Investment Newsletter
Much of the content from The Athletic comes from 47 American cities and some in the United Kingdom. A national paper, The New York Times, will hope to sell The Athletic’s subscriptions bundled with New York Times subscriptions. Somehow, this regional combined with local content does not add up. However, The Athletic probably cannot be successful without this business model.
Potential customers can subscribe to The Athletic for $0.50 per week. A price that low is not set from a position of strength. It means The Athletic has to lose money on subscribers early in the subscription cycle, hoping it can raise prices for these subscribers later.
The Athletic purchase will always be a mistake by The New York Times. One has to wonder what management was thinking.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Source: Read Full Article