Alex Mather was—reasonably, deservedly—celebrating when I texted him last night, hours after The New York Times announced its stunning $550-million all-cash acquisition of The Athletic. The deal was a coup for both Mather and his fellow co-founder Adam Hansmann (and a masterstroke for ubiquitous banker-to-the-stars Aryeh Bourkoff, and his deputy Alex Michael). Six years ago, Mather and Hansmann had capitalized on the disruption of the newspaper industry by snapping up many of the nation’s best local sports reporters and fashioning themselves as, in Mather’s words, “the local sports page for every city in the country.” Nevertheless, they were still burning about $50 million a year on average and appeared to be hitting a growth ceiling. And yet, they’d managed to convince the subscriber-hungry Times that their 1.2 million paying readers were worth more than half a billion dollars. It was probably the most lucrative and well-timed exit they could have hoped for.
In industry circles, The Athletic’s reputation has been sullied of late based on their reported aggressive burn rates and a belief that a significant portion of the subscriber base included at-risk, highly discounted subscribers. But the sale price, which represents a 10x multiple on revenue, is a power manifestation of the industry’s interest and emphasis on the long-term value, or LTV in industry parlance, of a subscriber. It’s a staggering multiple that must have many traditional publishers in heat today.
Mather wasn’t ready to talk about the deal last night, but Times Company C.E.O. Meredith Kopit Levien was game. It was, after all, her most notable move as chief executive of the Times to date. “We’re building volume,” she told me in a video interview. “We want to build a big audience around quality journalism… journalism for passionate fans.”