The New York Times’ Pricey Athletic Purchase Finally Generates a Profit

By: Christiana Sciaudone & Jacob Cohen Donnelly

The Athletic finally turned a profit for The New York Times Company in the third quarter, nearly three years after buying the sports site. 

The Times reported 260,000 net digital-only subscribers compared with the second quarter, bringing the total number of subscribers to more than 11 million. That compares to an addition of 300,000 in the second quarter, and came in below analyst expectations of 280,200 subscribers, CNBC reported. 

• Total digital-only average revenue per user increased 1.8% year-over-year to $9.45, which the company attributed to subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.
• Growth in digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 14%.
• Digital advertising revenues increased 8.8% year-over-year driven by higher revenue from open-market programmatic advertising, including new advertising supply.
• Other revenue increased 9.3% year-over-year because of higher Wirecutter affiliate referral and licensing revenues. 

Last year, the company disbanded its sports department and said it would rely on coverage of teams and games from its website The Athletic.

Adjusted operating profit attributable to The Athletic reached $2.6 million, the first time it has reported a positive number. At its worst, The Athletic lost $12.6 million in the second quarter of 2022. The Times has been reporting The Athletic’s results separately since it was purchased, and will incorporate the sports site’s results into the greater company’s earnings as of 2025. 

The Athletic and other “lifestyle products” are seen as major drivers of revenue, and becoming more so. 

“The Athletic is already an important component of our bundle offering in more deeply engaging subscribers. We began testing it more directly as the driver of bundle subscription starts in Q3 which was enabled by the technical integration with the Times web domain that we completed in Q2 and we continue to be pleased with the overall economic performance and direction of the app,” Meredith Kopit Levien, president and chief executive officer at The New York Times Company, said in a conference call today. 

The Times is adding more ad products into its lifestyle products to increase value for marketers 

“Ad growth reflected strong performance across all our lifestyle products as we broadened our ad offering and reached a wider set of marketers. This came, even as some advertisers continue to avoid certain hard news topics,” Levien said. 

Like most media, the Times has seen a decrease in traffic coming from platforms like Google search and amid a surge in the use of AI. It is building “resilience to those dynamics by making products that are so good that people seek them out and ask for them by name and build direct relationships and daily habits with them.”

“We’ve been very, very focused on two things, and I would say both are going well. One is getting our news product and the rest of the portfolio to drive very strong enterprise subscriber engagement. That is such an important part of the model, and that’s really working. And then secondly, and this is kind of a newer focus this year, we have been intently focused on getting the lifestyle products to begin to be more powerful funnels for the bundle.”

The paper is also convinced it will be able to keep generating more and more revenue from its subscribers. 

“As we just keep adding value into the products we’re confident in our ability to use the lever of continually raising prices,” William Bardeen, executive vice president and chief financial officer of the NYT, said on the same call.

AMO’s Take

The Athletic is, on paper, no longer a drag on The New York Times’ financials. When it was acquired in January 2022, we questioned the purchase price. “I fundamentally believe The New York Times dramatically overpaid. There were no buyers for this business at this price. The gambling companies who are in an arms race for users decided against playing. All the other media conglomerates have their own sports assets. At $550 million, who was the buyer?”

And when you add in the operating losses up to Q2 2024, it had spent another $75 million supporting this business. However, that’s no longer the case. Reaching breakeven and profitability on an adjusted operating basis is an important step for The Athletic.

Naturally, The Athletic doesn’t operate in a silo and so its contribution to the business’ overall growth in bundled subscriptions can’t be discounted. And this was, ultimately, the reason The New York Times bought The Athletic. There were few large-scale subscription businesses at the time and NYT believed this would drive more growth in bundled subscriptions. If we look at the data, that thesis has been proven true. 

Graduating subscribers from a single product—typically news—to a bundle has been a critical part of growing revenue. It would be a safe assumption that the 180,000 subscriber drop in News accounts for a majority of the 290,000 Bundle subscriber growth in the quarter.

The sports feature is obviously playing a major part: the Digital-Only Subs segment including The Athletic is rising in near-parallel to the Bundle and Multiproduct line. And so, from purely this perspective, the Times’ thesis is right.

What remains a concern is the very slow growth in digital-only ARPU. 

There are two ways to interpret this. 

The first is that single-product subscriptions growth—Wirecutter, Cooking, Games and the Athletic—is strong and the Times isn’t in a rush to get them to pay more. The marginal cost to support one of these subscriptions is effectively zero, so it can be patient in slowly increasing the price on these subscribers. 

The second is that the Times can’t graduate these folks to a higher price in sufficient numbers. If the majority of the growth of the Bundle offering comes either from News-only folks upgrading (which is likely 60%+ of the growth) and then the rest is coming from new sign ups, how many are coming from Single Product? It’s impossible to say, but I’d wager the number is not high. 

If this second scenario plays out and a larger percentage of new growth comes from these lower priced subscriptions, we will start to see revenue growth slow over the coming years. It’s not a problem for the Times now, but as it pivots to being seen as more than simply a news entity, it may need to get creative with its bundle offerings. Perhaps it’ll need to introduce a Lifestyle offering that is priced lower than All Access, but higher than any single subscription offering. The risk of this is that people might opt to downgrade from All Access.

Whatever the case, the Times continues to prove that it can grow its business. And The Athletic is finally not a drag on its financials. While the price was still too much, at least it won’t continue costing more.