The New York Times to acquire The Athletic for $550 million in cash

The New York Times has agreed to acquire The Athletic in an all-cash deal valuing the sports media startup at $550 million, the company said Thursday.

Why it matters: It's a huge victory for The Athletic, which had been shopping a deal for months. The subscription-based sports media company was under pressure to sell in light of how much cash it's lost over the past two years.

• The Times said it expects The Athletic to be "immediately accretive to The New York Times Company’s revenue growth rate," but that it "expects the acquisition will be dilutive to The New York Times Company’s operating profit for approximately three years, as it scales subscriptions and builds an advertising business, and accretive thereafter."

Details: The Athletic co-founders Alex Mather and Adam Hansmann will stay on after the deal, per a statement. Mather will be The Athletic’s general manager and co-president and Hansmann with be chief operating officer and co-president.

• Mather and Hansmann will report to David Perpich, Head of Standalone Products at The Times, who will become publisher of The Athletic. Perpich currently manages The Times ancillary subscription products, like Wirecutter, Games and Cooking.
• The Athletic will be a subsidiary of The Times and operate separately.
• Sources told Axios in May that The Times approached The Athletic following a report about a potential deal between The Athletic and Axios in March.
• The Information first reported about the final deal price.

Catch up quick: The Athletic was founded six years ago and has raised around $140 million to date. It last raised $50 million in January of 2020, putting its latest valuation at around $500 million.

• The company has hired hundreds of journalists across the U.S. and the U.K. to produce quality long-form journalism about sports. In recent months, it's begun experimenting with advertising and investing more in podcasts.
• Like most digital media companies, The Athletic laid off staffers early on during the pandemic but has picked up on hiring since. The company employs about 600 people full time, including around 400 editorial staffers.

Be smart: The deal makes sense for The Times, which is sitting on $1 billion in cash and is looking to increase its subscriber numbers.

• The company has 8.4 million total subscriptions, with 7.6 million that are digital-only.

• "Strategically, we believe this acquisition will accelerate our ability to scale and deepen subscriber relationships," New York Times CEO Meredith Kopit Levien said in a statement announcing the deal.
• The Times has said that it wants to reach 10 million paid digital-only subscribers by 2025. With The Athletic added to its subscription portfolio, it's well on its way to hitting that goals years ahead of schedule.
• "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."

The big picture: Consolidation has been rampant in the digital media space in the past few months. Vox Media acquired Group Nine Media. BuzzFeed acquired Complex and went public via a SPAC, months after acquiring HuffPost. IAC's Dotdash acquired Meredith last month.

What to watch: The New York Times has a mixed track record when it comes to deals.

• It bought the Boston Globe for $1.1 billion in 1993, only to sell it for around $70 million in 2013. It bought About.com in 2005 for $410 million in cash and sold it to Barry Diller's IAC for about $300 million in cash seven years later.
• Its more recent acquisitions, like Audm, Serial Productions, HelloSociety, Fake Love and Wirecutter, have been much smaller in scope.