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Adam Hansmann (left) and Alex Mather (right), co-founders of The Athletic. Photo: Steph Gray, courtesy of The Athletic

The Athletic is laying off nearly 8% of staff, 46 people, according to an internal memo obtained by Axios.

Why it matters: It's the latest media company that's been been forced to take drastic measures to survive the economic fallout from the coronavirus. Like many sports media outlets, The Athletic has been particularly impacted by the loss of live sports.

  • A spokesperson confirmed the cuts to Axios: "With sports on pause due to the ongoing pandemic, today we made the difficult decision to reduce the size of our staff in select coverage areas, affecting approximately eight percent of employees."
  • "While we are hopeful that sports will soon resume, this measure was necessary to ensure that the company can weather the uncertainty that lies ahead. Overall, our subscriber base remains steady and we are proud of our newsroom's continuing coverage of the return of sports."

In a memo to the company, co-founder and CEO Alex Mather said that in addition to the layoffs, The Athletic will be implementing pay cuts across the staff, with most people being asked to take a 10% pay reduction for the rest of the year.

  • "Those making greater than $150,000 USD will take a progressively higher cut, including continued reductions for execs and founders. The adjustments will go in place as of the second pay cycle in June."
  • Those that are being laid off will receive four weeks of salary, pay out of all unused PTO, and health insurance premiums including health, dental and vision fully paid by the company until the end of 2020, per the memo.
  • They will also receive full acceleration of all unvested options and an extended exercise window for one year. Employees can keep all company equipment including laptops.
  • Mather notes that the layoffs and pay cuts are a last resort and that the company did try to control burn "through reduced travel, freelance cutbacks, extreme cutbacks on marketing spend, and deep pay cuts for our entire HQ leadership team."

Be smart: The Athletic has been considered one of the most successful modern subscription-based digital media companies.

  • Mather says that while the company's subscriber base is still growing, "new subscriber growth was 20-30% down and podcast advertising revenue was severely impacted."
  • Axios reported a year ago that the company was launching a multi-million dollar podcasting business.
  • In January, the company raised $50 million, bringing its total amount raised to $139.5 million, and valuing it at roughly $500 million after the new raise, according to sources familiar with the deal.

The memo reflects regret from the company's founders, Mather and president Adam Hansmann, who were expecting the company to be profitable this year.

  • Mather says the founders assessed every part of the business with two criteria in mind: 1) Whether that line of business could drive subscriber growth and engagement; and 2) Whether it could be sustainable on its own long-term.
  • "This is a dark day for the company at one of the darkest moments in recent memory for most of us in the country, in the world. Not a single person leaving is at fault. They did nothing wrong .... Adam and I made every decision and we are fully responsible for being in this position today."
  • He noted that "diversity & inclusion are really important to us as a company, and we took great care in making these extremely tough decisions."

The big picture: The pandemic is forcing dozens of major media companies, including newer, digitally-native media companies, to carry out layoffs and pay cuts.

  • The Athletic joins The Atlantic, The Hollywood Reporter, Fortune, Billboard, The Economist Group, Group Nine Media, BuzzFeed News, Vox Media, Bustle Digital Group, Cheddar, Maven Media, G/O Media, Protocol and others who have resorted to layoffs and furloughs in the past few months.

What's next: Mather says that the company is preparing "for the strangest six months in sports history," noting shortened seasons, play-in tournaments, round-robins, no fans, insanely short off-seasons, hub cities, and bubble cities.

  • "We have some major product plans on deck: products that will spotlight the incredible work you produce, products that will hopefully make our subscribers really happy and products that will help us grow faster."
  • The Information recently reported that the company is looking at striking deals with online sports betting companies for additional revenue.

Go deeper

United Airlines halves planned layoffs to 16,370

Photo: John Nacion/SOPA Images/LightRocket via Getty Images

United Airlines said Wednesday it expects to cut 16,370 jobs on Oct. 1, far fewer than the 36,000 it warned of two months ago, as suspense builds over whether Congress will extend relief for the struggling airline industry.

Between the lines: United was able to limit the layoffs by cutting costs, raising debt and encouraging tens of thousands of employees to participate in a variety of voluntary leave, early retirement and reduced hours programs.

3 mins ago - World

Ukraine president to Biden: "There are no minor incursions"

Photo: Doug Mills-Pool/Getty Images

Ukrainian President Volodymyr Zelensky responded on Thursday to President Biden's suggestion that a "minor incursion" by Russia may not draw the same response as a large invasion, which some in Kyiv saw as inviting Russian aggression.

What he's saying: "We want to remind the great powers that there are no minor incursions and small nations. Just as there are no minor casualties and little grief from the loss of loved ones. I say this as the President of a great power," Zelensky tweeted.

14 mins ago - Health

The drugs pushing prescription prices down for Medicare patients

Illustration: Annelise Capossela/Axios

Although net prices of brand-name drugs have increased significantly over the last decade, the savings produced by generics have actually driven average prescription prices down in Medicare's pharmacy benefit and Medicaid, according to a new analysis by the Congressional Budget Office.

Why it matters: The analysis reiterates that the generic market is largely working as intended.