The New York Times Subscription Strategy Is No Longer About The New York Times
The deal to buy The Athletic seems to signal a significant change in the company’s thinking about who it thinks its future subscription customers will be
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One of the nice things about covering The New York Times is that you can usually learn what they’re thinking by simply listening to what its leaders say. Guile is not one of The Times’s core competencies, even if infighting and scheming are. When The New York Times Co. announced on January 6 that it is acquiring The Athletic for $550 million in cash — the third-largest acquisition in the company’s history — its stock price jumped nearly 5 percent, adding $362 million to its market cap. You could almost hear an ebullient business development team effuse: “This deal is paying for itself!” Shortly after the markets closed trading for the day, The Times hosted a call for Wall Street analysts with CEO Meredith Kopit Levien who explained that The Athletic “will be run independent of The New York Times newsroom” and offered as “a standalone product at first” with plans to add it to its all-you-can-eat digital bundle that currently includes its core news report, Cooking and Games apps, and the Wirecutter reviews site. The rationale for the deal, Levien explained, is to apply the expertise The Times has gained over the last decade or so in crafting a large digital subscription business to The Athletic. “To put a finer point on all of this,” she said, “we are buying a business whose next phase of growth depends on things we know how to do,” which she specified as knowing how to “run a journalism organization,” “drive a large and deeply engaged audience [who] ultimately pay and stay,” and “build a market-leading digital ad business.” When it was time for the analysts to ask questions, they repeatedly probed for the typical ways that businesses improve the bottom lines of recently acquired properties (staff redundancies, cost overlaps, etc.), but the answers Levien gave mainly centered on the expertise The Times has in selling digital subscriptions and ads.
One of the sharpest questions came at the end of the call from Kannan Venkateshwar, who tracks media companies for Barclays: “When we think about the price you’re paying, why is this the right deal, instead of you trying to do this organically?” As Venkateshwar pointed out, The Times was paying a price that translates to about $1 million per journalist in The Athletic’s newsroom or $460 for each of its subscribers. As he suggested, if there is such a big business opportunity in sports coverage and the main asset The Times is bringing to the deal is its cash and know-how, why couldn’t The Times just invest $600-plus million (the $550 million purchase price plus the $55 million it expects The Athletic to lose this year before becoming profitable, it hopes, in 2025) in building out its own sports section — which has cut back significantly on daily game coverage to focus on broader themes like the role of sports in culture and business — or launch an entirely new sports publication? (From what I’ve been told, it’s also a question that struck many of the editors and reporters on its sports desk, who the day after The Athletic deal was announced vented their hurt feelings.) In her answer, Levien stuck with her theme for the call: “The things we know how to do will help us help The Athletic get the whole thing there,” she said. “And we’re quite confident about that.”
The day after the investor call, on January 7, the New York Times Co. stock price dropped more than 10 percent, shaving nearly $850 million off its market cap.
When I was reporting a feature for Wired five years ago about The Times’s digital strategy, one of the most challenging questions to get a straight answer to was: how many subscribers does The New York Times think they can get? (Executive editor Dean Baquet’s answer back then: “many, many, many, many people—millions of people all around the world.”) In 2017, after a surge of new subscribers following the election of Donald Trump pushed the total past 2 million, Levien’s predecessor as CEO, Mark Thompson, started setting a new target of 10 million. When Levien was named CEO in 2020 — by which time The Times had begun to claim more than 5 million digital subscribers by rolling up the Cooking and Games apps subscribers with its news product — she began talking about Times internal research concluding that there are 100 million English speakers who are willing to pay for news. On the investor call, Levien said, “We are now in pursuit of a goal meaningfully larger than the 10 million total subscription target we set for ourselves in early 2019.”
But this deal seems to have signaled a significant change in the company’s thinking: It may still be confident of adding tens of millions more digital subscribers, but it doesn’t seem to expect them to be New York Times subscribers. Their new goal is a “bundle” of products. As Levien said, “We’re acquiring The Athletic to continue to build out our portfolio of products that meet more of our audience’s everyday needs.”
In some ways, this is a return to an older era for the New York Times Co., which was long a holding company of sorts before its near-death experience after the 2008 financial crisis. Twenty years ago, to pull an annual report at random, the various entities under its corporate umbrella included the namesake paper and 18 other newspapers (ranging from The Boston Globe to the Sarasota Herald-Tribune to the International Herald Tribune), eight local TV stations (including WNEP-TV in Scranton, Pa., and KFSM-TV in Fort Smith, Ark.), two radio stations, plus stakes in a Canadian newsprint company, the Discovery Times Channel cable station, and the Boston Red Sox. While those properties might have trumpeted the prestige of their affiliation with The Times if they thought it would have helped them in their local markets, they were decidedly not The New York Times. They have all since been sold, mainly in service of raising cash for the financial maneuvers that saved the company.
The executive engineering the new accumulation of digital properties is David Perpich, a member of the Sulzberger family that owns The Times, who is the head of the standalone products group, emphasis on standalone. Credited with the successful roll-out of the Times paywall in 2011, which is the basis of its current digital subscription strategy, Perpich was briefly named the president and general manager of Wirecutter in 2017. He was so fixated on it being a “standalone” business that he mulled moving the staff into entirely different office space in Brooklyn’s Industry City complex. The businesses he oversees — including now, The Athletic — are being built to be independent of the brand of the news publication.
The role of The New York Times brand in this strategy has become about brute marketing force. “One of the things we’re so excited about,” Levien said on the investor call, “is just our ability to cross-promote, from our newest products to our growing portfolio of other market-leading products.” She pointed to how the nytimes.com homepage now features recommendations from Wirecutter, recipes from Cooking, puzzles from Games, and eventually, one imagines, stories from The Athletic. “The way we talk about it internally,” she said, “is that core news product was such a huge audience … kinda like the sun in our solar system, it gives life to the other planets.”
But this interstellar view of The Times also seems to be a tacit admission of the identity crisis currently confronting the company. The 2014 Innovation report, which laid out the course for its digital transformation, set “Growing Our Audience” as the top goal for the Times newsroom. But it framed that task as deploying the proper digital tactics to find more readers for its existing journalism. What it didn’t propose was expanding its journalism to appeal to more and different kinds of readers. While digital distribution has vastly expanded the size of The Times’s audience, it still largely resembles the stereotypes of those newsprint days: whiter, richer, politically liberal but culturally conservative, and attuned to the coastal elite. And in embracing a strategy of building a “bundle” of other properties that can reach different kinds of audiences, as it hopes The Athletic can, it’s the brand of The New York Times that may be the biggest obstacle in its mission to conquer new planets.
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