Amazon in an athletic enthusiastic name before being sold to the New York Times

Date:

Athletic co-founders Adam Hansman and Alex Mother

Source: Athletic

September 2020, athletic Announced that the number of subscribers has reached 1 million, And bright co-founder Alex Mother talked about what he needed to sell.

“We’re just not thinking about exits, and we don’t know the benefits here,” Mother said at the time in an interview with CNBC. “Few companies are doing what we are doing. The New York Times is the tip of a spear and they are growing faster than ever. We know what our ceiling is. I don’t know. Our ceiling, then it’s time for [fellow co-founder Adam Hansmann] And I chat. But we are not close to chatting. “

By March 2021, six months later, athletics Negotiations have begun to merge with Axios. Two months later, the New York Times We have begun negotiations to purchase a subscription-based sports website. It launched a broader sales process and led to interest from suitors, including: Amazon, Condé Nast, Draft Kings And private equity farm TPG Capital, CNBC learned.

I’m not sure exactly why Mother and Hansman changed their minds so dramatically, but there’s one thing that’s clear. That was the company needed a new capital injection.

Athletic Burned about $ 100 million As The Information first reported, it generated only $ 73 million in revenue over the same period between 2019 and 2020.Athletic Never made a profit..

Athletic considered raising more money, but the cost of raising money and further dilution to the founders and other investors pushed Hansman and Mother to sell.

Still, some investors and advisors close to the company personally urged Mother and Hansman not to sell. Some of this astonishment this week Venture capital powerhouse capital sent a letter to a limited liability company Admit that he didn’t want to sell the sports site.

“We believe it’s still worth unlocking the athletic platform, but now the New York Times seems to be built on that foundation,” Powerhouse said. I wrote in a memo First reported by Axios and confirmed by CNBC.

Below is a description of the athletic route to sale with the help of those who are familiar with the problem. An athletic spokesman declined to comment.

Sale decision

Athletic remained the focus of the sport, but Mother and Hansman had other plans.In the early days of athletics, they Nate Silver 538.com Combine sports and politics to play with ideas for partnerships or mergers American test kitchenPeople who put food and sports together under one roof and asked not to name them because the discussion was private said.

Then, in March 2021, Axios approached athletics with the idea of ​​a merger, according to people familiar with the matter. Two relatively new journalism companies admire each other’s work and Expanded local coverage..

Axios was a front-end company with athletics folded down, one said. Mother and Hansman were interested in the idea of ​​whether the merged company could be published through a special purpose company (SPAC). However, sources say Jim VandeHei, co-founder and CEO of Axios, was skeptical of the SPAC. Eventually, both sides decided to leave.

Once an interest in an athletic merger Became public knowledge, The New York Times approached athletics to buy the company. But when they couldn’t reach an agreement on value, those discussions also broke down. The New York Times provided about $ 500 million, according to people familiar with the matter.Athletic Last raised in January 2020 with a valuation of $ 530 million, And some people close to athletics, such as investors and advisors, felt that the New York Times underestimated the company.

Athletic has decided to set up Liontree, a boutique media M & A bank, to assess potential sales options, while considering alternative financing. Lion Tree gave an athletic presentation, estimating that buyers may be willing to pay about $ 600 million for “less than $ 700 million,” one said.

Amazon, With Condé Nast Draft Kings According to people familiar with the matter, they showed interest. Amazon’s interest has partially arisen from recent pushes into broadcast games, including “Thursday Night Football,” one said. Having a high-traffic sports landing page to promote and analyze the game was considered to provide synergies with live game broadcasts. Amazon, Condé Nast, and DraftKings spokespersons did not respond to requests for comment.

After kicking the tires, those companies didn’t show up as serious buyers, three people said. Instead, people said the fourth party, private equity firm TPG, became Times’ biggest rival in The Athletic sweepstakes. But the owners of the buyout company didn’t seem to be endorsed by website employees whose work could be threatened, the two people said. A TPG spokesman declined to comment.

The New York Times was initially uninvited to participate in the new auction, given the end of previous negotiations. However, CEO Meredith Levien decided to return to the table. The deal was closed, sources said, as it became clear that the Times would only need to raise the initial offer by about 10%. Times executives felt it made sense to increase the offer, as athletics had invested another $ 25 million in the business since the first offer, one said.

Given the company’s strong journalistic reputation and the potentially unattractive terms of raising more capital, Hansman and Mother agreed to sell.

Some observers near the company consider the sale apparently successful. This is one of the most profitable exits in the history of digital media. The two founders founded the company from scratch, turning ideas (national subscription sports journalism products focused on detailed local reporting and analysis) into $ 550 million entities.Athletic was sold at “10 times the bubbling price / multiple of the revenue valuation” According to research firm CB Insights The company emphasized that its annual sales in 2020 will be less than $ 50 million.

Proponents of The Times purchases say Gray Lady is now good at expanding its digital subscriber base and is the perfect buyer for a sports site that boasts quality journalism. In addition, both entities want to expand their global footprint.

Serious sports journalists have also found a home in the Times, which takes pride in its professional reputation for excellence. Athletic also wants to expand into podcasts and digital video, pushing the boundaries in digital format. This shows that the parent company is a leader in journalism.

But others see it differently. Some investors told Mother and Hansman that athletics could have achieved a bigger vision, sources said. They felt they had a promise that it was a multi-billion dollar company.

As an independently operated entity within the New York Times, that may still be the case. But if that happens, these critics of the deal say it will be the New York Times shareholders who realize the benefits.

Amazon in an athletic enthusiastic name before being sold to the New York Times

Source link Amazon in an athletic enthusiastic name before being sold to the New York Times

The post Amazon in an athletic enthusiastic name before being sold to the New York Times appeared first on Eminetra.

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