With subscriptions seemingly at a standstill and renewals wavering, sports website The Athletic has engaged Axios on discussions of a possible merger, as first reported by The Wall Street Journal.
No one was sure how things would go for The Athletic when it launched a little more than five years ago. The idea was sports news, at a price.
That wasn't necessarily a novel idea. Some sites have been charging for years. But The Athletic was different in that it puffed out its chest and insisted it would hire some of the best sportswriters in the nation, localize coverage and reinvent the daily sports section for the modern era, all while going ad-free.
On each of those fronts, it has succeeded.
But industry sources tell OutKick that over the past year and a half, subscriptions to The Athletic have been lagging and renewals have been worse. "If you don't have advertising, renewals are where you make your money," one source said.
Insiders strongly believe The Athletic hasn't yet made enough money via subscriptions and renewals to come close to covering the costs of writer salaries and travel expenses.
"The majority of their cash flow is the result of investors, and at some point, you need to answer to them," another source said.
With a shaky subscription base, The Athletic has been looking to sell or merge for at least a year, maybe two, sources said, indicating the pandemic didn't help matters.
Per The Wall Street Journal, The Athletic and Axios are still in the early stages of merger talks, and there is no timeframe for when a deal may happen. Talks could even fall apart, leaving The Athletic in search of another partner. Axios is a news startup.
One of the ideas being discussed involves building a larger online publishing brand, possibly including "going public through a blank-check firm," The Wall Street Journal reported. They may also try to find more investors or perhaps bring in additional publishers, especially those who produce content for which consumers would be willing to pay.
If The Athletic and Axios do indeed go through with a merger, it remains unclear who would lead the company or what it would be called.
Bottom line: The Athletic may not feel desperate yet, but the fact that it's seeking a merger is evidence that it is standing on less than solid ground.