The Athletic is a bold, brash bet on reader revenue that could hurt the whole industry

For the past few months sports publisher The Athletic has been aggressively hiring UK-based sports journalists and, because journalists can’t resist a good analogy, it’s been compared to aggressive transfer window negotiations. In the past year the media company has been charged with ‘setting off a bomb‘ by purloining the top sports journalists from the BBC, the Times, the Guardian, the Mail, and many others.

Ball’s in their court

It’s an aggressive bet from a media company that sees a future in direct reader revenue and wants to be the biggest sport show in town. On the one hand that’s very heartening – any more evidence that people will pay for journalism online is very welcome. The only problem is that it’s almost certainly going to fail in its stated aims, despite all the hopes to the contrary, and could possibly stunt the chances of other publications as it does so.

As explained in this article from The Drum’s Rebecca Stewart, since its launch three years ago the “ad-free digital sports publisher The Athletic has garnered 500,000 subscribers with a reported 90% retention rate to its website and app and expanded into Canada”. In that time it has attracted almost $90 million in VC capital from, among others, Comcast Ventures and Founders Fund. As a result of that investment, it now operates in over 15 markets across the US and Canada, and plans a launch in the UK with 55 staffers primarily covering the Premiere League, having reportedly ploughed around £10 million into the launch.

Its subscription-based model will apparently cost its readers £9.99, though it will offer a discounted starting package. Considering its stated goal is to have fully one million paying subscribers by the end of the year, it is unsurprising it would offer discounts in service of that goal: the Guardian recently celebrated reaching one million paying supporters after a 3 year campaign, and it has reach and awareness far beyond that of the Athletic (so far).

Effectively, The Athletic’s plan seems to be to throw money at the problem of scale. By hiring some of the most well-known journalists in the UK and spending a fair amount on marketing that on social media, it’s hoping the allure of big names will help convince UK consumer there’s a space in the market for a new, subs-based sports site.

By throwing money at the problem, its founders hope to effectively outlast its competition in local media and become the only game in town. Its CEO Alex Mather told the New York Times: “We will wait every local paper out and let them continuously bleed until we are the last ones standing. We will suck them dry of their best talent at every moment. We will make business extremely difficult for them.” That rhetoric is likely to stick in the craw of journalists in the UK, where the straits of local news led to the formation of the Cairncross review.

However, there are many obstacles in The Athletic’s path to success, not least the fact that doubling its subscriber numbers in less than six months appears to be almost an impossibly tall order. For one thing, the UK market is effectively saturated with national news subscription products already, and some – like The Telegraph – are making sports analysis one of the key selling points for their own subscriptions. The Guardian, too, is well aware of the lucrative nature of sports and is investing a lot of money in covering growth areas, like women’s football, providing free alternatives in addition to those already offered by the BBC and commercial broadcasters.

Per the latest Reuters Institute Digital News Report, even among the relatively low proportion of people who are likely to pay for news online, the average number of digital subscriptions per person is one: “Perhaps more importantly, the average almost never exceeds one, regardless of what group you look at. Even among those who are most interested in news, the wealthiest, or the most educated, most people only pay money to one news organisation.” Perhaps worst of all, the report also found that if people could only choose one subscription product, 7% would choose news and another 7% would choose the sports content itself, suggesting that the proportion of people who would pay for sports news subscription is even smaller still.

The fact The Athletic is placing its chips on the UK market, which is almost certainly about to hit a period of financial instability and has a significant chance of entering recession that will limit its population’s incidental spending, is also a worry.

On the one hand, then, The Athletic’s aggressive move to control a niche is laudable, as it seeks to find a sustainable model for sports news journalism. However, as the economics behind its decision to launch in the UK don’t seem to add up, and its stated aim is to poach from and outlast the other local news outlets that would be its competition, its aggressive stance could end up detracting from the viability of digital news subscription rather than proving that they work.

 


Chris Sutcliffe

enquiries@trippassociates.co.uk

Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work across the media, information, technology, communications and entertainment sectors, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.