Athletic, Axios talking merger?

The puzzles and recipes apps are a significant source of revenue. Podcasts have been also. But don't forget that the NY Times grew digital subscriptions from somewhere around 2 million when Trump took office to more than 6.5 million when he left. I suspect they have hit a wall on that, and know it is done, which is why they would be looking to find new things.

 

Upfront costs would have no bearing on the current profitability.

I'd argue that the truest evidence that the Athletic is worth the $5/month price, as you put it, would be if the number of subscribers it attracts at that price resulted in the company turning a profit.

As for the $500 million valuation being nothing to sneeze at, as you put it, that has nothing to do with the actual business model. If I convince you that the gallon of milk in my fridge is worth $1,000 and you buy it from me for that, it simply means that you overpaid for a gallon of milk. The milk itself might be perfectly fine, but its more objective value isn't dependent on how much you were willing to pay for it. In an environment that has been largely driven by cheap money, an insane amount of liquidity, and the greater fool theory (that there will always be a fool willing to pay more than you paid), it's worth asking if that $500 million is where someone gets left holding the bag.

Of course, just as I type that, we'll get an announcement that the NY Times paid more than that for the company. But valuations right now have as much meaning as the valuation someone was putting on pets.com had in 1999.

 

The thing they don't show you on Shark Tank is how many of those companies go out of business because they never find a way to grow and give a return on the investment.

If only running a business was as simple as "I am going to raise prices because I think our product is great."

The typical subscriber to The Athletic is going to have a fixed amount of discretionary income every month. ... and a lot of things competing for it. That might include a Netflix or Hulu subscription, a Peloton subscription, X number of Starbucks frappucinos. ... or any other number of other things. There may be a really large pool of sports fans who would love a subscription to the Athletic. But if the Athletic falls on the fringe of the list of things competing for their discretionary income (because people have to make the choices), the pricing power you think is a given doesn't exist. That may be what they are running into.