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Athletic, Axios talking merger?

Discussion in 'Journalism topics only' started by FileNotFound, Mar 26, 2021.

  1. FileNotFound

    FileNotFound Well-Known Member

    This likely is paywalled, but if you have a WSJ sub:

    WSJ News Exclusive | Media Startups Axios and the Athletic Discuss Merger, Eyeing SPAC Deal

    The nut: Axios (under CEO Jim VandeHei) was approached recently by Athletic CEO Alex Mather about a plan to create a larger premium digital-media portfolio company, with a long-term goal of going public.

    Axios has been also gobbling up small local digital-media startups, in places such as Charlotte, Des Moines, Minneapolis and Tampa.
  2. FileNotFound

    FileNotFound Well-Known Member

    Put another way:

    Adam94 and garrow like this.
  3. garrow

    garrow Well-Known Member

  4. The Big Ragu

    The Big Ragu Moderator Staff Member

    Well, that's dissapointing.

    Not so much because it says anything about the viability of The Athletic. But the whole SPAC craze is gimmicky crap, in which everyone and their uncle is taking advantage of a massive asset bubble to cash out at ridiculous valuations.

    The major issue is that once Mather and Hansmann walk away ridiculously rich men if a SPAC deal happens, you then are going to have a publicly-traded company at a valuation it is never going to be able to justify in this lifetime. Which will put all kinds of pressures on the company that are likely going to be contrary to its long-term health. At first, it will feel awash in money to try to grow and expand. But unless it can actually show profitability and a return on all of that capital, it will likely get the company the "need to cut costs" treatment down the road.

    So far The Athletic has ridden a lot of VC money to get it to where it is. It isn't profitable, and in the grand scheme of things, its revenue is piddly. At the same time, it has attracted a million or so subscriptions at the price point they are offering it at, offering a tease of there being something viable.

    In the bubble environment of the last 10 years, it has been relatively easy to raise capital or borrow insane amounts of money and live off of it. The Athletic hasn't been the most ridiculous example of that, but without money being so loose, it would never have been valued anywhere near where VC money has had it.

    With the monetary madness we embarked on when the pandemic hit, it has now ushered in these ridiculous SPAC deals. Businesses that don't earn a thing, that are massively in debt, etc. are being given capital at even batshit crazier valuations. There is a lot of survival of the unfittest going on. When the craziness ends, a lot of these companies are going to end up going bust. And the ones that are actually viable (which I hope includes The Athletic) are going to be operating in a much tighter environment in which every penny matters, especially given the valuations they have fallen from.

    It's unrealistic for me to have expected this. There is too much money to be had from VC and from a SPAC / going public deal. But the best thing for the Athletic would have been to raise much less money and try to grow slowly, proving the concept along the way and growing organically from cash the business generates. When you try to grow quickly -- and worse, if you overestimate how big the business can be -- you put pressure on the business that has the potential to sink it, because the capital or borrowed money you raised doesn't offer the same patience.
    Last edited: Mar 26, 2021
  5. MeanGreenATO

    MeanGreenATO Active Member

    Yeah, this doesn't seem good for The Athletic at all. Could be a sign the initial backers may be looking for someone else to help foot a venture that still isn't profitable. The fact they're still offering flash sales should be troubling. Their sub numbers seem like all sizzle so far.
  6. Severian

    Severian Well-Known Member

    Possible outcome:

    1. Axios brings in The Athletic
    2. Lays off low-performing writers in regions no one in the U.S. cares about
    3. Athletic rebrands to Axios Sports
    4. Future coverage is bite-size recaps for games and sports news
    5. Axios hires people from other sports pubs in hopes of competing with Deadspin Defector
  7. DanOregon

    DanOregon Well-Known Member

    Why it matters: There seem to be fewer and fewer places to publish long-form sportswriting. Even Sports Illustrated, which grew famous for 10-12 page deep-dives on subjects and personalities now rarely goes past six given its ever shrinking profile - both in print and in the public consciousness. ESPN the Magazine is gone and even the annual anthology showcasing the Best Sports Writing was discontinued.
  8. The Big Ragu

    The Big Ragu Moderator Staff Member

    This is me spitballing, because I don't know the operations of either of their businesses well. But intuitively, the reason to combine wouldn't be to rename or rebrand anything. They both do online journalism, but that is about where the similarities end. It would be to get scale. How that scale works -- aside from the obvious technology, back office economies of scale -- is always more nebulous than the talk of it sounds when companies talk merger. Which is why this is mostly about the two of them together being big enough to create hype around a SPAC.

    I feel bad being cynical about it, but the reality is they have each gone to the venture capital market multiple times and are past their Series C funding rounds. At the valuations they were getting, the ability to keep raising money that way has dried up. I believe Axios even had to go to the debt markets because of that. At this point, if they need fresh money, the public markets are what is left for them, and right now a SPAC is much easier than doing an IPO and will likely get you a crazy valuation in the runaway speculative environment we are in. I am sure the calculation is that doing that alone will get The Athletic an X valuation, whereas adding Axios to the mix will get a multiple of X.
    Last edited: Mar 26, 2021
  9. BYH 2: Electric Boogaloo

    BYH 2: Electric Boogaloo Well-Known Member

    Glenn Stout actually found a new home for the anthology at Triumph. He also says he'll step away after serving a few years as an advisor to an editorial board that will decide the book's contents, though that sounds about as likely as man walking on Neptune.

  10. ChadFelter

    ChadFelter Member

    I've seen a lot of overreactions to this headline. Read the article and it's really not that big of a deal. We've seen products be bundled up before, that's nothing new. From a consumer perspective, it just adds value to each subscription. Only downside from a job perspective could be some consolidation of certain functions, which is smart business but sucks for the few people let go.
  11. Sam Mills 51

    Sam Mills 51 Well-Known Member

    Not overreacting. Companies buying other companies aren't good for employees. And if you haven't noticed, media outlets bought and consolidated have been beneficial for neither journalism nor journalists.

    If we don't react on this board, then where do you think we should do so?
    FileNotFound likes this.
  12. ChadFelter

    ChadFelter Member

    Where did I say don't react on this board? All I said was I've seen a lot of overreactions to this headline. I didn't say the overreactions were all on this board or that people shouldn't post here.

    I'm just saying read the article, not just the headline. It doesn't sound like that big of a deal.
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