(Bloomberg) -- Since its debut in 2016, The Athletic has been heralded as a model for how sports journalism can survive on subscription revenue alone. Its founders now realize that only goes so far. 

“When everything is paywalled, you’re limiting the audience you can reach every single day,” co-founder Alex Mather said in an interview last week. “For us to reach 5 million or 10 million subscribers, we’re going to have to reach more sports fans, give them a taste of our product, find ways to bring then into our universe and engage them and hopefully get them to become a paid subscriber.”

The Athletic, which currently has 1.2 million subscribers, is looking for new ways to keep growing in a rapidly evolving sports media landscape. Following the legalization of sports betting in the U.S., a number of aggressive sports gambling companies are pumping advertising dollars into the industry while also building media operations of their own. At the same time, the hunt for paying digital subscribers has grown even more fierce online, with everyone from newsletter upstarts like Substack Inc. to established incumbents like The Washington Post to newcomers like Defector Media, a sport and culture outlet started by former Deadspin employees, constantly beseeching readers to pay up for access to their content.

Last month, amid the crush of new competition, Jacob Donnelly, an employee at the newsletter company Morning Brew who writes about  digital media, noted that The Athletic’s growth appears to have “slowed quite considerably and it is churning subscribers almost as quickly as it is adding new ones.”

“These next few months are critical for The Athletic,” Donnelly said.

Mather says The Athletic’s subscriber base continues to grow each month, and its audience has bounced back this year thanks to the return of live sports, following shutdowns early in the pandemic.  

The San Francisco-based company, which is unprofitable and under growing pressure from investors to deliver a return, is currently exploring a sale, seeking a price of $600 million to $800 million, according to two people familiar with the matter. The New York Times did not reach a deal with the startup recently after crunching the numbers and assessing the value of The Athletic at less than $500 million, said the people, who asked not to be identified discussing private deliberations. Another reported suitor, the sports-betting company FanDuel, has also said it isn’t interested. (Disclosure: Bloomberg News previously had a subscription partnership with The Athletic, which is no longer active). 

To date, The Athletic has raised nearly $140 million from a range of investors, including Comcast Ventures, Waverley Capital and Laurene Powell Jobs’ Emerson Collective. In October, The Information reported that The Athletic has enough cash to cover its needs for about the next eight months.

Mather declined to comment on the sale process and said his company is “well capitalized.”

“We learned very quickly that folks tend to listen to their podcasts in specific apps like Spotify or Apple.”

Mather and Adam Hansmann founded The Athletic in 2015 after working together at Strava, a fitness app for endurance athletes. They hired dozens of well-known sportswriters, often from local newspapers, offering a lifeline to veteran journalists at a time when most newsrooms were shrinking. From the start, The Athletic aimed to serve the sports-hungry readers who felt poorly served by shrinking local newspapers and national magazines like Sports Illustrated. 

By the fall of 2018, with the site’s core coverage of regional and national sports gaining traction, the company revealed plans to expand its content beyond the written word. In November 2018, it hired three veteran TV journalists, led by former “60 Minutes” correspondent Armen Keteyian, to produce short documentaries. Keteyian’s team went on to make numerous videos, including a multipart series on child sex abuse in sports and a profile of NBA star Shaquille O’Neal. 

But the videos, which initially were behind the website’s paywall, failed to gain much traction, according to a person familiar with the matter. The number of subscribers each one generated — a key metric for The Athletic — often measured in the hundreds, according to the person, not enough to justify the expense. Each video cost roughly $50,000 to produce, including paying sports leagues to license game footage, another person said. In early 2020, about a year after the first video was published, Keteyian and his two producers left The Athletic. The company’s video strategy now focuses on publishing on YouTube. 

“At that time in our journey we couldn’t provide the audience big enough to support the economics of it,” Mather said. 

Around the same time that The Athletic began producing videos, it also jumped into podcasts. In the spring of 2019, it debuted more than 20 podcasts, including shows focused on specific teams.

Initially, the podcasts were ad-free and only available to subscribers. Locked behind the paywall, some shows got as little as a few hundred listeners per episode, while others got between 10,000 and 14,000 listeners and larger shows drew an audience of close to 50,000, one person said. The Athletic later made them free and started to sell podcasting ads.

“We learned very quickly that folks tend to listen to their podcasts in specific apps like Spotify or Apple,” Mather said. 

On a day last week, none of The Athletic’s shows rank among the top 25 sports podcasts, according to PodCharts. Meanwhile, three competitors — ESPN, The Ringer and Barstool Sports — had more than one show in the top 25. The Athletic has recently dropped several podcasts dedicated to baseball teams, including the Philadelphia Phillies, Chicago White Sox, Los Angeles Dodgers and Houston Astros.  

Mather says that while The Athletic’s podcasts aren’t at the top of the charts, it has “a top three show in every sports category.” He said it often adjusts its lineup, including canceling shows, based on what’s working. Its podcast business has grown to 115 shows and gets more than 10 million downloads a month. Some of the most popular shows are focused on soccer in the U.K., Mather said. Podcasts aren’t just a source of revenue but a way to promote articles behind the paywall and persuade people to subscribe, he said.

“We learned very quickly that folks tend to listen to their podcasts in specific apps like Spotify or Apple.”

In 2020, the company generated $41 million in revenue, and is on pace for $77 million this year, according to The Information. A company spokesperson said The Athletic expects to generate more than $100 million in revenue in 2022. That growth will come from advertising on podcasts and newsletters as well as subscriptions.

In June of 2020 after the pandemic brought live sports to a standstill, The Athletic laid off 46 employees, or about 8% of its staff, and implemented companywide paycuts. The Athletic also scaled back its coverage in some areas like boxing and mixed martial arts, though it still plans to cover news and events in that space. 

Matt Lindsay, president of the consulting firm Mather Economics (no relation to The Athletic co-founder), said subscription-focused publications like The Athletic often run into obstacles when they get to about 1 million customers — a milestone at which they typically see about 20% of their audience cancel every year.

“For any given product there’s a saturation point,” Lindsay said. “What tends to happen is publishers start testing complementary products to grow their targeted audience.”

Mather said that with the sports world back in action following the lockdowns, The Athletic is once again poised to grow. 

“We have been ambitious from day one, and we continue to be ambitious because we continue to believe in the opportunity in front of us,” Mather said. “The only thing that has been able to pull us down is a once-in-a-century sports stoppage. We continue to believe there are many more millions of subscribers to get over the coming years.”

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