By my math, they’ve lost $130M over the past three years. Are their 2022 projections realistic? How do our Kellogg grads feel about their 2022 and 2023 growth rate prospects?
The Athletic is losing money bigly
- Thread starter CatManTrue
- Start date
This reminds me of DeFord trying to pull off the birth of a national sports newspaper called "The National" back in the late 1980s in an attempt to centralize high quality sports journalism. I think it was a daily that brought about a better "The Sporting News". Great articles, but failed and fell way short of circulation numbers.
So sad to see the online version of the same idea fall short. Those are brutal numbers - $80 million of operating expenses historically growing to $110 this year. What in the world are the spending all that $$$ on?!?
This WSJ article says their revenue was $80 million in 2020. I think I'd believe them over right-wing hack Clay Travis whose website is theoretically in direct competition with The Athletic.
with the internet information is cheap...good information not so much....so we consume cheap not so quality information...and good, quality information whether it be news or sports...gets washed down the gutter. and we get the benefits of such beauties as QNON
Bingo. The internet is incredible and the fact that we have so much information literally at our fingertips is an incredible gift. But it's made things very hard for quality journalism. Not only are attention spans lower than ever, and the majority of people are turned off by longer in-depth articles, but most people don't want to pay for content. This means that the free content that is typically worse in every way rises to the top and the good journalism is only consumed by a small number of people...making profits hard to come by for news organizations.
In so many ways that go well beyond this issue, the internet is the best and worst thing to happen to humanity. It really sucks that a great site like The Athletic is just bleeding money when they are clearly the best all around sports journalism site around.
You need a lot more info than 2 lines from an income statement. There could be a bunch of non-cash expenses (depreciation) that make the company look unprofitable to Uncle Sam but they could be swimming in cash.
Also, Clay Travis is a dim witted hack.
Yeah was going to say this isn't nearly enough information to make a judgment, even if that information is correct (what the heck is "The information reporting" as a source). But even at those numbers, they aren't totally unreasonable. Getting to profitability by 2023 is probably slower than what they'd hoped for, but not out of the realm of expectations. And if they had ~80% yoy revenue growth in 2020 the forward revenue expectations seem an achievable trajectory - though would need to do analysis on what the TAM is and what portion they've captured (I'm guessing pretty low).
There could be lots more going on underneath the hood - need the breakdown of capex / investment expenses vs normal operating expenses (for them mostly cost of paying writers, and infrastructure (website setup and maintenance)). Think you'd prob focus on what operating margin is right now and where it's going - I think for an online journalism business that would be the key metric rather than FCF or net income.
Anyways, there is a significant VC bid out there in private markets for early-stage or even later-stage startups that have high revenue growth while running meaningful negative cash flow. You can even go public with meaningful negative cash flows (from perpetually over-investing toward top-line growth) and 1yr plus away from making money - see Uber and Lyft as a couple massive examples, though a couple years in they've finally been forced to pivot toward achieving profitability. This is not to say that the Athletic or all other similar companies will be a success (see WeWork among many others for high profile failures), but they prob have a bit more runway to get to profitability than start-ups did at many times in the past (with the bubble leading up to 2000-2001 a notable exception).
A disinformation specialist tweets criticism of a subscriber-only site that excerpts information from another subscriber-only site (The Information) that I don't have access to. There's poetry in there somewhere, if not in the extremely long sentence I just wrote.
Also this info isn't really a true P&L because net cash flow, often called EBITDA, isn't a P&L line. Losing money in the past is not as important to investors as a path to profitability, which this company is projecting. This being mostly an online business, there should not be a lot of meaningful capex or depreciation, but mostly operating expense the bulk of which would be salaries. They seem to be in okay shape actually.
Edit: having said that, breakeven requires a doubling of revenues, so there is that little minor detail.
How much CAPEX could a digital media site realistically have? I would not think there would be a lot, though there is some investment in building the site. But in this age of web-hosting and server farms, I would think most of their opex is labor.
Yeah I was thinking it's mostly opex from labor, capex should be limited. You might have some but probably not a ton. That said given they've built out to the point where they have multiple national writers for every major league and 1-2 beat writers for every pro team (plus some college teams, not NU unfortunately), the business model should be fairly scalable from here. Just need to keep growing subscribers. Which is what those projections seem to suggest. They don't really market much at all (that I've seen?) so they could start doing that at some point.
Interesting. Does the WSJ article show if they’re cash flow is closer to positive, or if they’re close to generating a profit? The article linked requires a WSJ subscription, which I no longer have.
I’m not familiar with who Clay Travis is or his website. I’m not an Athletic subscriber - we get plenty of great NU content on this side.
The Athletic was purchased by the NYT for $550M. Guess their financials were alright after all.
Seems awfully expensive for a sports section.
Seems awfully expensive for a sports section.
Also the New York Times said that the acquisition would be immediately accretive to their earnings
Disappointed that it appears I won't be able to read The Athletic with my NYT subscription.
If you can only afford one subscription, obviously The Athletic is the way to go. See ya later, The Rock.....
