By Eva Mathews
(Reuters) - The New York Times Co has met its target of 10 million subscriptions three years ahead of schedule thanks to its purchase of The Athletic, a win for the newspaper that has staked its future on the success of its digital business.
The Times gained more than a million subscriptions in its $550 million deal for the sports news website that closed earlier this week, swelling its already 8.8 million strong subscription base at the end of 2021.
About 375,000 of those were added in the last three months of the year when people turned to its website and app for games, cooking recipes and news on the Omicron variant's global surge.
The 170-year-old newspaper said on Wednesday it was now targeting at least 15 million subscriptions by the end of 2027, a goal it hopes to achieve with the help of acquisitions like the Wordle deal.
Its shift to a subscription-first model, started a decade ago, has made up for steep declines in its traditional print business and turned it into a beacon for the newspaper industry.
The company posted an adjusted profit of 43 cents per share in the fourth quarter on revenue of $594.2 million, exceeding analysts' estimates.
Its digital ads revenue grew 23.3% to a record level as businesses continued to loosen their purse strings with the recovery in the economy.
The Gray Lady expects the Athletic deal to help continue that momentum, projecting an increase of 20% to 24% in digital ads revenue for the first quarter.
(Graphic: Digital Ad Revenues at NYT in the past years: https://graphics.reuters.com/NYT-RESULTS/NYT-RESULTS/zdpxoanmbvx/chart.png)
"We expect the business at The Athletic characterize-wise to look very much like the business we have at the time, which is an ad business," Chief Executive Meredith (NYSE:MDP) Kopit Levien said.
But there are some concerns around the costs related to the sports news website, said Erik Gordon, professor at Ross School of Business, University of Michigan.
"The Athletic is a favorite of die-hard sports fans, but its coverage of so many teams makes it expensive to run," he said.