47Bloomberg Businessweek August 26, 2019
AlexMatherwouldlikeyoutoknowthathelovesnewspapers.
He’s loved them since he was a kid growing up in Philadelphia.
“I waited for the smack of the Inquirer on the ground in the
morning,” he says. “I would grab it, rip it apart, take the
sports section, leave the rest for the family, and read it front
to back.” Mather, co-founder and chief executive officer of the
Athletic, a digital sports-news subscription service, delivers
this paean to the sports pages in a June interview at the com-
pany’s San Francisco offices.
It’s a do-over, of sorts. Two years ago, while talking to the
New York Times, Mather spoke less warmly about newspapers
when describing his company’s ambition. “We will wait every
local paper out and let them continuously bleed, until we are
the last ones standing,” he said. “We will suck them dry of
their best talent at every moment.” After the comments went
viral, Mather apologized, writing that he was “not rooting for
newspapers to fail” and had “learned a lesson in humility.”
But the damage was done: The Athletic was just another tech-
bro startup out to wreck livelihoods in the name of disruption.
“I’ll stay away from metaphors, for sure, for the rest of my
career,” Mather says now.
“That’s good,” says Adam Hansmann, the Athletic’s
co-founder and chief operating officer, who’s sitting across
the table.
Mather has tempered his rhetoric, but the Athletic hasn’t
stopped poaching talent. It had about 65 editorial staffers
when he spoke with the Times. Now there are over 400, cov-
ering more than 270 teams in the U.S. and Canada. This sum-
mer the service added dozens of reporters from the BBC, the
Guardian, and elsewhere to cover English Premier League soc-
cer. “We have hired more journalists than most in the world,”
Mather says. “We’ve both hired over a hundred personally.”
The hiring spree comes amid spiraling industry decline.
American newspapers shed 238,000 jobs—more than half of
their total employment—from 2001 to 2016. And the layoffs
have recently hit digital publishers once hailed as the future
of media, including BuzzFeed, Refinery 29, and Vice Media.
There were 3,000 jobs cut in the first five months of this year,
which is on pace to be the worst in a decade.
The Athletic—ad-free, online-only—is a test of digital journal-
ism’s subscription model. Subscriptions cost $10 per month or
$60 per year, though many start at lower promotional rates.
Average annual revenue per subscriber is $64, according to
the company. Almost every one of the 1,200 stories the site
publishes in an average week is behind the paywall.
In August, Mather says, the Athletic crossed 600,000 sub-
scribers. “We’ll end the year somewhere close to a million,”
he says. The leader in digital journalism, the Times, has
almost 3 million online-only subscribers, not including peo-
ple who get just its crosswords and cooking services. The
Wall Street Journal has 1.8 million, the Washington Post more
than 1.5 million as of last year, and the Financial Times about
750,000. All four were founded in the 19th century and have
carried a loyal readership into the internet age. The Athletic
published its first story three and a half years ago.
ESPN’s new subscription service, ESPN+, which has more
than 2 million subscribers, includes some journalism with its
live sports. But the Athletic doesn’t really have direct com-
petitors. ESPN, Bleacher Report, and Yahoo Sports, each of
which reaches tens of millions of users per month, rely on
ads to support their free content.
The question is whether the Athletic can make money. It
has yet to turn a profit. Venture capital investors have poured
more than $90 million into the site to date; in the most recent
fundraising round, a $22 million investment the Founders
Fund led in May, the company was valued at about $500 mil-
lion, says a source familiar with the offering. (The Athletic
declined to comment on its valuation.) The early numbers
are impressive, but more than one person interviewed for
this story made comparisons to the ill-fated National Sports
Daily. The tabloid started in 1990 and spent $150 million to
poach top writers before folding 18 months later.Mather, 39, and Hansmann, 31, met while working at Strava
Inc., a subscription service runners and cyclists use to
track and share routes. Mather was head of product, and
Hansmann worked in finance and operations. In 2015, Mather
told his colleague his idea for building a network of online
sports pages by hiring beat reporters and charging for sub-
scriptions. He planned to call it the Armchair.
A few major newspapers had begun experimenting with
paywalls, but the consensus then was that “information wants
to be free” on the internet. Publishers would have to ride on
thebackofsocialmedia.BleacherReportandSBNation, two
ofthemostsuccessfuldigitalsportsmediastartups,hadbuilt
theirbrandsbypayingarmiesoffreelancers to churn out sto-
ries designed to show up at the top of Google search results
or go viral on Facebook. (Sample headline, from Bleacher
Report: “Why Tom Brady Is the Most Overrated Quarterback
in NFL History.”)
In fall 2015, Mather and Hansmann left their jobs and
funded the Athletic out of their own pockets. “Someone has
to be in the locker room,” Mather says. “We can’t have every-
one barely paying kids to write their opinions on teams.” They
messaged hundreds of journalists on LinkedIn.
The first bite came from Jon Greenberg, a reporter at ESPN’s
local site in Chicago who’d recently been told his contract
wouldn’t be renewed. “Open to a new opportunity?” asked the
message from Hansmann. Greenberg said that he was and that
he knew others who might join him. Mather and Hansmann
madeChicagotheirtestmarketandhiredGreenbergaseditor.
HerecruitedtwoothersfromESPNChicago,andthesitewent
liveinJanuary2016. Hundreds of subscribers signed up on the
first day, mostly friends and family and readers of the three
reporters’ prior work. Later that year, the Athletic added cov-
erage in Toronto, and by yearend the site was reaching 3,500
subscribersinthetwocities.Emailsbegancominginfromwrit-
erswhowantedtointroducethesiteelsewhere.
Thatfall,MatherandHansmannraised$2.5million in
seed money from a handful of investors and, in 2017, began