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InContext / An inside look at the business of digital content

MVP: Why sports coverage could be the next great subscription driver

July 22, 2021 | By Chris M. Sutcliffe – Independent Media Reporter @chrismsutcliffe

Sports coverage and analysis is the lifeblood of specialist sites like Defector and The Athletic. However, as the competition for subscription revenue heats up, many media outlets are re-examining the value of sports as a means to connect with audiences. And a rash of hiring and acquisitions shows that is trickling down to regional titles too.

Last week The Athletic raised its subscription price. The increase – the first since the sports news and analysis title launched – followed two failed attempts to tie the brand up with larger publications. The first endeavor saw The Athletic pitch a partnership with Axios, which ultimately came to nothing. The second saw it enter talks with the New York Times, which is currently in the midst of its own drive to add millions more subscribers.

On paper the latter seemed like a great potential partnership. The Athletic boasted over one million subscribers as of September last year, and 1.2m as of May this year. That would amount to an instant addition of over one tenth of the users needed to take the NYT past its target of 10m subscribers by 2025.

It also would have cemented the NYT as one of the definitive sources of sports news online: in addition to its own coverage, it would gain that of The Athletic’s ~400 editorial staff across text and audio. In the face of hungry acquisition of sports content from the likes of Sinclair, it would have put the NYT ahead of the pack to scoop up sports-focused subscribers.

By the numbers

So, what went wrong? The answer lies in the often-omitted information from the story of The Athletic’s early success. Despite (or in part due to) its initial splurge on the best-known sports journalists in countries across the globe, the site is still not profitable.  

Even with reported revenues of around $80m in subscriptions, it is not covering the cost of its formidable staff. In an interview with Variety its founder Alex Mather stated: “We have got 450 reporters, writers, editors, producers on three continents producing as much volume as any national newspaper in the world per week”. He then noted that the company was still priced the same for consumers as when it launched with just three full-time employees.

It’s tempting to suggest that The Athletic raising its prices is an acknowledgement that its play for scale to appeal to larger publications has stalled. It is likely that some of those subscribers, brought in through discounted or free subscriptions, will choose to opt out of paying, so it is concentrating on consolidating revenue from its most valuable and engaged users.

Sporting chances

However, it is too soon to say that The Athletic as an experiment has failed. Rather, it could be the catalyst that sparks important changes elsewhere. Even in the announcement that accompanied the price hike, there was a note of optimism. As we come out of the pandemic and live sports return in earnest there is an opportunity for sports news and analysis platforms, both at legacy organizations and at the digital upstarts like The Athletic.

Jasper Wang is VP of revenue and operations at sports blog Defector. While it pales in comparison to The Athletic in scale, its smaller newsroom allows it to be profitable at a comparable membership cost to The Athletic. It is effectively right-sized by design. He told me:

“If we take the business model first, we are subscription-supported, because we knew there was a rabid group of readers. Is that millions? No. But is it tens of thousands, maybe even hundreds of thousands? Yes. And so the quickest way to get some cash flow was to ask people to pay subscriptions directly. We had 10,000, paid subscriptions within 24 hours of announcing the project. We’re at about 39,000 total paid subscribers right now.”

The rights stuff

So even if The Athletic’s play for scale will lead to it shedding subscribers and some staff again, there is a demonstrable hunger for that content. That’s led to a spending spree in both broadcast rights and editorial output.

In the U.S., for example, Sinclair is still high on its acquisitions horse, attempting to control the distribution and streaming rights to regional sport. Its latest $250m effort to acquire NBCUniversal’s seven regional sports networks (RSNs) bulks up its Bally Sport network. Sport, even at the regional level, attracts huge audiences.

In fact, at ESPN there is growing recognition that, even with smaller audiences, live sports offer a bevy of opportunities to connect advertisers with audiences. “Primetime is when most people are watching, and that’s what sports is. Sports is prime,” says Rita Ferro, president of Disney advertising sales. Perhaps that’s why ESPN Plus is also raising its prices, with the annual cost jumping from $60 to $70.

And it’s on that primacy that some news outlets are betting their fortunes.

Investment opportunity

Newspapers, which cannot afford or have no interest in becoming carriers for sports broadcasts, are approaching the opportunity from another angle. In the U.K,, for example, Reach plc is investing heavily in creating new roles to tap into engagement from fans through punditry and analysis. Much like The Athletic, it is splurging on bringing new journalists into the fold to boost its coverage.

Jon Birchall, Reach’s audience and content director for sport, said, “We want to bring more views, a wider range of expertise and more round the clock coverage on both our national and regional brands.

“Our ambition is to not only continue to serve our readers, viewers and listeners but also attract new fans and communities.

Connecting with communities

The phrase “new fans and communities” is telling. While national leagues still attract the lion’s share of coverage and therefore subscription revenue, The Athletic has demonstrated that audiences are just as invested in their local teams. Reach’s play, then, is to take back some ownership of the local sports coverage it lost while stripping out costs.

Its timing is significant, too. Reach is currently in the middle of a drive to explode its digital revenue. Lloyd Embley, its editor-in-chief, said: “Over the past 18 months, we’ve significantly ramped up the number of new sites we’ve launched as part of our Live network, many in areas where we don’t have established print titles.

“Thanks to our transformation of editorial operations last year and underpinned by our customer value strategy which ensures we build deeper relationships with our readers, we have created a sustainable model for digital-only local journalism.”

In the U.K., sports subscriptions are also key to the fortunes of titles like The Telegraph. While the cost is less than that of an overall subscription, it is a recognition that sports coverage has its own appeal. In discussing its subscription plans, the Telegraph ranks its sports coverage alongside its politics as among the biggest drivers of subscription take-up; a member of the Telegraph team flagged its upcoming suite of Olympics coverage to me as being one of its primary focuses for the year.

Mind the gender gap

Perhaps most importantly of all there is still a gap in women’s sport, both in terms of coverage and punditry. Research has found that on average women’s sport receives about 4% of the media coverage of men’s. This clearly suggests there is still significant headroom for growth in revenue from subscribers looking to learn more about women’s sports teams and stars.

That’s backed up by research from Deloitte, which demonstrates broadcasters are slowly cottoning on the rising demand for women’s sport. In 2019, CBS Sports Network signed a deal to televise 40 regular-season Women’s National Basketball Association (WNBA) basketball games. Similar deals have taken place across the U.S. and U.K. for other sports.

Crucially, there is an opportunity for news orgs here too. Women’s sport advocacy group The Fan Project found that audiences are hungry for greater access to athletes and stars. At both national and regional level, investment in teams that can promote those stars will pay dividends for news titles. It’s a far cry from the days when tennis was considered the only women’s sport worthy of coverage in the U.K.

With the rise of online gambling and its integration with news titles, local sports coverage might well be the next great driver of revenue for regional titles on both sides of the Atlantic. Huge great experiments like The Athletic might not work on their own terms. However, they are already spurring a tranche of investment in what could be a key source of subscription sign-ups elsewhere.

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