To acquire The Athletic, the New York Times agreed to pay $550 million.

The New York Times said Thursday that it has reached an agreement to buy The Athletic, a subscription sports news service.

Initially priced at $550 million, the acquisition will finalise in the first quarter of 2022. The amount of the arrangement was initially disclosed by The Information, which first reported on the pact before it was publicly publicised.

After-hours trading for the Times saw a modest decrease in its stock price.

There were conversations between the two firms earlier this year, but negotiations broke down because The Athletic believed the Times’ offer was too low, according to a person involved with negotiations who requested not to be named because the discussions were private. That’s when Liontree was brought on board.

According to a source, the price of The Athletic went up because of it. People familiar with the matter stated that the New York Times was interested in The Athletic because it would open up a new audience for the newspaper.

The Times said in its statement that The Athletic would continue to exist as a separate site. In a conference call with investors after the announcement, CEO Meredith Kopit Levien said that The Athletic will initially be available as a separate subscription but would eventually be included in a “broader Times package.” While the Times provides “sports coverage for a broad interest readership,” she said that the vertical will provide subscribers with more in-depth coverage of sports teams and leagues.

According to the Athletic, the New York Times is considering acquiring smaller, community-based media outlets that have a loyal following and are ready to charge membership fees for their content. According to a person who talked to CNBC, the New York Times is looking to acquire websites that focus on science, technology, and other particular interests.

Additionally, the partnership would bring in a new group of readers for the New York Times. There was a former target of 10 million print and internet subscribers for the New York Times by 2025. It is now aiming for “a target considerably bigger than 10 million subscriptions and we think The Athletic will help us to extend our addressable market of prospective customers,” Levien said in a statement.

The Times has 8.4 million subscribers as of the third quarter of 2021. According to Levien, the subscriber base has a “small overlap.”

After launching in 2016, The Athletic claimed late 2020 that it had more than 1 million members and that its newsroom was profitable, but that evaluation didn’t take into account the company’s running expenditures. To far, The Athletic has 1.2 million paying customers, according to the Times.

In a conference call with investors, Levien estimated that The Athletic will have $55 million in operating losses and $65 million in revenue in 2021.

The Athletic, according to The Times, is expected to boost the company’s revenue growth rate right now. While it expects the purchase to reduce operational profit for three years, it expects it to contribute to it beyond that time period.

It was announced in a press statement that Alex Mather and Adam Hansmann would remain in their roles after the purchase. With Mather as general manager and Hansmann as chief operational officer, they will be co-presidents. The Athletic’s publisher will be David Perpich, the Times’ head of standalone products, with Mather and Hansmann reporting to him.

As CNBC first reported in March, The Athletic has previously mulled a combination with Axios, a short-form news business.