Axios agrees to sell itself to Cox Enterprises for $525 million

Axios, the digital media company that has rapidly gained traction since its inception five years ago with its distinctive newsletter-style scoops on politics, business and technology, said monday that she agreed to sell herself to Cox Enterprises.

The deal, which is due to close this month, values ​​Axios at $525 million, according to two people familiar with the deal.

The deal is structured so that the company’s three founders – Jim VandeHei, the chief executive; Roy Schwartz, the president; and Mike Allen, a journalist, have financial incentives to stay with the company. Each will be a minority shareholder and will continue to make day-to-day editorial and business decisions. Alex Taylor, CEO and President of Cox Enterprises, will join the Axios Board of Directors.

Axios became a staple of Beltway media shortly after its inception in 2017, with readers devouring stories about President Donald J. Trump and his administration. Jonathan Swan, national political correspondent for Axios, has drawn attention for his in-depth on-camera interviews with Mr. Trump and White House officials, and newsletters from reporters such as Dan Primack and Sara Fischer have drawn attention. attention from the business world.

The deal offers a rare ray of hope for the digital publishing industry, which has been beset with challenges for investors and operators over the past decade. Some of Axios’ peers struggled to go public, sell or raise money at favorable valuations as investors cooled on digital advertising, a market dominated by tech giants like Google, Meta and Amazon.

Axios is selling about five times its projected 2022 revenue of more than $100 million, according to a person familiar with a presentation Axios made to its board. The company has been profitable for the past three years but is not expected to be so in 2022, in part due to investments in HQ, its communications software division, the person said.

In an interview, VandeHei said the company’s founders decided to sell now because they had found a buyer who was committed to journalism and who would pay a fair price, allowing investors who backed Axios at the start, including NBCUniversal and Emerson Collective, to receive substantial feedback.

Mr VandeHei said it was also important to him that any deal allowed the management team to remain in place, as he did not plan to step down anytime soon.

“Not a chance,” Mr. VandeHei said. “It’s my life’s work, it’s my passion. I would do it for free.

The deal provides a kind of coda for the founders of Axios, who left Politico in 2016 amid a tussle over the future of that company, which Mr VandeHei also helped found. He, Mr. Allen and Mr. Schwartz launched Axios the following year. Policy continued to sell last year to German publishing conglomerate Axel Springer for $1 billion.

Cox Enterprises is not buying HQ, which Axios is turning into a separate company. Mr. Schwartz will be the company’s chief executive and Cox will take a minority stake, with Mr. VandeHei as chairman, a person familiar with the deal said.

The deal to acquire Axios goes back to the media roots of Cox Enterprises, a privately owned, family-owned Atlanta-based company that generates most of its revenue from its cable and broadband business. The company dates back to 1898, when its founder, James Middleton Cox, bought what is now The Dayton Daily News for $26,000. In 1939, Mr. Cox purchased the newspaper that would become The Atlanta Journal-Constitution, and the company still owns both publications.

“It’s a big part of who we are and what we do,” Taylor said. “We’ve been in the news business for 124 years, and it’s a testament to the legacy our grandparents left us.”

Cox Enterprises, which already held a minority stake in Axios, is injecting $25 million of cash into its balance sheet to fund the company’s growth. VandeHei said Axios plans to create a series of subscription products, similar to those offered by Politico Pro, on topics including technology, politics and legislative policy.

Axios also plans to continue launching more regional editions, which already exist in 24 cities, including Philadelphia, Des Moines and Nashville. VandeHei said the company aims to have a presence in at least 100 cities in the coming years.

“Hopefully with Politico first, and Axios today, we’ve shown a way for serious journalism to thrive in the digital age,” VandeHei said. “This country desperately needs it.”

Axios’ next big test will be how its coverage of the upcoming midterm elections and the 2024 presidential election cycle compares to some of its wealthier competitors. Mr VandeHei said the company planned to hire additional journalists for the campaign, noting that quality coverage was more about finding experienced journalists than having “100 boots on the ground”.

VandeHei said he remains optimistic about the prospects for the digital media sector despite the turmoil plaguing the industry. He pointed to business-oriented outlets like The Information and Morning Brew, which have cultivated loyal readership in a tough market.

“The lesson of the digital age: Chase fads, fantasy and clicks, you fade or starve,” VandeHei said. “Chase a loyal audience with quality information, you can thrive.”

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