Axios, the digital media company that has rapidly gained popularity with its high profile bulletin-style firsts in politics, business and technology since its founding five years ago, said Monday it agreed to sell itself to Cox Enterprises.
The deal, which closes this month, will value Axios at $525 million, according to two people with knowledge of the deal.
The deal is structured so that the company’s three founders — Jim VandeHei, the chief executive; Roy Schwartz, the chairman; 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, the CEO and Chairman of Cox Enterprises, will join Axios’ board of directors.
Axios became a fixture in Beltway’s media shortly after its founding in 2017, with readers devouring stories about President Donald J. Trump and his administration. Jonathan Swan, Axios’ national political correspondent, gained attention for his probing on-camera sitdowns with Mr. Trump and White House officials, and newsletters from journalists such as Dan Primack and Sara Fischer caught the attention of the corporate world.
The deal offers a rare glimmer of hope for the digital publishing industry, which has faced difficulties for investors and operators over the past decade. Some Axios colleagues have struggled to list, sell, or raise funding at favorable valuations as investors balked at digital advertising, a market dominated by tech giants such as Google, Meta and Amazon.
Axios is selling at about five times its projected 2022 revenue of more than $100 million, according to a person familiar with a presentation Axios gave to the board. The company has been profitable for the past three years, but is not expected to be profitable by 2022, in part due to investments in its headquarters communications software division, the person said.
In an interview, Mr. VandeHei said the company’s founders decided to sell now because they had found a buyer who is committed to journalism and who would pay a fair price, prompting investors to back Axios early, including NBCUniversal and Emerson Collective. a substantial return.
Mr. VandeHei said it was also important to him that the management team could continue to exist with any deal, as he had no intention of stepping aside any time soon.
“No chance,” said Mr. VandeHei. “This is my life’s work, it’s my passion. I would do it for free.”
The deal provides a coda of sorts for the founders of Axios, who left Politico in 2016 amid a tug-of-war over the future of that company, which Mr. VandeHei also helped found. He, Mr. Allen and Mr. Schwartz started Axios the following year. Politico sold itself last year for $1 billion to German publishing conglomerate Axel Springer.
Cox Enterprises will not buy out the headquarters, which will be transformed by Axios into a separate company. Mr. Schwartz will be the CEO of that company and Cox will take a minority stake, with Mr. VandeHei as chairman, said one person with knowledge of the deal.
The Axios acquisition harks back to the media roots of Cox Enterprises, a privately owned, family-owned company based in Atlanta that generates the majority of its revenues from its cable and broadband operations. The company began in 1898 when its founder, James Middleton Cox, bought what is now The Dayton Daily News for $26,000. In 1939, Mr. Cox bought the newspaper that would eventually 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,” said Mr. Taylor. “We’ve been in the news world for 124 years and this ties in with the legacy our grandparents left us.”
Cox Enterprises, which already owned a minority stake in Axios, is putting $25 million in cash on its balance sheet to fund the company’s growth. Mr. VandeHei said that Axios planned to build a line of subscription products, similar to Politico Pro’s, on topics such as technology, politics and legislative policy.
Axios also plans to continue to launch more regional editions, which already exist in 24 cities, including Philadelphia, Des Moines and Nashville. Mr. 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 showed a way for serious journalism to thrive in the digital age,” said VandeHei. “This country needs it so badly.”
Axios’ next big test will be how its coverage of the upcoming midterm elections and the 2024 presidential election compares to some of its competitors with deeper pockets. Mr. VandeHei said the company planned to hire additional reporters for the campaign, noting that quality reporting was more about finding experienced journalists than having “100 boots on the ground”.
Mr. VandeHei said he remained optimistic about the prospects for the digital media sector, despite the turmoil plaguing the industry. He pointed to corporate outlets such as The Information and Morning Brew, which have cultivated loyal readers in a tough market.
“The lesson of the digital age: Chase fads, fantasy and clicks, you fade or starve,” said VandeHei. “Chase a loyal audience with quality information, you can thrive.”
