Axios’s Sale to Cox Marks Merger of New and Old Media

From a Wall Street Journal story by Alyssa Lukpat, Lillian Rizzo, and Jessica Toonkel headlined “Axios’s $525 Million Sale to Cox Marks Merger of New and Old Media”:

Axios, a digital news site known for bulletin-style articles, agreed to be acquired by Cox Enterprises Inc., the companies said, uniting new and old media companies amid a flurry of mergers in the publishing world.

The cash deal values Axios at $525 million, according to people familiar with the matter.

Axios, known for its motto “smart brevity,” was launched in 2017 by the people behind the buzzy Washington news site Politico. Axios primarily covers politics, business and technology, churning out stories and newsletters using its signature bullet-point style.

Cox Enterprises is a closely held, Atlanta-based company that owns newspapers such as the Atlanta Journal-Constitution and Dayton Daily News, as well as a cable TV and broadband business. The company said it was committed to expanding Axios’s local coverage into more cities.

The deal is expected to close in the next month.

Publishers have been consolidating during the past few years as traditional media companies and digital upstarts alike come to the conclusion they need greater scale to compete. The battle for online ad dollars is fierce—with marketers spending big sums on Google, Facebook, TikTok and other tech platforms—and many publishers are trying to build up alternative lines of revenue, such as e-commerce and subscriptions.

In January, the New York Times Co. agreed to acquire the sports-media company the Athletic for $550 million, hoping to expand its subscription offerings and draw in young readers. Native digital publisher BuzzFeed Inc. acquired Complex Networks as it went public last December through a special-purpose acquisition company. Vox Media agreed in the same month to acquire Group Nine Media Inc.

Last October, Barry Diller’s IAC/InterActiveCorp. purchased magazine publisher Meredith Corp., betting on the online-publishing future of brands such as People and Better Homes & Gardens. And earlier last year, German publisher Axel Springer purchased Politico for more than $1 billion.

The recent spate of deals shows that publishers that focus on certain areas, such as Axios, the Athletic and Politico, can become attractive targets, said Eric Hippeau, a partner at New York-based venture-capital firm Lerer Hippeau Ventures, which was an early Axios investor but has since sold its stake. Companies that try to be generalists to build huge audiences sometimes struggle, he said.

“It’s very difficult to be broad-based if you are competing with the likes of Google and Facebook,” he said.

Launched by Jim VandeHei, Roy Schwartz and Mike Allen after the trio left Politico, Axios focused on short, newsy stories and concise newsletters. The company, which has more than 500 employees, generates roughly $100 million in revenue, according to people familiar with the matter. Its revenue was more than $60 million in 2020.

Cox, which became a big Axios investor last year, initiated buyout negotiations around January, a person familiar with the deal said. Cox had asked Axios how the publication could expand its coverage more quickly, and the companies decided a purchase would be the easiest way to inject money into Axios. Axios pushed to ensure it would retain editorial control of day-to-day operations, which Cox agreed to, the person said.

Axios has explored other deals. In March 2021, The Wall Street Journal reported the company was in merger talks with the Athletic. The companies jointly explored a tie-up that could have involved a deal with a special-purpose acquisition company, but the discussions didn’t move forward. Axios also was in talks with Axel Springer before the German company’s deal with Politico, the Journal reported.

Axios has tried to carve out a niche in American journalism with its focus on brevity. It also has set out to fill a void in local news, caused by the collapse or retrenchment of many outlets, by investing in that area. Axios acquired the Charlotte Agenda, a digital-media publisher based in North Carolina, and has launched newsletters in cities such as Denver, Des Moines, Iowa, and Florida’s Tampa Bay region. Axios also sells software that helps users compress their writing.

The money from the deal will allow Axios to hire more staff, the person familiar with the deal said, particularly for its local coverage and its Axios Pro verticals.

The Axios founders will be majority owners of Axios HQ, a communications software business that will become an independent company as part of the transaction. Mr. VandeHei will be chairman of Axios HQ and Mr. Schwartz will be its CEO.

Cox Enterprises, which was founded in 1898 by Ohio Gov. James M. Cox, has remained a family-owned company with businesses across the media, communications and automotive industries.

The company, which said it has $20 billion in annual revenue, owns Cox Communications, a cable-TV and broadband operator. The company recently said it planned to offer mobile service, following in the footsteps of larger, publicly traded peers such as Comcast Corp. and Charter Communications Inc. Those companies have each seen recent success with their wireless offerings.

Cox first invested in Axios in 2021 for an undisclosed sum. The acquisition of Axios fits into its media segment. As part of the transaction, Cox Enterprises will invest $25 million into the company, Axios said.

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