Axios, the digital media company that has been gaining rapid momentum since its founding five years ago with its signature spade-style posts in politics, business and technology, has agreed to sell itself to Cox Enterprises, according to two people familiar with the deal.
The people, who spoke on condition of anonymity to discuss confidential terms of the agreement, said the deal values Axios at $525 million. The deal, which is due to close this month, is expected to be announced on Monday.
The deal was structured so that the company’s three founders – Jim Vandehy, CEO; Roy Schwartz, President; And Mike Allen, the journalist – they both have financial incentives to stay at the company. Each of the shareholders will be the minority and will continue to make day-to-day decisions in the newsroom and in business. Alex Taylor, CEO and Chairman of Cox Enterprises, will join the Axios Board of Directors.
Axios became a Beltway media tool shortly after its founding in 2017, with readers devouring stories about President Donald J. Trump and his administration. Jonathan Swan, Axios’ national political reporter, has drawn attention after investigating his on-camera confrontations with Trump and White House officials, and newsletters from reporters such as Dan Primack and Sarah Fisher have drawn the attention of the business group.
The deal offers a rare glimmer of hope for the digital publishing sector, which has been fraught with difficulties for investors and operators over the past decade. Some of Axios’ peers have struggled to go public, sell or fundraise at favorable valuations as investors cool off digital advertising, a market dominated by tech giants like Google, Meta and Amazon.
Axios is selling nearly five times its forecast revenue for 2022 at more than $100 million, according to one of the people, who was familiar with the presentation Axios gave to its board of directors. The source said the company has been profitable over the past three years, but is not expected to be profitable in 2022, due in part to investments in HQ, its communications software division.
In an interview, Mr. VandeHei said the company’s founders decided to sell now because they had found a buyer committed to the press who would pay a fair price, allowing early investors who backed Axios, including NBCUniversal and Emerson Collective, to get a substantial return.
Mr VandeHei said it was also important to him that any deal would allow the management team to stay in place, as he was not planning to step down anytime soon.
“Not a chance,” Mr. VandeHei said. “This is my life’s work, it is my passion. I will do it for free.”
The deal saves somewhat for the founders of Axios, who in 2016 left Politico amid a tug of war over the future of that company, which Mr. Vandehi also helped found. He, Mr. Allen, and Mr. Schwartz started Axios the following year. Politico gold for sale itself to German publishing conglomerate Axel Springer for $1 billion last year.
Don’t buy Cox Enterprises HQ, which Axios spins into a separate company. A person familiar with the deal said Mr. Schwartz would be that company’s CEO, Cox would take a minority stake, and Mr. Vandehi would serve as chairman.
The acquisition of Axios goes back to the media roots of Cox Enterprises, a privately owned family business based in Atlanta that generates most of its revenue from the cable and broadband business. The company’s beginnings go back to 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 huge part of who we are and what we do,” said Mr. Taylor. “We’ve been in the news business for 124 years, and that speaks to the legacy our grandparents left us.”
Cox Enterprises, which already owns a minority stake in Axios, is putting $25 million in cash on its balance sheet to fund the company’s growth. Mr. VandeHei said Axios planned to build a series of subscription products, similar to those offered by Politico Pro, around topics including technology, politics and legislative policy.
Axios also plans to continue launching more regional releases, which are already in 24 cities including Philadelphia, Des Moines and Nashville. Mr VandeHei said the company aims to be in at least 100 cities in the coming years.
“With Politico first, and Axios today, we hope to have shown a path for serious journalism to thrive in the digital age,” said Mr. VandeHei. “This country desperately needs it.”
The next big test for Axios will be how its coverage of the upcoming midterm elections and the 2024 presidential election cycle stacks up against some of its wealthy rivals. Mr Vande Hai said the company plans to hire additional reporters for the campaign, noting that good coverage was more about finding seasoned journalists than having “100 shoes on the floor”.
Mr. VandeHei said he remains optimistic about the prospects for the digital media sector despite the turmoil in the industry. He noted business-focused outlets such as The Information and Morning Brew, which have successfully grown loyal readers in a challenging market.
“The lesson of the digital age: fads of stalking, imagination and clicks, you fade or starve,” said Mr. VandeHei. “Chase a loyal audience with good information, you can thrive.”
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