Why it matters: The deal is structured to ensure that investment continues to flow into local news at a time when most commercial investors have abandoned local markets.
Axios was founded in 2016 by the same leaders who built Politico, with a focus on politics, technology and business. In 2020, a major expansion into local news began. Cox is a multi-generational family business that started in local newspapers. It wants to ensure local news remains part of its legacy in the digital age.
“A big part of this investment is expanding the number of local markets we serve. Local journalism is so important to the health of any community, and no one is more focused on building it nationally than Axios,” president and CEO of Cox said Alex Taylor. Details: The deal, signed Sunday, includes an additional $25 million in new investment in Axios’ media business to help the company expand into local, national and subscription news products.
Axios Local currently operates in 24 cities and plans to expand its coverage to 30 US cities by the end of 2022. Eventually, it hopes to be in hundreds of cities. Axios will spin off its software division, Axios HQ, into a separate, standalone company led by Axios President Roy Schwartz.
“This is great for Axios, for our shareholders and for American journalism. It allows us to think and operate across generations, with a like-minded partner — and build something great and durable that will live long after we’re gone,” said Axios CEO Jim VandeHei. Deal terms: The deal values Axios at $525 million, the sources said. It has been reported that Axios plans to reach $100 million in revenue by 2022.
Cox will control the board of Axios’ media arm with four board seats, and Axios’ three co-founders — VandeHei, Mike Allen and Schwartz — will remain on the Axios board. Taylor will take one of four board seats. Axios will still control the Axios HQ board, where Cox will hold one of three board seats. Axios management will retain control of editorial direction and day-to-day operations of the company. The deal is structured to incentivize Axios’ management and current employees to remain with the outlet and continue to grow its business. Axios HQ is parting with some seed capital and plans to raise money early next year to fuel its growth as an independent company. This year it will bring in about $6 million in annual recurring revenue. It has over 300 customers.
Be smart: Axios was launched with a mission to provide news to professionals in a simple format that helps them become smarter on a range of topics including politics, science, business, health, technology and media.
He was able to scale quickly by hiring subject matter experts to write digestible newsletters on complex topics.
An Emmy Award-winning show on HBO and a television partnership with MSNBC helped Axios expand its name recognition widely across the country. Axios HQ launched in 2021 with a similar mission to help internal and external corporate communications departments communicate more effectively with stakeholders through proprietary email publishing software.
By the numbers: Axios has raised $55 million, but because it’s always been profitable, it has a lot of that cash still available to keep investing in the business.
The majority of Axios’ revenue comes from high-end advertising, with brand awareness among major companies in its 19 national newsletters, website and podcasts. It recently launched a professional news subscription, called Axios Pro, to provide investors and policy professionals with in-depth information about their industries. Axios has over 500 employees, with nearly 100 working for Axios HQ and over 75 working at Axios Local. Axios HQ plans to more than double in size next year and triple its revenue.
Get up to speed: Axios was in talks to sell to German publishing giant Axel Springer last year, but that deal fell through amid unusual circumstances.
Cox sold a majority stake in its local television and radio businesses to private equity firm Apollo Global Management in 2019. The Atlanta-based firm still owns the Atlanta Journal-Constitution.
The big picture: Axios is one of the few digital news startups to have sold for more than $500 million in enterprise value in the past decade.
Politico, which Axios’ founders built and ran until 2015, sold for about $1 billion in 2021, a price that valued the company at about 5 times its annual revenue. The Athletic sold for $550 million to The New York Times earlier this year, about 8 times its annual revenue.
What’s next: The deal is expected to close within the next few weeks, subject to regulatory approvals.
