Axios announced Monday that it has signed a sale deal to its newest flagship investor, Cox Enterprises. The cash deal values the company at $525 million, according to people familiar with the deal.
why does it matter: The deal is designed to ensure that investments continue to flow into local news at a time when most commercial investors have abandoned the local markets.
- Axios was founded in 2016 by the same leaders who built Politico, with a focus on politics, technology and business. In 2020, I started a major expansion in local news.
- Cox is a multi-generational family business that started in local newspapers. She wants to ensure that local news remains part of her legacy in the digital age.
“A large part of this investment is to increase the number of local markets we serve. Domestic watchdog journalism is very important to the health of any community, and no one is more focused on building that nationally than Axios, said Cox’s Chairman and CEO, Alex Taylor.
details: The deal, signed Sunday, includes an additional $25 million new investment in the Axios media arm to help the company expand across its 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. Ultimately, it hopes to be in hundreds of cities.
- It will separate Axios from its software arm, Axios HQ, into a separate stand-alone company led by Roy Schwartz, president of Axios.
“That’s great for Axios, To our shareholders and the American press. It allows us to think and act on a generational basis, with a like-minded partner – and build something great and lasting that will last long after we’re gone, said Axios CEO Jim VandeHei.
Terms of the deal: Sources said the deal values Axios at $525 million. It has been reported that Axios Ventures will reach $100 million in revenue for 2022.
- Cox will control the board of the four-seat media arm Axios, and the three Axios 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 of directors, where Cox will have one of three seats.
- Axios management will retain control of the company’s editorial direction and day-to-day operations. The deal is designed to incentivize Axios management and existing employees to stay with the outlet and continue growing its business.
- Axios HQ is being built with some seed capital and plans to raise funds early next year to support its growth as an independent company. This year it will generate nearly $6 million in annual recurring revenue. It has more than 300 clients.
be clever: Axios was launched with the goal of delivering news to professionals in a simple format that helps them get smarter faster across a range of topics, including politics, science, business, health, technology, and media.
- She was able to scale quickly by hiring subject matter experts to write easy-to-understand newsletters on complex topics.
- The Emmy Award-winning show on HBO and a TV partnership with MSNBC helped Axios expand her name recognition across the country.
- Axios HQ was launched in 2021 with a similar mission of helping internal and external corporate communications departments communicate more efficiently with stakeholders via proprietary email publishing software.
In numbers: Axios raised $55 million, but since it’s always been profitable, it still has plenty of that cash on hand to keep investing in the business.
- Most of Axios’ revenue comes from high-level advertising and brand awareness to major companies via its 19 national newsletters, website, and podcasts.
- It recently launched a professional news subscription, called Axios Pro, to provide in-depth insights to investors and political professionals about their industries.
- Axios has more than 500 employees, with approximately 100 employees working at Axios HQ and more than 75 working at Axios Local. Axios HQ plans to more than double its size next year and triple its revenue.
Quick catch up: Axios was in talks to sell it to German publishing giant Axel Springer last year, but that deal fell through amid unusual circumstances.
- Cox sold a majority stake in her local television and radio business to private equity firm Apollo Global Management in 2019. The Atlanta-based company still owns the Atlanta Journal-Constitution.
The Big Picture: Axios is one of a small group of digital news startups that have sold more than $500 million in enterprise value in the past decade.
- Politico, built and led by the founders of Axios until 2015, sold nearly $1 billion in 2021, a price that values the company at nearly 5 times its annual revenue.
- Athletic sold for $550 million to the New York Times earlier this year, nearly 8 times its annual revenue.
What’s Next: The transaction is expected to close within the next few weeks, following regulatory approvals.