Axios agrees to sell itself to Cox Enterprises
Axios, the digital media company that quickly gained traction since its founding five years ago with its distinctive bulletin-style scoops on the realms of politics, business, and technology, said Monday that it agreed to sell itself to Cox Enterprises.
The deal, which is set to close this month, values 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 president; and Mike Allen, a journalist — have financial incentives to stay at the company. Each will be a minority shareholder and will continue to make day-to-day newsroom and business decisions. Alex Taylor, chief executive and chairman of Cox Enterprises, will join the Axios board.
Axios became a Beltway media fixture shortly after it was founded in 2017, with readers devouring stories about President Donald Trump and his administration. Jonathan Swan, Axios’ national political correspondent, gained attention for his probing on-camera sitdowns with Trump and White House officials, and newsletters from journalists such as Dan Primack and Sara Fischer captured the attention of the business set.
The deal offers a rare flicker of hope for the digital publishing sector, which has been fraught with difficulty for investors and operators over the last decade. Some of Axios’ peers have struggled to go public, sell, or raise funding at favorable valuations as investors cooled on digital advertising, a market dominated by tech giants such as Google, Meta, and Amazon.
Axios is selling at roughly five times its projected 2022 revenue of more than $100 million, according to a person who was familiar with a presentation Axios made to its board. The company was profitable for the last three years but is not expected to be profitable in 2022, partly owing to investments in HQ, its communications software division, the person said.
VandeHei said the company’s founders decided to sell now because they found a buyer that was committed to journalism and that would pay a fair price, allowing investors that backed Axios early, including NBCUniversal and Emerson Collective, to receive a substantial return.
VandeHei said it was also important to him that any deal allowed the management team to remain in place, because he was not planning to step aside anytime soon.
“Not a chance,” VandeHei said. “This is my life’s work; it’s my passion. I would do it for free.”
The deal provides a coda of sorts for Axios’ founders, who left Politico in 2016 amid a tug of war over the future of that company, which VandeHei also helped found. He, Allen, and Schwartz started Axios the next year. Politico went on to sell itself to German publishing conglomerate Axel Springer for $1 billion last year.
The deal price tops the $400 million or so valuation Axios discussed with Axel Springer last year, according to three people familiar with the matter. After those talks, Axios raised another funding round led by Cox that valued the company at $430 million.
Cox Enterprises is not buying out HQ, which Axios is spinning out into a separate company. Schwartz will be chief executive of that company, and Cox will take a minority stake, with VandeHei serving as chairman, a person with knowledge of the deal said.
Cox Enterprises, which already owned a minority stake in Axios, is putting $25 million of cash on its balance sheet to fund the company’s growth. VandeHei said Axios planned to build a series of subscription products, similar to those offered by Politico Pro, on topics including technology, politics, and legislative policy.
Axios also plans to continue starting more regional editions, which already exist in 24 cities including Philadelphia; Des Moines, Iowa; and Nashville, Tenn. VandeHei said the company aimed to be in at least 100 cities in the coming years.
“Hopefully, with Politico first, and Axios today, we have shown a way for serious journalism to thrive in the digital era,” VandeHei said. “This country so desperately needs it.”
Axios’ next big test will be how its coverage of the upcoming midterm elections and the 2024 presidential election cycle stacks up against some of its deeper-pocketed competitors. VandeHei said the company planned to hire additional reporters for the campaign, noting that quality coverage was more about finding experienced journalists than having “100 boots on the ground.”