In 1898, at the end of America’s Golden Age, a 28-year-old Ohio businessman named James M. Cox purchased the Dayton Evening News for $26,000 (about $928,000 in a modern tender), planting the seeds for the $20 billion company now known as Cox Enterprises. On Monday, Cox – these days mostly in the telecommunications and automotive services sector – announced a deal reminiscent of its very first foray into media 124 years ago: the $525 million acquisition of Axios. of dollars. This time, the prize is not a pioneering local newspaper, but an influential news website that thrives in local digital journalism, effectively bringing Cox back to its roots.
“If you go back a decade ago, they were almost exclusively a media company,” said the CEO of Axios. Jim Vande Hei told me when I had him on the phone for a few minutes shortly after the news broke. “They owned some of the biggest newspapers and TV stations in the country, and they made the wise decision to pull out of local media just when it was starting to crumble. They really wanted to get back into media, and especially local media, but they also wanted to make sure it could be a big, scalable business. (Cox still owns The Atlanta Journal-Constitution, the Dayton Daily News, and other Ohio newspapers.)
Enter Axios, which put itself on the map with its bullet-proof scoops devoured by influential players in media and politics, but is now expanding into local news – 24 cities so far and planning many more to come. come. Axios itself reports that the Cox deal includes “an additional new investment of $25 million…to help the company grow in its local, national and subscription news products.” As VandeHei said, “I think they see what we see – that there’s an almost limitless market we can go to if we do it smartly, and that’s a business that could be worth a lot more than they’ I pay for it.
Axios was launched in 2017 by VandeHei, Mike Allen, and Roy Schwartz after leaving Politico – which VandeHei also co-founded – amid a falling out with then-owner Robert Allbritton. Axios, backed by a company, had flirted with an acquisition at least once before. Last year, German media conglomerate Axel Springer kicked the tires. But as I reported at the time, Axios pulled out after learning that Axel Springer’s boss Mathias Dopfner was simultaneously pursuing Politico, which Axel Springer ended up buying. (Döpfner denied any questionable dealings.) The Axios guys walked away from the talks all the more adamantly because, under any potential owner, they wanted to retain a high degree of control over their business. They have found such an owner in Cox, under whom the trio will retain jurisdiction over day-to-day editorial and business management, while holding “substantial” stakes in the business, according to Cox’s announcement. The Axios Board, in turn, will receive a new addition to the President and CEO of Cox Enterprises Alex Taylor, who said in a statement, “Bringing a forward-thinking organization like Axios into Cox Enterprises is exciting for us on many levels, and we look forward to helping them continue to evolve and grow.
VandeHei told me talks about selling began shortly after Cox led Axios’ Series D funding round last fall, heating up over the past two months. “They were by far the easiest, kindest investor you could imagine,” he said. “We spent the time after they ran the D series getting to know them and, to be honest, doing our own due diligence, figuring out, are these people real? And they were. A source said. said The New York Times that Cox is buying Axios for roughly five times its projected 2022 revenue of over $100 million. Why should we believe that Axios is worth $525 million? “Because that’s what Cox paid for,” VandeHei replied. “Look, you’re trying to look at a company’s revenue. What’s really unique and scalable about you? So from Cox’s perspective, they have some interesting things to work on. We have this national platform with an elite audience. We’re launching our premium subscription business, Axios Pro, so there’s endless room for growth in the premium subscription space. We are present in more than 20 cities today, and there are many more cities in the United States.
VandeHei is a businessman, having co-founded two of the most influential start-ups of the digital age. I wondered if he could once again heed the call of the starter siren. “I will never start or run another media company,” he said emphatically. (Mark those words!) “This is my life’s work, and there are many, many years of work to be done at Axios.”