Axios has signed a deal to sell its most recent lead investor, Cox Enterprises, the companies announced Monday. The cash deal values the company at $525 million, according to sources familiar with the deal.
Why it matters: The deal is structured to ensure 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. 2020 saw a significant 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 lot of that investment is to expand the number of local markets we serve. Local watchdog journalism is so important to the health of any community, and no one is more focused on building that nationally than Axios,” said Cox Chairman and CEO Alex Taylor.
Details: The deal, which was signed Sunday, includes an additional new investment of $25 million in Axios’ media division to help the company expand into 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. Eventually, it hopes to be in hundreds of cities.
- Axios will spin off its software arm, Axios HQ, into a separate, standalone company led by Axios President Roy Schwartz.
“This is great for Axios, for our shareholders and American journalism. It allows us to think and work across generations, with a like-minded partner – and build something great and durable that lives long after we’re gone,” said Axios CEO Jim VandeHei.
Terms of the deal: The deal values Axios at $525 million, the sources said. It has been reported that Axios predicts it will reach $100 million in revenue for 2022.
- Cox will oversee the Axios media division’s board with four board seats, and Axios’ three co-founders — VandeHei, Mike Allen and Schwartz — will remain on the Axios board.
- Taylor will fill one of four seats on the board.
- Axios will still control the Axios HQ board, where Cox will have one of three board seats.
- Axios management will maintain control over the company’s editorial leadership and day-to-day operations. The deal is structured to incentivize Axios’ management and current employees to stay with the store and continue to grow the business.
- Axios HQ is being spun off with some seed capital and plans to raise money early next year to fuel its growth as an independent firm. This year will bring in approximately $6 million in annual recurring revenue. It has over 300 customers.
Be smart: Axios launched with a mission to deliver 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.
- He was able to grow 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 across the country.
- Axios HQ launched in 2021 with a similar mission to help internal and external corporate communications departments communicate more effectively with their stakeholders through proprietary email publishing software.
By the numbers: Axios raised $55 million, but because it has always been profitable, it still has a lot of that money to keep investing in the business.
- Most of Axios’ revenue comes from high-level brand recognition advertising to major companies in its 19 national newsletters, its 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 for Axios Local. Axios HQ plans to more than double its size in the next year and triple its revenue.
Catch up fast: Axios was in talks to sell German publishing giant Axel Springer last year, but that deal fell through under unusual circumstances.
- Cox sold a majority stake in its 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 handful of digital news startups that have sold for more than $500 million in enterprise value over the past decade.
- Politico, which Axios’ founders built and ran until 2015, was sold for roughly $1 billion in 2021, a price that valued the company at roughly 5 times its annual revenue.
- The Athletic was sold for $550 million to the New York Times earlier this year, roughly 8 times its annual revenue.
What next: The deal is expected to close in the next few weeks, subject to regulatory approvals.