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Economy and Stock Market News for Aug. 8, 2022

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credit…Jared Soares of The New York Times

Since its inception five years ago, Axios is a digital media company that has quickly gained traction with its unique breaking-style scoop on the areas of politics, business and technology. said on monday announced that it has agreed to sell it to Cox Enterprises.

The deal, due to close this month, values ​​Axios at $525 million, according to two people familiar with the deal.

The deal marks the company’s three founders, CEO Jim VandeHei and President Roy Schwartz. And journalist Mike Allen has a financial incentive to stay with the company. Each will have a minority stake and will continue to run the daily newsroom and business decisions. Alex Taylor, Chief Executive Officer and Chairman of Cox Enterprises, will join his Axios Board of Directors.

Founded in 2017, Axios quickly became a staple of the Beltway media, with readers devouring stories about President Donald J. Trump and his administration. Jonathan Swann, National Political Correspondent for Axios, garners attention for in-depth on-camera roundtables with Trump and White House officials, and newsletters from journalists such as Dan Primack and Sarah Fisher. has attracted the attention of the business set.

The deal brings a rare glimmer of hope to the digital publishing sector, which has seen the past decade fraught with challenges for investors and operators. Some of Axios’ peers are looking to go public, sell or raise money at favorable valuations as investors cool off on digital advertising, a market dominated by tech giants such as Google, Meta and Amazon. I’m having a hard time.

Axios sells for more than $100 million, about five times its projected 2022 revenue, according to a person familiar with the presentation Axios made to its board. The company, which has been profitable for the past three years, is not expected to be profitable in 2022, partly due to investments in its telecom software unit, HQ, said a person familiar with the matter.

In an interview, Vandehei said the company’s founders decided to sell because they were committed to journalism and found a buyer who would pay a fair price. Substantial return.

VandeHei said it’s also important to ensure that management can stay in place in any deal, as he doesn’t intend to step down anytime soon.

“Not a chance,” he said. “This is my life’s work. It’s my passion. I do it for free.”

The deal offers the Axios founders a coda of sorts. Axios founders left Politico in 2016 amid a tug-of-war over the company’s future. VandeHei also contributed to the discovery. He, Allen, and Schwartz launched Axios the following year. Politico sold to German publishing conglomerate Axel Springer last year for $1 billion.

The transaction price exceeds the $400 million valuation Axios discussed with Axel Springer last year, according to three people familiar with the matter. After those negotiations, Axios raised another funding round led by Cox, valuing the company at his $430 million.

Cox Enterprises did not acquire the headquarters that Axios spun out into a separate company. Schwartz will become CEO of the company, Cox will get a minority stake and Vandehei will serve as chairman, people familiar with the deal said.

The deal to acquire Axios harks back to Cox Enterprises’ media roots. Cox Enterprises is a family-owned, privately held company based in Atlanta that generates most of its revenues from its cable and broadband businesses. The company’s beginnings date back to 1898 when James Middleton Cox bought what is now the Dayton Daily News for his $26,000. In 1939, Mr. Cox purchased the newspaper that eventually became Atlanta His Journal His Constitution, and the company still owns both publications today.

“It’s a big part of who we are and what we do,” said Taylor. “We have been in the news industry for his 124 years, and this speaks to the legacy our grandparents left us.”

Cox Enterprises, which already owned a minority stake in Axios, is adding $25 million in cash to its balance sheet to fund the company’s growth. VandeHei said Axios plans to build a series of subscription products on topics such as technology, politics, and legislative policy, similar to what Politico Pro offers.

Axios also plans to continue launching more regional editions that already exist in 24 cities, including Philadelphia, Des Moines and Nashville. VandeHei said the company aims to reach at least 100 cities in the next few years.

“Hopefully Politico was the first, and with Axios today, we have shown how serious journalism can thrive in the digital age,” said VandeHei. “This country desperately needs it.”

Axios’ next big test is how its coverage of the midterm elections and the 2024 presidential election cycle aligns with its well-financed competitors. Vandehey said the company plans to hire additional reporters for the campaign, saying quality coverage is more about finding experienced journalists than having “100 boots on the ground.” pointed out.

VandeHei said he was optimistic about the prospects for the digital media sector despite the industry’s turmoil. He pointed to business-focused outlets like The Information and Morning Brew that have cultivated loyal readers in difficult markets.

“Lessons for the digital age: Chase Fudd, fantasy, click, fade or famish,” Vandehey said. “If you follow an engaged audience with quality information, you can thrive.”

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