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Axel Springer announced this morning that it will acquire Politico, as well as the remaining 50% share of its current joint venture Politico Europe and the tech news website Protocol, which launched in February 2020.
The financial specifics of the deal were not disclosed, but The Wall Street Journal has reported that sources close to the matter suggest the transaction has been valued at over $1 billion, nearly five times Politico’s $200 million in annual sales.
The acquisition expands the growing U.S. footprint of Axel Springer, which owns the German newspapers Bild and Die Welt. It acquired Business Insider (now Insider) in 2015 for $500 million and nabbed a controlling stake in the business newsletter Morning Brew last October.
“As Politico has prospered in recent years, accompanied by the successful launch of Protocol, it became steadily more clear that the responsibility to grow the business on a global scale, to better serve the audience and create more opportunities for our employees, might be better advanced by a larger company with a significant global footprint and ambitions than it could be by me as owner of a family business,” Politico owner Robert Allbritton said in a statement.
The merger could also help Axel Springer better maneuver Politico Europe, which it launched in 2014 as a 50/50 co-venture alongside Politico. The publisher has an office in Brussels and is a key foothold for Politico’s overseas expansion. However, Axel Springer did not control Politico Europe, so it could not expand the business without the consent of Allbritton.
The deal will also make Axel Springer and its growing stable of U.S. media companies a more appealing advertising partner for ad-buyers. Publishers have entered into an acquisition frenzy in recent months as they seek to ad scale, bolster their banks of first-party information and take advantage of a barbelling media ecosystem.
The Politico appeal
The $1 billion deal would be one of the more expensive recent acquisitions in the media business. Launched in 2007 by Allbritton, Politico helped reshape the landscape of political media with its rapid-fire style and insider scoops. The publisher reportedly had an opportunity to sell to Axel Springer years ago when the operation was much smaller, but Allbritton declined.
The publisher became one of the first digital media companies to build out an empire of free newsletters. It offers 35 free email products, and its tentpole product, The Playbook, reaches over 350,000 people and generated $10 million in revenue in 2020. The publisher uses its warren of newsletters to cross-promote its products, helping it super-charge the growth of new products.
Politico also offers Politico Pro, a business-to-business newsletter offering that, in 2018, comprised more than half of its total revenue, according to Vanity Fair. Politico Pro prices start at $10,000 and can run into the six digits, depending on how much policy-focused content subscribers want and how many users will be accessing it.
The merger might also torpedo deal talks between Axel Springer and Axios, the latter publisher an offshoot of Politico. Axios was launched by Jim VandeHei, Roy Schwartz and Mike Allen in 2017 after the three left Politico.
