4 Key Takeaways From the Axios Acquisition

On Monday, the business publisher Axios announced that it had been acquired by the media conglomerate Cox Enterprises for $525 million, marking the beginning of a new era for the publisher whose signature style of bullet-point reporting helped it rise to nationwide prominence just five years after launching. The acquisition comes at an inflection point in the media industry, as sweeping changes to the digital advertising ecosystem—and the prospect of an impending recession—threaten to upend the brief year of prosperity that followed on the heels of the pandemic. The deal reflects several of the larger trends shaping the industry, such as the rising value of first-party data, as well as offering insight into its future. Below are takeaways from the acquisition. Axios Local gets a patient, deep-pocketed investor Cox Enterprises gravitated to Axios in large part because of its political and business news coverage, which The New York Times reported would reach $100 million in revenue for 2022. Most of Axios' revenue comes from brand awareness advertising across its site, 19 national newsletters and podcasts. It recently launched a subscription product, Axios Pro, aimed at investors and policy professionals. But in Axios Local, Cox Enterprises sees a new vision of local news. The program, launched in December 2020, has already expanded into 24 cities and topped 1 million free newsletter subscribers. It is on pace to generate more than $10 million in revenue by the end of the year. After leading Axios’ Series D investment round in November 2021, Cox Enterprises examined the blueprint for Axios Local and found it compelling, said Shereta Williams, the senior vice president of growth operations at Cox Enterprises. The venture represents an ambitious attempt to create a nationwide network of news outposts, a digitally native web that the country has never seen. And for Cox Enterprises, which once owned dozens of newspapers across the country before selling off all but four, the audacity of the task is matched only by its potential upside. Blanketing the country with local news outfits will require time and capital, both of which Cox Enterprises is uniquely well situated to provide, Williams said. “We are a well-funded private company that can play for the long term in a way that other investors cannot,” Williams said. “We think Axios Local is a long-haul project and we are patient.” Axios Local Tops 1 Million Email Subscribers as it Eyes Its 24th City Logged-in audiences keep fueling acquisitions The looming deprecation of third-party cookies and a heightened emphasis on consumer privacy have increased the value of first-party data, a trend made apparent by several of the major media acquisitions of the last year, said Insider Intelligence senior analyst Max Willens. In July, the newsletter-based business publisher Industry Dive was acquired for $525 million, and in January the subscriber-only publisher The Athletic was bought for $550 million by The New York Times for roughly eight times its annual revenue. Both publishers––Industry Dive through email addresses, The Athletic through logins––commanded large, valuable audiences composed of clearly identifiable readers. As first-party data grows more important, publishers with troves of known readers will only grow in value. Axios, like Industry Dive, enjoys the benefits of knowing a lot about its email subscribers, enabling it to sell relevant advertising without relying on third-party cookies. “We have 2.7 million influential, smart readers that rely on us to get caught up on what is happening in their industry, community or city,” said Fabricio Drumond, Axios' chief business officer. “That is our core strength: the fact that we have that first-party data perspective.” Cox Enterprises expands its digital footprint ahead of midterm elections Cox Enterprises makes the majority of its revenue through the cable and broadband businesses, both of which are poised to decline in consumption in the coming years. But local television still plays an outsized role in advertising, specifically in political spending––so far, political advertisers have spent $2.1 billion out of a total $3.6 billion on broadcast television, according to Axios. And in expanding its digital footprint by acquiring a property known for its political coverage, Cox Enterprises positions itself to attract even larger ad buys ahead of the coming midterms, Willens said. Last August, the legacy broadcast company Nexstar made a similar acquisition when it nabbed The Hill for $130 million. Axios Local, with its hyper-targeted geographic relevance, could also act as a vehicle for political spend, Willens said. Combined, between its digital, local, television and radio channels, Cox Enterprises can offer political advertisers thousands of targeted touchpoints in one media buy. “Media is a good business if you can attract a sought-after audience and keep their attention,” Willens said. Axios HQ watches from the sidelines In acquiring Axios, Cox Enterprises inherited a slew of ancillary products that complement its core news business, including Axios Pro, Axios Latino and a budding slate of events. One product it did not inherit is Axios HQ, the software-as-a-service communication product that allows companies to mimic the Smart Brevity style of Axios writing. Instead, Axios will spin out Axios HQ as a separate company, with Cox Enterprises taking a minority stake in its ownership. Both companies said that the product, while promising, represents a departure from the rest of Axios’ media-centric offerings—a difference that made it a nice-to-have, rather than a need-to-have, according to Williams. Willens agreed, citing its different target market and business model as a key reason why Axios HQ was left out of the acquisition. But its carve-out from the deal, however sensible, sends a signal about its current desirability. “It was not close enough to what made Axios attractive to the news industry,” Willens said. “That it was something that Cox felt comfortable not acquiring.” Axios Pro Deal Newsletters Launch, Starting at $599 Annually

Merger & Acquisition News

Political Ad Buyers, First-Party Data and Other Perks of the Axios Purchase

As the importance of first-party data grows, so does the value of publishers with large newsletter bases

Mark Stenberg

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Mark Stenberg