For Axios Local, selling to Cox will mean fresh cash and growth momentum
Axios Local has been growing like kudzu since its launch 18 months ago. Now, with its parent company sold to Cox Enterprises on Monday, the newsletter family is poised for even faster expansion.
“Our goal of 100 cities is within reach,” editor Nick Johnston told me over the phone. “I have a list of 384 metro areas in my office, and we’re going through them one by one.”
Axios Local will hit its 2022 goal of launching 24 city-specific weekday newscasts ahead of schedule, he added, when Houston and Miami go live Monday.
The purchase of Axios by Cox Enterprises for $525 million (first reported in the New York Times by my former Poynter editor Ben “Scoop” Mullin) looks like a near-perfect M&A match .
In five years, Axios founders Jim VandeHei, Mike Allen and Ray Schwartz have built a strong and profitable brand – having been among those to launch Politico, which was sold in October to German media giant Axel Springer for over a billion dollars.
There comes a time in the life of most digital startups to cash in and/or look to a larger parent company for the next round of growth investments. Quick-format Axios quickly got to this point.
Monday’s transaction is part of the subset of those deals where the founders were asked to stay and continue running the company. They, along with Axios staff members, will receive a stake in the business and therefore have an incentive to operate it under the new ownership.
Cox had previously taken a minority stake in Axios, as VandeHei and company sought a buyer. “They were clearly fans,” Johnston said. The new owners will have the deciding vote on what comes next, he continued, but “they share our dreams of what can happen with Axios Local.”
Axios has about 500 employees, Johnston said, about half of those reporters and half of the reporters assigned to Axios Local.
The Axios Local format, modeled after Charlotte Agenda, which the company bought for around $5 million, is a fast-reading morning newsletter billed as what you need to know to start your day right.
It features the bulleted telegraph style of Axios’ national offerings, which VandeHei likes to call “smart brevity.” He consults for companies, and the three publish a book in September on how to write that way.
Local newsletters, at least initially, have a two-person team. They are paid well – six figures for the most experienced – and tasked with producing a combination of aggregation, original reporting and personal chat. This content can be supplemented by tapping into Axios’ national databases on real estate and other topics.
When I spoke to Johnston, a Bloomberg veteran, in January, he was acting as editor, coordinating the work of the first dozen letters and seeking editorial help. He has since appointed seven more editors and bureau chiefs, he said, a capacity that will support the next one or two growth cycles.
Cox owns The Atlanta Journal Constitution and Dayton (Ohio) Morning News, the latter founded by namesake and 1920 presidential candidate James M. Cox. It became big and rich in the second half of the 20th century with various major cable and digital properties.
Cox announced in March that he was selling a dozen local broadcast stations and other properties to companies associated with the Apollo Global Management hedge fund.
The price was not disclosed, but gave Cox enough money to reinvest – a wealthy private parent company for Axios, analogous to ownership of Hearst and Advance for their local newspaper chains.
Will Axios Local and Newspapers be operated together to realize (pardon the expression) synergies? “I don’t think so,” Johnston said. More likely, everyone will continue to do their own thing in their own way. “What’s important to us is (their) generational commitment to current affairs.”
Critics of Axios Local, as Poynter contributor Elizabeth Djinis reported last week, doubt that a two-person team, no matter how skilled and energetic, can fill persistent gaps in newspaper coverage. . And how many ambitious investigative projects can they expect to undertake?
VandeHei and Johnston also admit that their initial slate of newsletters skewed toward big, thriving cities loaded with young professionals, the primary target audience. Whether the formula can be transferred to news deserts or even mid-sized towns stuck with “ghost” newspapers remains to be seen.
“We learned a lot,” Johnston said. This includes, for example, where to focus an upcoming news staffer on established newsletters in Denver and Dallas or how to adapt the Charlotte Agenda ad sales model in other cities, post-COVID-19.
Achieving impact on a more diverse set of hometowns won’t be the work of the next few months, but perhaps not too far. As I wrote in January, Axios Local is “a disruptive enterprise product that should worry any incumbent.” Especially after Monday’s sale to Cox Enterprises.