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 family of newsletters is poised for even faster expansion.
“Our goal of 100 cities is in reach,” publisher Nick Johnston told me by phone. “I have a list of 384 metropolitan areas in my office, and we cross them off one by one.”
Axios Local will hit its 2022 goal of launching 24 city-specific weekday newsletters ahead of schedule, he added, when Houston and Miami go live Monday.
Cox Enterprises’ $525 million purchase of Axios (first reported in The New York Times by my former Poynter editor, Ben “Scoop” Mullin) looks like a near-perfect mergers and acquisitions match.
In five years, Axios founders Jim VandeHei, Mike Allen and Ray Schwartz have built up a strong and profitable brand – having earlier been among those launching Politico, which was sold in October to German media giant Axel Springer for more than $1 billion.
There comes a time in the life of most digital startups to cash out and/or look to a bigger parent for the next round of investments in growth. Fast-format Axios got to that juncture quickly.
Monday’s transaction is in the subset of such deals where the founders have been invited to stay on and keep running the enterprise. They, and Axios staff members, too, will be given an equity stake in the company, and thus have incentive to make it work under the new ownership.
Cox had earlier taken a minority stake in Axios, as VandeHei and company looked for 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 for what can happen with Axios Local.”
Axios has roughly 500 employees, Johnston said, about half of those journalists, and half the journalists assigned to Axios Local.
The Axios Local format, patterned on Charlotte Agenda, which the company bought for an estimated $5 million, is a quick-read morning newsletter, framed as what you need to know to get your day going.
It features the telegraphic, bullet-point style of Axios’ national offerings, which VandeHei likes to call “smart brevity.” He consults for corporations and the three are publishing a book in September on how to write that way.
The local newsletters, at least starting out, have a news staff of two. They are well paid — six figures for the most experienced — and tasked with producing a combination of aggregation, original reporting and personal chat. That content can be supplemented by dipping into Axios’ national databases on real estate and other topics.
When I spoke to Johnston, a veteran of Bloomberg, in January, he was functioning as editor-in-chief, coordinating the work of the first dozen letters and looking for some editing help. He has since appointed seven other editors and bureau chiefs, he said, capacity that will support the next round or two of growth.
Cox owns The Atlanta Journal Constitution and Dayton (Ohio) Daily News, the latter founded by namesake and 1920 presidential candidate James M. Cox. It grew big and rich in the latter half of the 20th century with various large cable and digital properties.
Cox announced in March that it was selling a dozen local broadcast stations and other properties to companies associated with hedge fund Apollo Global Management.
The price was not disclosed but gave Cox ample cash to reinvest – a rich privately held parent for Axios, analogous to Hearst and Advance ownership for their local newspaper chains.
Will Axios Local and the newspapers be jointly operated to achieve (pardon the expression) synergies? “I don’t think so,” Johnston said. More likely, each will continue to do their own thing in their own way. “What’s important to us is (their) generational commitment to news.”
Critics of Axios Local, as Poynter contributor Elizabeth Djinis reported just last week, doubt that a staff of two, however skilled and energetic, can make a dent in the continuing gaps in newspaper coverage. And how many ambitious investigative projects can they be expected to take on?
Both VandeHei and Johnston also concede that their initial roster of newsletters has tilted to prosperous big cities loaded with young professionals, the primary target audience. Whether the formula can transfer to news deserts or even mid-sized towns stuck with “ghost” newspapers remains to be seen.
“We’ve learned a lot,” Johnston said. That includes, for instance, where to focus a next news staffer at established newsletters in Denver and Dallas or to how to adapt the Charlotte Agenda ad sales model in other cities, post COVID-19.
Achieving impact at a more varied set of home cities won’t be the work of the next few months, but may not be down the road too far. As I wrote in January, Axios Local is “a disruptive business product that should worry any incumbent.” All the more so after Monday’s sale to Cox Enterprises.
Correction: This story has been modified to correct the name of the Dayton Daily News, which was erroneously referred to as the Dayton Morning News. Poynter regrets the error.
