Politico to Be Acquired by Axel Springer, a German Publisher
The publishing giant will take control of Politico, Politico Europe and Politico’s tech news site, Protocol.,
Politico, the Washington news site that has prospered for years as Beltway professionals gobbled up its scoops and inside-baseball-style reporting, will have a new owner.
The German publishing giant Axel Springer agreed to buy Politico in a deal announced on Thursday that could shake up the Washington media scene.
Springer will take control of Politico and its sister site, Politico Europe, as well as Politico’s tech news site, Protocol, a relatively new venture, the companies said. The deal, expected to close by the end of the year, is valued at more than $1 billion, two people with knowledge of the matter said. The New York Times reported last week that Politico’s owner, Robert Allbritton, was seeking $1 billion for the deal. The companies did not publicly disclose financial terms.
Mathias Dopfner, the chief executive of Springer, described Politico as an “outstanding media company” that has “disrupted digital political journalism.” He added the importance of maintaining Politico’s “editorial independence and nonpartisan reporting.”
Mr. Allbritton, who helped found Politico in 2007, will remain publisher of the site, and it will operate separately from Springer. “I reach this milestone with a sense of satisfaction that I hope is shared by every Politico,” he said in a statement. He also took a jab at others in the digital media space: “We have put the emphasis on doing rather than boasting, and what multiple competitors have aspired to — a consistently profitable publication that supports true journalistic excellence — we have achieved.”
Mr. Allbritton and Springer had been in talks for several months about a deal for Politico, which generates about $200 million a year in revenue and has been consistently profitable. The site is available to readers free of charge, and its flagship newsletter, Playbook, is widely read by Washington’s power brokers. A high-end subscription service, Politico Pro, generates more than half the company’s annual revenue.
With a value of more than $1 billion, the deal is one of the most expensive media mergers in recent memory, the equivalent of five times Politico’s yearly sales. BuzzFeed, one of the largest digital publishers in the country, recently announced a financial transaction that would take it public at a valuation of $1.5 billion, or about three times its annual revenue.
Springer has been pursuing deals in the United States as a way to expand its portfolio. The publisher has become particularly attracted to subscription-based news businesses. After Springer acquired Business Insider for around $500 million in 2015, it remade the company to become a subscription-based news outlet and put its scoops behind a paywall. (For that deal, Springer paid almost nine times Business Insider’s revenue.) Last year, the company acquired a controlling stake in Morning Brew, a newsletter publisher.
Politico’s subscription business made it an even more attractive target for Springer. The German publisher already had a partnership with Politico as a joint owner in Politico Europe. Springer had been looking to expand Politico Europe, but it couldn’t do so without Mr. Allbritton’s consent.
The Politico deal could quash Springer’s talks to acquire Axios, a competing news start-up founded by Jim VandeHei, Mike Allen and Roy Schwartz, all veterans of Politico. (Mr. VandeHei and John F. Harris started Politico in 2006 after they left The Washington Post.)
But Mr. Dopfner has said that the acquisition of Politico would not prevent him from continuing his pursuit of Axios, according to two people with knowledge of his thinking. How he would resolve the conflicts that go with owning two closely competing publications is unclear.
When asked in a town-hall-style meeting on Thursday with Politico staffers why he had chosen Politico over Axios, he described Axios as “an impressively successful product” before saying that, when there was the chance to acquire Politico, “Why would you consider any other alternative?”
Mr. Dopfner still needs to find a top executive to manage the new property. In February, Politico’s chief executive, Patrick Steel, announced that he would depart. Buying a property like Axios could help Mr. Dopfner solve the pending management search by installing its leaders to run both operations, the two people said.
Mr. Dopfner could not be reached for comment. Axel Springer offered a statement: “We acquired Politico because we believe in its potential. At the same time as a global media company we are always looking at strong digital publications to partner with.” Later, Springer updated its statement to read: “Axel Springer will not acquire Axios.”
Mr. Allbritton has lost some of his big-name journalists in recent years, either to rivals or to upstarts. Three of Politico’s top staff members — Jake Sherman, Anna Palmer and John Bresnahan — left this year to start Punchbowl News, a competing news site. Mr. Sherman and Ms. Palmer were the hands behind the Playbook newsletter. In June, Carrie Budoff Brown, a longtime editor at Politico, said she would be leaving to join NBC News.
Politico’s nearly 400 journalists are also in the throes of a unionizing effort that could add to the cost of the business. It’s unclear how Springer will manage the mounting labor issues.
For Mr. Allbritton, the deal means a huge personal payday. His family already netted about $500 million after Mr. Allbritton sold its television empire to Sinclair Broadcast Group in 2013.