Nieman Foundation at Harvard
Congrats are in order: Today, Atlanta-based Cox Enterprises announced it was spending $525 million to buy Axios, the newsletter-driven news outfit that made “Be smart:” a thing.
The sale isn’t particularly surprising to me. After all, Axios was playing footsie with Axel Springer last year until the German giant decided to buy Politico instead. And while I believe the company’s leaders when they say they see years of growth ahead, a number of Axios’ early investors are likely very happy to get a nice return as they plan for any downturn-related belt-tightening.
But what did surprise me was the buyer.
Cox is still a family-controlled company after nearly 125 years of existence. It has produced enormous wealth for the relatively small number of heirs to its fortune. (Forbes estimates the company is worth about $34 billion. When she died in 2020, Anne Cox Chambers was one of the richest women in the United States. Her father, company founder James M. Cox, was the Democratic nominee for president in 1920, a race he lost by an astonishingly large margin.)
Strong family owners who have held on to their newspapers generation after generation are wonderful. But they’re not particularly common. Most newspaper families spent the 20th century diversifying their businesses — often into radio, then into TV, and then into cable systems. From the 1970s onward, many were happy to sell off their papers to Gannett or whichever other growing chain came to town with a checkbook. In the 1990s and 2000s, many more followed, and the ones who didn’t sell tried to make sure newspapers were only one smallish part of a diverse portfolio.
The Cox family seemed to fit into this category. Its empire grew first on newspapers — the big dailies in Atlanta, Dayton, Austin, and Palm Beach were the most important, but it owned dozens of dailies and weeklies, mostly across the South and West. But it entered the radio business in 1935, then TV in 1948, then cable in 1962. Over time, newspapers became less and less important to the company.
The path seemed clear: Let’s get out of the media business. Cox Enterprises now makes the overwhelming share of its revenue from providing middling cable service across the country and from a number of automative-related products, including Autotrader.
Which is why it was surprising to see today’s deal. Other than the Atlanta and Dayton papers, Cox has no other media properties to speak of.1 How to explain betting $525 million on Axios?
For one thing, never doubt the pull of family. Some stories about the deal describe Alex Taylor as Cox’s CEO, which is true. But he’s also the forty-something son of Margaretta Taylor (net worth $5.6 billion), the grandson of the aforementioned Anne Cox Chambers, and the great-grandson of James M. Cox himself. He became the CEO of Cox Enterprises in 2018 and its chairman in January. He spent his early years in the family business at Cox newspapers and TV stations, including a stint as publisher of the Palm Beach Post.
Owning a bunch of cable systems throws off waterfalls of cash, sure — but is it as fun as being a media mogul? In a family-owned company, the urge to put your own stamp on the business must be strong. And the flexibility that comes with all those billions lets you try things out. For instance, Cox invested $100 million into a little startup named Theranos, an investment the all-knowing Theranos reporter John Carreyrou says was driven by Taylor. (Taylor was included on a potential witness list for Elizabeth Holmes’ trial.) Under Taylor, Cox has also invested in esports; it owns a team in the Overwatch League.
Also, a cable company buying a news publisher — the pipes buying what flows through it — is a classic move. (See: Comcast buying NBCUniversal. Less successfully, see: Verizon buying [and then selling] Yahoo, AOL, HuffPost, TechCrunch, etc. Or AT&T buying [and then selling] Time Warner.) Everyone might be canceling cable TV, but they’re still going to need internet from somewhere.
Owning Axios might also be attractive to a family that has a long history of involvement in politics. While Anne Cox Chambers was a Democrat and ally of Jimmy Carter, most of the family’s efforts have been on the political right. James M. Cox, Jr. made national news in 1972 by ordering all of his (previously editorially independent) newspapers to endorse Richard Nixon — symbolic of a broader move of southern white conservatives from the Democrats to the Republicans. The company’s chairman emeritus, James Cox Kennedy, is an active Republican donor. Alex Taylor is currently the lead fundraiser for a deeply controversial project nicknamed “Cop City” — “a proposed $90 million police militarization training facility [including] a mock city for officers to train in, as well as a helicopter landing base, new shooting ranges, burn tower sites, and more,” right in the middle of Atlanta’s largest remaining green space. (Cox’s Atlanta Journal-Constitution has been an editorial supporter of the project.)
Until today, Cox’s most noteworthy investment in digital media was Rare, the conservative news site it launched in 2013. (Its beef-loving slogan? “Red is the Center.”) Its content strategy was a bit muddled — sometimes serving up red meat for the base, sometimes turning more Jeb Bush establishment, and sometimes just chasing apolitical Facebook clicks — and it never gained much traction. (It was the sort of place that would mix quotes from John Bolton and Ted Nugent in the same press release.) By 2015, less than 3% of the site’s traffic was on political stories.
Rare shut down in 2018, the year Taylor became Cox CEO. (It’s since been revived by another company. Current top headline: “You’ve Been Heard: McDonald’s Brings Back Breakfast Favorite.”) Perhaps Axios’s establishmentarian bullet-pointing can serve as another crack at the national political market. (And given that the broadband/cable industry is highly regulated, owning an outlet read widely in Washington circles is a significant bonus.)
Axios is a hell of a media company. Growing from zero to a $525 million exit in just five years is an accomplishment with few precedents. I think they’ve done a lot of smart things along the way and their revenue success has been remarkable — especially given that their Smart Brevity™ format is imminently stealable. (I’ve complained about plenty of their editorial decisions — but hey, that proves I’m reading it, right?)
The price strikes me as a little high. I’m not as sold on the future areas of expansion (a Smart Brevity™ SaaS platform, Axios Local’s further sprawl) as I was on their core product. (Cox must not be that excited about Axios HQ either, given that it’s excluded from the sale.)
But Axios deserves nothing but credit for building one of the nation’s most prominent national news media brands in the blink of an eye. If you’re a company looking to break into digital media, they’re an obvious choice to acquire. Now we’ll see what Cox does with them.
