The buyer of Virginia media startup Axios is saying the right things about supporting journalism.
But it remains to be seen whether the Cox Enterprises deal improves the local journalism crisis that’s left millions of American voters with little to no coverage of local events.
Cox on Monday announced that it was acquiring Axios, after The New York Times broke the story of the $525 million deal.
Cox was an early investor in Axios, which raised a reported $57 million from venture capital firms and billionaires. Axios started in 2016 as a national, online outlet known for its abbreviated, bullet-list style of reporting.
The merger comes a year after Axios began launching local-news newsletters in a handful of cities. Its formula is to hire two or three reporters per city and fill out newsletters by excerpting stories from existing local outlets.
I’ve argued that this won’t save local journalism, as Axios says it’s doing, and will probably make the situation worse. That’s because there’s minimal local investment by the company, which siphons readership and potential subscribers away from local outlets providing foundational local coverage.
So far it’s targeting cities with existing outlets, not news deserts where local journalism is desperately needed.
We’ll see what happens now that Axios is owned by a family with ink in its blood and a fortune available to invest.
The companies said the deal will enable Axios to expand national coverage, launch in more cities and build more professional subscription products, like a health care product it’s developing.
Many things must happen to save and restore America’s independent, local free press system. One reason it’s suffering is because so many local news outlets are controlled by an ever smaller handful of remote investors.
“Increasingly, a consensus is emerging that reviving local news in the 21st century involves re-establishing some form of local ownership that is accountable to the community where the news outlet is located,” said The State of Local News report by Northwestern University’s Medill School.
Cox should be different. It started as publisher of the Dayton Daily News in Ohio and has long published The Atlanta Journal-Constitution.
But nearly all the company’s revenue now comes from cable and broadband services and an automotive division providing trade media (like Kelley Blue Book), marketing other services.
Cox used to own dozens of radio and TV stations, including Seattle’s KIRO 7. But it sold a majority stake, plus the Dayton newspaper, to a hedge fund in 2019. It later reacquired the Dayton paper so the deal could get regulatory approval.
Its hedge fund partner, Apollo Global Management, isn’t a beacon of hope for local media.
Apollo financed Gannett’s merger with GateHouse, putting hundreds of America’s daily papers in the hands of a merged company burdened with debt. Gannett last week signaled that major layoffs are expected as its earnings fell short.
Cox Media Group, the broadcasting partnership between Apollo and Cox, is involved in another big merger expected to close this year. Apollo is backing an $8.6 billion bid to acquire Tegna, a chain of 64 local broadcast outlets in 51 local markets, including KING in Seattle and KREM in Spokane.
As part of that deal, Cox Media Group will acquire TV stations in Austin, Dallas and Houston.
Cox Enterprises CEO Alex Taylor is a descendant of the Dayton publisher and worked as a reporter. Later he oversaw the TV, radio and newspaper companies and led creation of its first “cross platform” newsroom, according to his corporate biography.
I asked to interview Taylor about his plans for Axios but haven’t heard back. He told the Journal-Constitution it’s a natural fit because of the family’s journalism background.
“We invested in Axios because we’re just passionate about journalism and covering the news,” he told the paper.
There are other reasons the deal seems smart. Axios also built a digital advertising operation serving big brands — especially Google and Facebook, providing them prominent placement in newsletters and its growing national reach.
That complements digital marketing businesses Cox operates directly and through Cox Media stations, several of which overlap with Axios Local markets.
To me, it looks like Cox divested its stake in high-cost, legacy local news outlets and their marketing affiliates as local TV ad spending slowed. Now it’s acquiring a low-cost, digital media company aiming to build a national ad network.
If that enables Cox to provide substantial local news coverage in places where it’s lost, the deal might turn out to be a good thing for everyone.
But if it leads to another national conglomerate hoovering up local audiences and advertising while making a minimal investment in local news coverage, the journalism crisis will only get worse.