Politico seeks €1bn in potential deal with German publisher – sources

If agreed, deal would be one of the most expensive media mergers in recent memory

Politico, the Washington news site popular with Beltway power brokers, is seeking as much as $1 billion (€850m) in a potential deal with the German publishing giant Axel Springer. Led by its owner, Robert Allbritton, Politico has been in talks with Axel about a potential investment or an outright sale, two people familiar with the matter said. Such a deal would amount to a hefty premium for Politico, which generates about $200 million a year in revenue, they said.

That would make it one of the most expensive media mergers in recent memory. A $1 billion deal would amount to 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. The New York Times Co. is valued at about four times annual revenue.

A spokesman for Allbritton responded to inquiries by referring to an email sent to staff Monday in which the owner said, in part, “My companies have a clear policy of simply not commenting, we don’t confirm, we don’t deny, we don’t wink, we don’t nod” about any pending deals. Axel also declined to comment.

The German publisher has been actively seeking media properties in the United States. The company acquired Business Insider for around $500 million in 2015, and last year it acquired a controlling stake in Morning Brew, a newsletter publisher.


Existing partnership

Axel already has a partnership with Politico as a joint owner in Politico Europe, which the German company has been trying to sort out what to do with. Since it doesn’t control the entity, it can’t expand the business without Allbritton’s consent. A deal with Politico could solve that issue while also expanding Axel’s presence in the United States, the people said.

A merger with Politico could scuttle Axel's talks to acquire Axios, the competing news startup founded by Jim VandeHei, Mike Allen and Roy Schwartz, all early veterans of Politico. (VandeHei and John F. Harris started Politico in 2006 after they left The Washington Post.) Axios' leadership has not aggressively pursued the deal, according to one of the people.

Allbritton, a major player in Washington media whose family owned a television empire, funded Politico. He eventually sold off his family's TV stations to Sinclair Broadcast Group for nearly $1 billion. After debt, the family netted about $500 million in the sale.

Politico had a chance to sell to Axel several years ago when it was a much smaller operation, but Allbritton did not want to do so at that time, the people said. Allbritton has lately become focused on trying to maintain Politico’s stable of stars and expand the business. But the media landscape has shifted dramatically, and the so-called talent economy has allowed big-name journalists to start their own ventures.

This year, three of Politico’s top staffers, Jake Sherman, Anna Palmer and John Bresnahan, left to start Punchbowl, a political news site. Sherman and Palmer were the well-known hands behind Politico’s biggest franchise, the Playbook newsletter.

In February, Politico’s chief executive announced he would depart. Then, in June, Carrie Budoff Brown, a longtime editor at Politico who led the US newsroom for half a decade, 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 severely add to the cost of the business.

Allbritton has been weighing the prospects of a lucrative payday against maintaining full control over a well-read news site in the US nation’s capital. The merger discussions were earlier reported by The Wall Street Journal. – The New York Times