Politico Is Looking for a $1 Billion Deal with Axel Springer

Politico, the Washington news site popular with Beltway power brokers, is aiming for a possible deal with the German publishing giant Axel Springer.

Under the direction of its owner Robert Allbritton, Politico had spoken to Axel about a possible investment or a full sale, said two people familiar with the matter. Such a deal would mean a high premium for Politico, which generates about $ 200 million in annual sales, they said.

That would make it one of the most expensive media mergers in recent times. A $ 1 billion deal would equal five times Politico’s annual sales. BuzzFeed, one of the largest digital publishers in the country, recently announced a financial transaction that would bring it public with a value of $ 1.5 billion, or about three times its annual sales. The New York Times Company is valued at roughly four times annual sales.

A spokesman for Mr. Allbritton responded to inquiries citing an email sent to employees yesterday in which the owner said in part, “My companies have a clear policy of simply not commenting – we do not affirm, we do not deny we don’t wink, we don’t nod ”over pending deals. Axel also declined to comment.

The German publisher has been actively looking for media items in the US. In 2015, the company acquired Business Insider for around US $ 500 million and last year acquired a majority stake in Morning Brew, a newsletter publisher.

Axel already has a partnership with Politico as a co-owner in Politico Europe, with which the German company has tried to clarify what to do with it. Since it does not control the company, it cannot expand the business without Mr. Allbritton’s consent. A deal with Politico could solve that problem while expanding Axel’s presence in the US, people said.

A merger with Politico could undo Axel’s talks to acquire Axios, the rival news start-up founded by Jim VandeHei, Mike Allen and Roy Schwartz, all of Politico’s early veterans. (Mr. VandeHei and John F. Harris founded Politico in 2006 after leaving the Washington Post.) Axios’ leadership was not aggressively pursuing the deal, according to one of the people.

A major Washington media player, Mr. Allbritton, whose family owned a television empire, funded Politico. He eventually sold his family’s television channels to the Sinclair Broadcast Group for nearly $ 1 billion. In terms of debt, the family raised approximately $ 500 million from the sale.

Politico got the chance to sell to Axel a few years ago when it was a much smaller company, but Mr Allbritton didn’t want to do that back then, people said.

Mr. Allbritton has recently focused on maintaining Politico’s star staff and growing the business. But the media landscape has changed dramatically, and the so-called talent economy has made it possible for well-known journalists to set up their own companies.

That year, three of Politico’s top people – Jake Sherman, Anna Palmer, and John Bresnahan – left Punchbowl, a political news site. Mr. Sherman and Ms. Palmer were the familiar hands behind Politico’s largest franchise, the Playbook newsletter.

In February the CEO of Politico announced his resignation. Then in June, Carrie Budoff Brown, a longtime editor at Politico who ran the US newsroom for half a decade, said she was moving to NBC News. Politico’s nearly 400 journalists are also in the midst of union efforts that could significantly increase the cost of the business.

Mr Allbritton has weighed the prospect of a lucrative payday against complete control of a well-read news site in the country’s capital.

The merger discussions were previously reported by the Wall Street Journal.

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