Politico transaction brings profit and U.S. platform to Axel Springer

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Axel Springer SE update

When German publisher Axel Springer agreed last week Acquired Politico, The first reaction of the media was envy.

The American political website and subscription service, established in 2007, have achieved rare success stories. Although two rounds of defections led to the establishment of competing products by former employees, Politico was still profitable. Now its financial backer, Robert Allbritton, has received nearly $1 billion, which is five times the company’s reported revenue.

The sale comes at a difficult time for Politico’s competitors, including traditional media and digital upstarts, especially those who rely on advertising.

The total circulation of U.S. newspapers (print and digital) fell again last year by 6%, and now Half of 2007 levelAlthough in the United States alone, digital advertising soared to US$152 billion during Covid-19, the revenue did not flow to news media websites. Last year, Facebook, Google, and Amazon accounted for the majority of US advertising spending for the first time.

Many media companies now view subscriptions as a more reliable source of income. During the blockade and the US presidential election last year, some media companies achieved impressive growth.

But interest is now waning. The prime time ratings of the three major U.S. cable news networks fell by more than 35% year-on-year in the second quarter, with CNN performing the worst. The New York Times recently reported that subscriber growth is slowing. According to data from ComScore, in July this year, the number of visits to its website, the Washington Post, The Wall Street Journal and USA Today all dropped by at least 10% year-on-year.

Several digital players hoping to cash out are now struggling.Vice is More layoffs And has been shelved Planned merger Use special purpose collection tools. BuzzFeed has lowered its valuation Committed financial discipline Because it promoted its own Spac transaction.

With all this in mind, why does Axel Springer splurge on Politico?Some analysts believe this is another sign Private equity bubble. Due to delisting with support KKRIn 2015, Springer’s bid surpassed the Financial Times, and it is now more free to indulge its global ambitions. The company said modestly last week that it “Aiming to create a leading digital media publisher in a democratic world“.

But another way to look at this acquisition is to view it as a two-pronged battle with technology giants. As Google and Facebook absorb advertising revenue, media organizations have two options. They must either find a source of professional income that the large technology companies cannot use, or try to recapture some of the mainstream funding. When acquiring Politico, Axel Springer was looking for a way to balance both.

The main public image of this American brand comes from talkative, free e-mail and exclusive news reports about the promoters and shakers of Washington. According to data from SimilarWeb, unlike many political websites, in the year ending in July, its network traffic has increased by 28%, and it has attracted the hope that Facebook and Google can’t match in all aspects of data mining. Corporate advertisers with powerful audiences.

Even so, half of Politico’s $200 million in revenue comes from its far less compelling “professional” subscription business, which basically takes advantage of the $3.5 billion US lobbying industry. Described as “Political Bloomberg”, it sells data, catalogs, and detailed reports on the legislative and policy-making process for up to $10,000.

This is a lucrative market, The Hill is another profitable Capitol Hill target site, Recently sold for USD 130 million The local television group Nexstar.

When the supervision of large technology companies was on the Washington agenda, the acquisition of Politico also allowed Axel Springer to gain greater American influence. Various antitrust issues are under discussion, but the impact on the news media may rise to the highest point.

Australia has shown how the government can force platform companies to share revenue with content creators – and large media companies like Rupert Murdoch’s News Corp. Best able to profit from these changesThe larger Axel Springer’s presence in the United States, the more likely its American interests (including shares in Business Insider and Morning Brew, Ninth Group and Politico) will benefit.

More importantly, Springer CEO Mathias Döpfner has made public Fight against Google And other platform companies since 2014. So far, most of his efforts have been directed at In Brussels, But Politico gave him an American platform. A soap box and a profitable American company are combined into one. Who can resist?

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