Axios, the digital news brand whose backers include Jeffrey Katzenberg’s WndrCo and Greycroft Partners, is returning a $4.8 million loan it secured as part of the troubled Paycheck Protection Program.
In a blog post, founder Jim VandeHei said the decision was made to give back the funds because “the program has become much more politically polarized since its inception.” He said the company is exploring other avenues to shore up its business. “Over the past week, a new alternative source emerged, giving us the confidence to return the PPP funds,” he said.
PPP funding has been mobilized as a way to help small businesses survive COVID-19 and pay workers, but more than two dozen companies have had to return funds after being criticized for crowding out more deserving recipients. Several companies and organizations, including Shake Shack and the Los Angeles Lakers, have opted to give back the Paycheck Protection Program loans after incurring a backlash. With tens of millions of Americans jobless and small businesses in turmoil during the pandemic, the idea of larger corporations elbowing their way into the funds via banking relationships has prompted outrage. A small handful of entertainment companies, including 42West parent Dolphin Entertainment, Cinedigm and Emmis Communications, have reported receiving loans.
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At the time the company applied for relief a month ago, it “felt like the right and prudent thing to do” to protect its 190 employees, a head count below the PPP limit of 500, VandeHei wrote. “If we knew then what we know now, we would have gutted it out and hoped for the best.”
Like other media businesses, Axios has suffered in recent weeks from the abrupt pullback in advertising and the lack of live events and conferences. Among the other applicants for PPP funding are the publishers of the Seattle Times and Tampa Bay Times newspapers.
VandeHei, a co-founder of Politico, launched Axios four years ago. It gained wider notice in the entertainment world in 2018 when it set a deal for branded documentary series on HBO. That arrangement was renewed in 2019.
In an interview with CNBC Tuesday, U.S. Treasury Secretary Steven Mnuchin said it was “outrageous” for the Lakers to have taken money, and he said one million loan recipients are businesses with 10 or fewer employees. A “full review” of loans of more than $2 million is now planned, Mnuchin said, with criminal charges potentially facing any violators.
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