No financial terms were revealed in the account of the talks, but part of the talks is said to include a scenario in which the companies would anchor a portfolio of digital brands. That entity would then seek to go public via a special-purpose acquisition company, or SPAC, a popular investment vehicle also known as a “blank-check” company.
Both organizations have gained prominence a few short years after their founding, but via distinctly different routes. Axios, whose main focus is politics but also includes business and other categories, was launched in 2016 by former Politico staffers Jim VandeHei, Mike Allen and Roy Schwartz. The company relied on free newsletters and online news to establish its brand, making money on events and, eventually, a TV deal with HBO. It has recently invested in local news sites.
The company had more than $60 million in revenue last year and was profitable, the Journal said.
The Athletic, by contrast, has emphasized subscriptions. The sports news organization has attracted more than 1 million subscribers to its $8-a-month service. As newspapers, magazines and now many digital outlets have hit rocky times and laid off staff, The Athletic has hired much of that talent, mounting a digital version of the once-fat sports sections of local papers.
The bet that sports readers will be willing to pay to keep reading their favorites and get the latest scoop on their teams appears to have paid off in terms of valuation. A recent fundraising round valued the company at $475 million and it has raised $139.5 million in start-up funds to date, per the Journal.
If combined, the two entities see potential for selling subscription products at higher rates to business clients, the report said. That could enable a larger entity to be less vulnerable to volatility in the advertising market. The strain of battling tech titans like Facebook and Google for a share of ad revenue has hit several former rising digital stars, resulting in a wave of consolidation in the past couple of years.