Sports-media outlet the Athletic is in merger talks with news startup Axios, according to people familiar with the matter, part of a plan to build a larger online-publishing company that could include going public through a blank-check firm.
Alex Mather, chief executive of the Athletic, approached Axios CEO Jim VandeHei about a week ago with a merger proposal, the people said. The two CEOs have held general conversations about business opportunities during the Covid-19 pandemic, but the talks escalated significantly in recent days.
If Axios and the Athletic merge, the combined company may seek to raise money for expansion and acquisitions, according to people familiar with a presentation aimed at potential investors. The long-term plan is to bring additional digital publishers into the fold, especially those with content that consumers are willing to pay for and that can earn a premium from advertisers, the people said.
Across the digital publishing world, companies are exploring ways to consolidate what is now a fragmented market, betting that scale will improve their odds of success.
Axios and the Athletic believe one potential growth area is selling subscriptions to businesses at a premium rate, according to the people familiar with the investor presentation. VandeHei and one of his co-founders, Axios President Roy Schwartz, helped create Politico Pro, a business-to-business publication, when they both worked at Politico.
Blank-check companies have become increasingly popular, including among media firms. BuzzFeed Inc. and Group Nine Media Inc., for example, are exploring using SPACs as vehicles to go public or merge with competitors, The Wall Street Journal reported.
Axios was launched by VandeHei and Schwartz and journalist Mike Allen in 2017 after the trio left Politico. The company, which specializes in short, newsy stories and concise newsletters, generated more than $60 million of revenue last year and was profitable, The Journal reported.
Axios has about 250 employees and has launched newsletters focused on media, technology and deal making. The company also has a documentary-style show on HBO and has developed a communications platform that it is selling to companies that want to update their employees in its succinct style.
An expanded version of this story appears on WSJ.com.