As feats of publishing entrepreneurship go, it’s one for the record books, or at least the business school case studies — Politico, a Washington-centric mostly online news organization founded in 2007, will be sold to the German publisher Axel Springer for a reported $1 billion.
If that sum is even close to being accurate, it’s staggering. Time magazine was sold in 2018 to Marc Benioff and his wife Lynne Benioff for $190 million. The Washington Post was sold to Jeff Bezos in 2013 for $250 million.
Politico had been founded by three former Washington Post reporters — John Harris, Jim VandeHei, and Mike Allen — and by Robert Allbritton, whose family owned banks and television stations.
In Silicon Valley, rapid “unicorn” valuations of a billion or more for recently founded technology companies have become frequent enough that the term unicorn itself, with its implication of rareness, should probably be replaced with something more common, like pigeon, or squirrel. In publishing, though, where entry barriers and legacy brand equity, at least until recently, were high, unicorn startups are indeed rare.
For those concerned that “mainstream” media organizations such as Time or the Washington Post — “The Powers That Be,” in the words of David Halberstam’s 1979 book — are too powerful, the Politico sale is a reminder that disruptive change is possible.
Not to slight either Time or the Washington Post, both of which remain in business and with some influence, but it might be more accurate to call them “The Powers That Were,” at least if you go by the valuations at sale.
It’d be a mistake, in any event, to see the Politico sale as just a media story. It’s a capitalism story, too. The Allbritton family could have stayed in television or banking. The Washington Post reporters could have stayed at the Washington Post.
Instead, they took risks, started something new, and reaped the rewards. Those incentives fuel the dynamism of capitalism. New ideas and competition drive up wages for talent and create better products for consumers. The alternative is stasis, mediocrity, and decline.
Is there a potential downside? Cynics view Politico’s business success as an indicator of how much money and power there is of late in the swamp of George W. Bush-Obama-Trump-Biden Washington. The K-Street Washington lawyer-lobbyist-industrial-complex is the paying customer base for Politico’s lucrative “pro” subscriptions.
If you are a trade association lobbyist who needs a cellphone alert for when the time changes for a markup hearing on an appropriations bill, Politico will sell you that information. If you are an ordinary citizen annoyed that trade association lobbyists have too much say over where your tax dollars go, Politico reporting may provide you with some good concrete examples, but it isn’t going to be campaigning for smaller or more decentralized government.
Others may be concerned about the implications of having a German-based company buy a major American news organization. Axel Springer’s famed five values are:
“We stand up for freedom, the rule of law, democracy and a united Europe. We support the Jewish people and the right of existence of the State of Israel. We advocate the transatlantic alliance between the United States of America and Europe. We uphold the principles of a free market economy and its social responsibility. We reject political and religious extremism and all forms of racism and sexual discrimination.”
It’s certainly possible, though, to imagine a scenario in which American national interests, or even freedom and democracy, might come into conflict with the goal of “a united Europe.” What might happen were parts of Europe to become less enthusiastic about being “united” than the Germans are about uniting them?
Then there are concerns about information “haves” and “have-nots.” How do citizens make informed decisions in a democracy if the highest quality news and information is behind an expensive “Pro” paywall?
The best corrective to all these worries is the aforementioned “free market economy.” If Politico sets its prices too high, tilts too much toward the Washington blob-industrial-complex, or attempts to push a Brussels-Eurocratic agenda in Washington, nothing is stopping Politico reporters from leaving and starting a competitor.
At least two groups have done that already, forming Axios and Punchbowl. The Silicon Valley-backed Substack platform makes it easier than ever for a writer to start and monetize a Mike Allen-style “Playbook” newsletter of the sort that was initially Politico’s flagship product.
As the proprietors of Time and the Washington Post learned, the only thing harder than building a billion-dollar startup media business is keeping a billion-dollar media business. No wonder Mr. Allbritton decided to sell.
Image: Detail of a tapestry from the collection of The Met Cloisters, via PublicDomainReview.