The inside story of Axel Springer’s bitter deal to buy Politico

It is not often that journalists revel in the drama of a media scandal that spreads across continents and language barriers. But the controversy that has engulfed German media titan Axel Springer is one of those unicorns. It exploded on Sunday with Ben smiththe last New York Times column, which revealed new and damning details about Julien Reichelt, the editor-in-chief of Axel Springer’s ubertabloid, Bild, who would come under meticulous examination months earlier for suspicious conduct with younger subordinates in his newsroom. (Reichelt a refuse that he abused his authority.) A day later, on the heels of some additional brush cutting by the German weekly Der Spiegel, Reichelt was sacked, and Axel Springer’s management found themselves in the hot seat for their handling of the allegations. For Axel Springer, a digitally transformed 75-year-old publisher who has expanded his global presence in recent years through a series of large-scale US investments and acquisitions, the timing couldn’t have been worse. The company was just days away from closing its billion dollar deal to buy Robert allbritton‘s Politico. Suddenly, a #MeToo crisis that was making all the talk in Berlin didn’t seem so far away. As a Politico reporter told me, “It’s not like people have heart attacks because of it, but it’s not great.

The acquisition of Politico was consumes Tuesday. (Allbritton, in a note to employees, called their new German bosses “perfect successors to my property.”) Mathias Döpfner, sat in the nearly empty Politico newsroom outside Washington, flanked by the chairman of the company’s media, Jan Bayer. Dressed in a dark blue sports jacket and matching shirt, his fine brunette hair impeccably slicked back, Döpfner faced the scandal head-on in remarks to some 900 Politico employees across North America and Europe. , the vast majority of which were connected via Zoom. “Most of you may have seen the play in The New York Times. We have had a very unfortunate compliance case in the very recent past. The New York Times the story is not the whole story. It’s very complicated. Hope you understand that I can’t really comment in detail, ”Döpfner said. (A source shared an audio recording with me.) “But I can assure you, we took it very seriously, we took action, the publisher was removed, and we are absolutely committed to modernizing and changing the culture at Bild where there is a problem. But it has not been at Axel Springer in general some kind of inappropriate culture… I really assure you that we live up to our own standards.

BildAside from the door, there were other pressing issues that the Politico team was eager to hear from their new CEO, which was introduced by the founding editor. John harris. Perhaps most urgent of all was the issue of paid content, which had already been raised at a town hall in August when the acquisition was first announced. At that meeting, Döpfner was asked whether free games on the Politico website would end up going behind a pay wall, a key strategy for other Axel Springer posts. “We are from Berlin,” Döpfner had said. responded. “We don’t like the concept of walls. The words came back to bite him last week, when The Wall Street Journal interviewed Döpfner and reported that “he has said he expects the main Politico news offerings, now free, to pass behind a paying wall in the medium term.” It didn’t go well with the Politico journalists, one of whom told me he was worried about Döpfner’s “deception”. During Thursday’s presentation, Döpfner said he misspoke in the Newspaper maintenance. “My response was very unfortunate. It was my mistake, “he said.” Rest assured that if we had made a decision, we would never announce it publicly before speaking to you. No decision was made, and it was fair. because of my unclear communication.

Döpfner and Bayer also touched on other hot issues, such as Politico’s union campaign, that Allbritton had go out against. “It’s a decision of the newsroom, it’s not our decision,” Bayer said, noting that other Axel Springer properties are unionized. “The only concern I have is that I want to act fast in this company. We want to have quick decisions. We want to grow the business, and if unionization slows it down, you know, that would be really sad. »Regarding the five core values ​​of the company that all Axel Springers are expected to uphold, including a free market economy and Israel’s right to exist, Döpfner reiterated that Politico employees would not be required to formally sign a pledge. “This particular aspect of Israel is understandable only given German history and the fact that we are responsible for the Holocaust,” he said. “In this context, there is a particular historical responsibility and a particular affiliation with the idea of ​​the State of Israel. … Do not view these values ​​as something that limits editorial freedom.

In Germany, Döpfner, a 58-year-old former music critic and newspaper editor who became CEO of Axel Springer in 2002, is a hugely influential figure, someone whose news outlets hold power. Rupert murdochThis is the case in the United States, Great Britain and Australia. (I am told that the two men are friendly, as are Döpfner and Robert thomson, CEO of Murdoch’s News Corp.) As a source who knows him put it, “Mathias is not going to see Angela Merkel. She comes to see him. But Döpfner’s ambitions are much bigger than his native market, and he has paid particular attention to strengthening Axel Springer’s influence in America. The company bought Business Insider, now called Insider, in 2015, and added a controlling stake in Morning Brew last year. Since 2017, Axel Springer has been a major shareholder of Group Nine Media, whose titles include Thrillist and NowThis News. (Axel Springer was also an investor in Ozy, the daring startup recently exposed for deceptive business tactics.)

Döpfner, who received $ 1.2 billion in shares last year and is the anointed heir de Friede Springer, 75, owner of Axel Springer, also sits on the board of directors of Netflix and Warner Music. But buying Politico is his biggest American move. He has had a business relationship with Allbritton since 2015 with the creation of Politico Europe, a 50-50 joint venture with Axel Springer. There had been talk of Axel Springer making a larger investment in Politico or owning the company. These conversations picked up and cooled off at different times. The last time the prospect was seriously revisited was in December 2020, someone familiar with the matter told me. But again, nothing materialized.

According to sources familiar with how the deal unfolded, a move to sell took on new urgency last May when Allbritton learned that Axel Springer was in talks to buy Axios, which was founded by a group of executives who defected from Politico in 2016. Axios has been a great success, and Döpfner has had a separate relationship with its CEO, Jim VandeHei, also going back to the Politico Europe adventure. Allbritton and Harris knew that if Axel Springer bought Axios it would be an unsustainable proposition for Politico in every way. Too much bad blood. Too much competition. This would blow up the Politico Europe partnership. As Allbritton reportedly told his associates, “It would have meant war.” A source close to Allbritton told me, “I think he had decided that the place was at its peak and that he either had to commit to the next 10 to 15 years, or it was time to pass the baton and to let someone else do it. He wasn’t having as much fun as in the early years. “

Allbritton returned to Döpfner, and this time he was really serious: Let’s do this. It was then that talks about buying Politico intensified. At one point there was even talk of doing a stock purchase transaction, in which Politico would be part of a combined business structure with Insider, but Allbritton was unwilling to do this and he preferred cash. . Döpfner had already taken this route with Allbritton. If Allbritton did eventually back down, he wanted to make sure Axios was still on the line, and so a parallel set of deal talks began to unfold. “From what I understood, they wanted to make sure they didn’t end up with zero,” one of my sources said. “I think they were trying to hedge their bets.”

This is where things get complicated. Another source familiar with the ticking told me that Axios had heard that Döpfner was advancing on a Politico acquisition because someone had warned them. In his column on the Bild scandal, Smith slipped into further intrigue about making a stealth deal: Döpfner wanted to buy the two companies and let VandeHei handle it all, but he had kept the Politico side in the dark about it, which VandeHei found ” devious, prompting Axios to walk away. I had heard the same thing from two sources. But Döpfner denied it in a statement to the Times: “We have been honest and direct about our plans and intentions. No lies and no deception.”

In his speech to Politico on Thursday, Döpfner doubled down on his denial. His own version of events is as follows: “We have informed Axios of this. But also of course, Robert was always aware that we were continuing our discussions with Axios, as we didn’t know if the Politico deal was really going through. the moment we found out, now Politico is really serious, and Robert is determined to do it, and we are determined to do it, there have been issues where we thought for a moment, could we make a minority investment in Axios and other ideas, but then we basically said, Politico was our priority and the Axios talks were stopped. At no point was there the idea, as it was written I think, that the top management of Axios should become editor-in-chief of Politico or something like that. And we have always honestly informed Robert of our discussions and our ideas. As of today, there is no intention to buy back Axios. If you can be the champion’s shareholder in this area, there is no need to do anything else.

VandeHei declined to comment.

This article has been updated.

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