Axel Springer has made good on earlier reports that it was close to buying business news site Business Insider. The company, which already owned a 9 percent stake, announced this morning that it’s buying another 88 percent for $343 million based on a full value of $442 million.
Founder and CEO Henry Blodget and COO Julie Hansen will stay with the company, remaining “significantly committed” on the equity side, said Blodget in a conference call.
Blodget said BI was not running a sales process when Axel Springer came calling, but Axel’s earlier investment made an impression. “We were not looking to sell the company,” he said. “When they approached us and asked us if we would consider it, based on our experience with them we were excited.”
Axel Springer CEO Mathias Döpfner said on the call that the deal was attractive for mainly two reasons—BI’s millennial audience, with numbers describing one in four visitors as a business millennial, and the potential for a much bigger subscription platform.
“Business Insider knows how to reach the 18-24 year olds, where and how they want to read news,” he said. “Which brings us to the main reason for the success of Business Insider, the digital storytelling. Punchy headlines, engaging visuals and fast-breaking news. It’s a combination of being serious and fact-driven but on the other hand entertaining. That leads to a very attractive audience.”
Döpfner pointed out that BI has already started a paid content model, with BI Intelligence and its recently launched Tech Intelligence, and sees that as an opportunity to hedge ad revenues. “They’re already monetizing with regards to ad revenues and they’ve already started the paid content model. We hope we can do more things on that front since Axel Springer has been an early mover and player with subscription models.”
Moving forward, Döpfner says the first priority will be continued growth in reach (“It’s all about growth”), then more monetization and then boosting profits.
Following the deal, Axel Springer projecting 30 percent annualized revenue growth. BI is expecting a 50 percent growth rate for 2015. Axel Springer expects BI to break even by 2018 including growth investments.
On the call Axel Springer said a no-debt value of $390 million for BI is based on 6x 2016 revenues.
For his part, Blodget also sees major potential in paid content. “There’s a limit to the depth of journalism and content you can produce with only and advertising model,” he said in the call. “We can go much deeper with a subscription model and Axel Springer has incredible expertise with subscriptions.”
But Blodget is also betting heavily on distributed content and the recent alpha launch of BI’s more generalized content brand Insider is a result of that. “Instead of publishing on a website, we will be placing the stories where the readers are—on social platforms. We launched Insider on social. It’s very video heavy and that could grow to be very broad in terms of what we do.”