The Inside Story of Axel Springer’s Cutthroat Deal to Buy Politico

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It’s not often that journalists get to revel in the drama of a media scandal that ripples across continents and language barriers. But the controversy engulfing German media titan Axel Springer is one such unicorn. It blew up on Sunday with Ben Smith’s latest New York Times column, which revealed new and damning details about Julian Reichelt, the editor in chief of Axel Springer’s übertabloid, Bild, who’d come under scrutiny months earlier for sleazy conduct with younger female subordinates in his newsroom. (Reichelt has denied that he abused his authority.) One day later, on the heels of some additional muckraking by the German newsweekly Der Spiegel, Reichelt was sacked, and Axel Springer’s leadership found itself in the hot seat over its handling of the allegations. For Axel Springer, a 75-year-old digitally transformed publisher, which has expanded its global footprint over the past several years through a series of high-profile U.S. investments and acquisitions, the timing couldn’t have been worse. The company was just days away from closing its $1 billion deal to buy Robert Allbritton’s Politico. Suddenly, a #MeToo crisis that was all the talk of Berlin didn’t seem so distant. As one Politico journalist put it to me, “It’s not like people are having heart attacks over this, but it’s not great.”

The Politico acquisition was consummated on Tuesday. (Allbritton, in a note to employees, called their new German bosses “the perfect successor to my ownership.”) By Thursday morning, Axel Springer’s six-foot-seven CEO, Mathias Döpfner, was sitting in Politico’s mostly empty newsroom outside of Washington, flanked by the company’s president of news media, Jan Bayer. Dressed in a dark blue sports jacket and matching shirt, his thin brown hair impeccably slicked back, Döpfner confronted the scandal head-on in remarks to Politico’s roughly 900 employees in North America and Europe, the vast majority of whom were tuned in via Zoom. “Most of you may have seen the piece in The New York Times. We had in the very recent past a very unfortunate compliance case. The New York Times story is not the full story. It’s very complicated. I hope you understand that I cannot 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 acted, the editor has been removed, and we are absolutely determined to modernize and to change the culture at Bild where there is an issue. But this has not been at Axel Springer in general a kind of inappropriate culture.… I really assure you that we are living up to our own standards.”

Bildgate aside, there were other pressing matters about which the Politico crew was eager to hear from their new CEO, who was introduced by founding editor John Harris. Perhaps most pressing of all was the matter of paid content, which had earlier come up during an August town hall when the acquisition was first announced. At that meeting, Döpfner was asked if the free parts of Politico’s website would end up going behind a paywall, a key strategy for other Axel Springer publications. “We’re from Berlin,” Döpfner had responded. “We don’t like the concept of walls.” Those remarks came back to bite him last week, when The Wall Street Journal interviewed Döpfner and reported that “he said he expects Politico’s main news offerings, now free, to go behind a paywall in the medium term.” That didn’t go over well with Politico journalists, one of whom told me there was concern about Döpfner’s “deception.” During Thursday’s presentation, Döpfner said he had misspoken in the Journal interview. “My answer was very unfortunate. It was my mistake,” he said. “Be assured, if we had made a decision, we would never announce it publicly before we speak to you. No decision has been made, and that was just because of my unclear communication.”

Döpfner and Bayer also addressed other hot-button issues, such as Politico’s union drive, which Allbritton had come 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 that I have is that I want to act fast in this company. We want to have fast decisions. We want to grow the company, and if the unionization makes it more slow, you know, that would be really sad.” As for the five core company values that all Axel Springers are expected to uphold, including a free market economy and the right of the state of Israel to exist, Döpfner reiterated that Politico employees would not be required to formally sign a pledge. “This special aspect about Israel is only understandable given the German history, and the fact that we are responsible for the Holocaust,” he said. “In that context, there is a special historic responsibility and a special affiliation to the idea of the state of Israel…. Don’t see 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 massively influential figure, someone whose news outlets wield power the way Rupert Murdoch’s do in the U.S., Britain, and Australia. (I’m told the two men are friendly, as are Döpfner and Robert Thomson, CEO of Murdoch’s News Corp.) As one source who knows him put it, “Mathias does not go to see Angela Merkel. She comes to see him.” But Döpfner’s ambitions are much bigger than his native market, and he has been particularly keen on burnishing Axel Springer’s influence in America. The company bought Business Insider, now called Insider, in 2015, and added a majority stake in Morning Brew last year. Since 2017, Axel Springer has been a major shareholder in Group Nine Media, whose titles include Thrillist and NowThis News. (Axel Springer was also an investor in Ozy, the audacious startup recently exposed for deceptive business tactics.)

Döpfner, who was given $1.2 billion in stock last year and is the anointed heir of Axel Springer owner Friede Springer, is also on the boards of Netflix and Warner Music. But buying Politico is his biggest American coup. He’s had a business relationship with Allbritton stretching back to about 2015 with the founding of Politico Europe, a 50-50 joint venture with Axel Springer. There had been talks about Axel Springer making a bigger investment in Politico or owning the company outright. These conversations picked up and cooled off at different points in time. The last time the prospect had been seriously revisited was in December of 2020, someone familiar with the matter told me. But once again, nothing materialized.

According to sources familiar with how the deal went down, a movement toward a sale took on a new urgency this past 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 big success, and Döpfner had a separate relationship with its CEO, Jim VandeHei, also dating back to the Politico Europe venture. 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. It would blow up the Politico Europe partnership. As Allbritton was said to have told associates, “It would have meant war.” A source close to Allbritton told me, “I think he had decided that the place was plateauing, and that he needed either to commit himself for the next 10 to 15 years, or it was time to hand over the baton and let somebody else do it. He was not having as much fun as in the early years.”

Allbritton went back to Döpfner, and this time he was really serious: Let’s do this. That’s when the talks about buying Politico heated up. At one point there was even talk about doing a stock deal, in which Politico would be folded into a combined business structure with Insider, but Allbritton was not amenable to that and he preferred cash. Döpfner had been down this road with Allbritton before. If Allbritton ended up backing down, he wanted to make sure that Axios was still in play, and so a parallel set of deal talks began to unfold. “My understanding is 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 ticktock told me that Axios only heard that Döpfner was moving forward on a Politico acquisition because someone tipped them off. In his column about the Bild scandal, Smith slipped in some additional intrigue about the furtive dealmaking: Döpfner wanted to buy both companies and have VandeHei run the whole thing, but he’d kept the Politico side in the dark about this, which VandeHei found to be “sneaky,” thus prompting Axios to walk away. I’d heard the same thing from two sources. But Döpfner denied it in a statement to the Times: “We were truthful and straightforward about our plans and intentions. No lies and no deceptions.”

In his address to Politico on Thursday, Döpfner doubled down on his denial. His own version of events is as follows: “We informed Axios about that. But also of course, Robert was always aware that we were continuing our talks with Axios, because we didn’t know whether the Politico deal really goes through. At a certain moment when we found out, now Politico is really serious, and Robert is determined to do that, and we are determined to do that, there were some issues where we thought for a moment, Could we do a minority investment in Axios and other ideas? But we then basically said, Politico’s our priority, and the Axios talks were stopped. There was at no point the idea, as it was written I think, that Axios top management should be become editor in chief of Politico or something like that. And we have always truthfully informed Robert about our talks and our ideas. From today, there is no intention to buy Axios. If you can be the shareholder of the champion in this field, there is no need to do anything else.”

VandeHei declined to comment.

This article has been updated.

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