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Substack, the newsletter platform, will open up a community fundraising round on Tuesday, allowing writers on the platform to invest in the company. 

Why it matters: Substack tried to raise money last year, but scrapped its plans amid a harsh financing environment. Instead, it has pushed more aggressively to become self-sustaining through new revenue streams and cost-cutting measures.

Details: In a memo posted Tuesday, Substack founders Chris Best, Hamish McKenzie and Jairaj Sethi said "the dynamics of a platform like Substack change if the people who are building their businesses on it are owners of it, too." 

Allowing newsletter authors to purchase a stake in the company, they argue, offers the writers more financial upside and incentive to join Substack's network.

How it works: The raise is technically an extension of the company's $65 million series B raise in 2021, a source confirmed. 

The company's fundraising goal, according to its community fundraising page, is $2 million. As of Monday evening, it had already raised $194,300. 

The company's pre-money valuation is $585 million, Substack notes. 

Bill Bishop, a former Axios writer and Substack's first publisher, is leading the round so far with $25,000 invested. Bishop previously invested $100,000.

Bishop is joined by other Substack authors, such as Ted Gioia, Heather Havrilesky, Polina Pompliano, Anthony Pompliano, and Kmele Foster.

Substack notes on its fundraising page that it's excited to "enable thousands of others to invest" alongside those writers, at a $100 minimum investment threshold.

Non-Substack writers are also allowed to participate in the round, but Substack will prioritize investments from its own writers, a spokesperson confirmed.

Between the lines: The founders said they tried to explore how they could help writers invest alongside institutional investors when Substack last raised money in March 2021, but it ultimately proved "too complex," given how hard it was to include people in the round who were not already accredited investors.

"We are serious about building Substack with writers, and this community round is a good way to concretize that ideal," the founders wrote.

By the numbers: The new fundraising page offers a closer look at Substack's business. 

Readers have paid writers more than $300 million through Substack subscriptions, according to the page. 

Today, there are more than 17,000 writers earning money on Substack. 

The top 10 publishers on the platform collectively make more than $25 million annually. In 2020, the top 10 publishers collectively made $7 million in annual revenue. 

Substack confirmed last month that it has 2 million paid subscriptions total.

The big picture: More companies are exploring community rounds amid the economic downturn, which has made it harder to secure private financing. 

In their memo, Substack's founders noted that a 2021 regulatory change "that increased the limit for how much money could be raised in such a round" has also made community rounds more viable.  

“We have seen an uptick in our pipeline in 2023, and are projecting to have a strong year in 2023, despite the significant slowdown in early stage venture funding,” said Jonny Price, VP of fundraising for Wefunder. 

Wefunder has helped companies raise nearly $600 million to date in community rounds, with a median investment of $250. 

Substack invites newsletter writers to invest

The paid newsletter platform aims to raise $2 million and give its authors a stake.

Illustration of dialogue box with dollar signs and a cursor on the enter button

Substack

Media

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

More newspaper sales could be on the way for Gannett, which has lost roughly half of its workforce since merging with GateHouse in 2019, Axios reported. 

Why it matters: Gannett's strategy in the wake of the merger has been to shed assets and focus on fewer, more lucrative, markets. 

CEO Mike Reed said on last month's earnings call that the company "would entertain bids on any of our markets."

Details: Gannett's top 100 or so daily newspaper markets bring in roughly 90% of its newspaper business revenues, Reed told Axios on stage at Mather Economics' annual Media Revenue Symposium in Atlanta.

While it's unclear how many more daily papers the company will shed, Reed suggested that the company would ultimately land somewhere between the 217 daily newspaper markets it's in today and its top 100 performing markets. 

The top 100 or so performing markets is "probably where most of our focus will be," he said, while acknowledging that many of the markets outside of the top 100 are still "highly profitable" and don't have declining revenues. 

Be smart: Wherever Gannett lands, it will be down considerably from the 261 daily newspapers, including USA Today, that it had following its merger with GateHouse in 2019. 

In addition to the reduction of dailies, Gannett has also reduced weeklies — from 302 weekly newspapers after the merger in 2019 to 175 by the end of 2022, according to regulatory filings.

Between the lines: Gannett has tried to focus on selling its newspapers — often to local or family-owned chains — rather than shuttering them, but some have still been squeezed. 

The Salinas Californian, for example, no longer employs any reporters, the Los Angeles Times wrote Monday. Instead, it carries stories from Gannett's flagship newspaper, USA Today, and its other California papers. 

Axios reported that the last remaining reporter at Gannett's St. Cloud Times in Minnesota left in February. 

"Our local markets are critical to Gannett's strategy. We plan to invest in better serving our readers with content initiatives that expand our audience and drive growth to ensure the sustainability of local news," said Lark-Marie Antón, Gannett's chief communications officer, in a statement.

What's next: Asked if the company was exploring another major strategic merger, like the one with GateHouse, Reed said the company's focus is on serving subscribers rather than achieving more scale. 

Asked about the cuts, which have totaled over 10,000 since 2019, Reed said some of the layoffs were attributed to synergies coming out of the GateHouse merger. 

Gannett CEO forecasts more daily newspaper sales

Wherever Gannett lands, it will be down considerably from the 261 daily newspapers it had following its merger with GateHouse in 2019.

Left to right: Mike Reed, chair and CEO of Gannett; Nancy Lane, CEO of Local Media Association; Katy Murray, president and CFO of Dallas Morning News; Sara Fischer, Axios senior media reporter. Photo: Courtesy of Mather Economics

Media trends

Forecast growth in U.S. net advertising revenue

Data: Magna; Note: Forecasts include cyclical events like the Olympics and elections. FY 2023 forecasts not available for December 2021 and March 2022. FY 2022 forecast not available for March 2023; Chart: Axios Visuals

Experts at Magna, one of the world's largest ad-buying firms, have trimmed their 2023 U.S. advertising spend forecasts slightly to account for continued uncertainty in the economy. 

Yes, but: The ad market is still growing, just at a slower rate. It remains healthy largely due to innovation in formats, said Vincent Létang, Magna's executive vice president of global market research. 

"I feel optimistic because the advertising market is more resilient, robust and diversified than it was 20 years ago," Létang said. Back then, "ad spend would have been on the decline, but now we have a mature, large diversified landscape of digital advertising formats."

Details: The 2023 ad market is expected to grow 3.4% this year, down from the 3.7% that Magna predicted in December. That figure accounts for the absence of cyclical events, like the U.S. elections and the Olympics. 

Still, the ad market will reach a record high of $326 billion this year, thanks in large part to huge growth in over-the-top, or streaming, ads as well as short-form mobile video ads that run on platforms like TikTok and Instagram. 

"All of the digital formats provide innovation that's increasingly attractive to brands," Létang said.

Those formats will make up for slower or negative growth in traditional ad formats, such as print, TV and radio. Local television, which typically sees huge ad declines in years without national elections, will decrease by more than 21%. 

Be smart: Before the ad market began to meaningfully decline last year, Magna had higher hopes for 2023. 

It predicted global ad revenue would grow 6.3% for 2023 in June, but then lowered that forecast to 4.8% in September as budgets began to dry up in the third quarter. 

The big picture: The advertising market typically grows at roughly the same rate as the GDP. But even during COVID, when both supply and demand for many goods were restricted, the ad market didn't completely crater the way it did during the 2008 financial crisis, Létang notes. 

Digital growth, fueled by new mediums like streaming and short-form video, has helped offset slower growth in television and radio advertising. 

Be smart: A possible TikTok ban has not been factored into Magna's forecasts, in part because any short-form video spend that would've gone to TikTok would likely just migrate to other short-form video platforms, like Instagram or Snapchat. 

What to watch: Looking ahead, Magna predicts that the market will start to show signs of improvement in the second half of the year, which will make up for the minimal to flat growth in the ad market in the first two quarters. 

The rise of e-commerce advertising, driven by consumer package goods brands shifting their retail marketing budgets toward digital advertising from in-store placements, will help fuel digital ad growth organically, in addition to the growth in streaming advertising. 

The comeback of automotive advertising, following two years of supply chain hurdles, will also help the ad market recover. The rise of electric vehicles is creating more competition that should fuel more growth in the auto ad sector long term, Magna notes. Overall, auto ad spend by car brands and dealers is expected to grow 10%–15% this year. 

Ad spending by the travel and entertainment industries is also slated to grow, while restaurants and retail brands will show less momentum in 2023.

Go deeper: Ad growth expected to slow further in 2023

U.S. ad forecast cut again for 2023

Yes, but: Despite a dampened economy, the ad market is still growing — just at a slower rate.

Advertising

Disney CEO Bob Iger on Monday said the company will begin to inform impacted employees this week about layoffs, according to an internal memo. 

Why it matters: The cuts are part of a wider restructuring plan under Iger that's intended to save the company billions of dollars.

Catch up quick: Disney first announced its plans to lay off 7,000 employees — or about 3.6% of its global workforce — during an earnings call with investors in February.

The cuts are being made alongside a broader restructuring effort that is meant to give greater authority to the company's creative leaders — essentially most of the organizational changes made under former CEO Bob Chapek.

Details: The layoffs are the first of three rounds of cuts that will take place this year, Iger said in the memo.

"Leaders will be communicating the news directly to the first group of impacted employees over the next four days," he wrote.

"A second, larger round of notifications will happen in April with several thousand more staff reductions, and we expect to commence the final round of notifications before the beginning of the summer to reach our 7,000-job target." 

The big picture: The cuts come as Hollywood tries to reckon with newfound pressure from Wall Street to post profits, instead of growing streaming efforts at all costs.

Disney, which lost over $120 billion of its market value in 2022, isn't alone in its job-cutting efforts. Paramount Global, Comcast, Warner Bros. Discovery and other major entertainment firms have also implemented layoffs as a part of wider cost-cutting measures.

Go deeper: Disney to lay off 7,000 employees amid major restructuring

Disney layoffs start this week, CEO tells employees

7,000 employees — about 3.6% of its global workforce — will be impacted.

Photo: Matt Stroshane/Bloomberg via Getty Images

Disney

Pro Rata

Axios Pro Rata

Communicators

Axios Communicators

Axios HQ, the communications software company that spun off of Axios last year, has raised $20 million in Series A funding at nearly a $100 million post-money valuation. 

Why it matters: It's rare for media companies to create software startups.

While many media firms license their own proprietary tech, few actually spin out their tech departments into independent companies. 

Axios HQ is leveraging the brand equity and trust built by Axios, which is primarily an email-driven news company, to attract clients that need better email communication tools to reach internal and external stakeholders. 

Catch up quick: Axios HQ was launched in 2021 as a separate tech division within Axios. It split off from Axios in 2022, after Axios Media was acquired by Cox Enterprises for $525 million. 

The company is majority-owned by the Axios founders. Cox Enterprises serves as a minority investor. 

Glade Brook Capital Partners led the Series A round, and was joined by Greycroft. Both were investors in Axios Media.

Axios' co-founder and president Roy Schwartz is the CEO of Axios HQ. Axios co-founder and CEO Jim VandeHei is chairman of the board.

Details: Proceeds will be used to help HQ scale its suite of tools and services that it currently uses to service over 500 enterprise clients, which include brands like  Sweetgreen and Edelman. 

To-date, the company says it has nearly $7 million in annual recurring revenue. 

Between the lines: Axios HQ is leaning heavily into artificial intelligence tools to help its clients write clearer emails. 

The software helps users automatically sharpen their writing with stronger wording suggests. It also offers suggestions for pictures, headlines and summaries that can be used to strengthen their communications, using AI. 

The big picture: More companies are leaning into artificial intelligence to grow public relations and communications tools. 

Some are using AI tools to help companies write press releases. Others are using AI to help communications departments understand which reporters to pitch.   

Axios HQ raises $20 million

It's rare for media companies to create software startups.

Media deals

Axios Pro: Deals

Digital World Acquisition Corp., the blank check company seeking to buy Truth Social parent company TMTG, on Wednesday disclosed that it has fired chairman and CEO Patrick Orlando.

Why it matters: This reflects the difficulties faced by President Trump's social media company since its October 2021 agreement to be acquired by DWAC, including a series of government investigations that have kept the deal in limbo.

Orlando had been the merger's most vocal cheerleader, regularly using Truth Social to encourage shareholders to vote in favor of merger extensions and online protests against the SEC.

He has not yet issued a public statement on his termination, and last posted to Truth Social around three weeks ago.

Zoom in: Orlando will remain a director with DWAC, while existing director Eric Swider will assume the chair and CEO roles on an interim basis.

The move does not impact leadership at TMTG, which continues to be led by former Congressman Devin Nunes. 

What they're saying, per a DWAC press release: "Due to the unprecedented headwinds faced by the company, the board agreed it was in the best interest of its shareholders to select a new management team to execute an orderly succession plan and set strategic operating procedures for the Company in this new phase. Mr. Orlando's departure enables the Board to appoint new leadership, which it believes will restore confidence to the shareholders."

Go deeper: DWAC shares spike on Trump arrest prediction

DWAC fires its CEO amid stalled deal to buy Trump's Truth Social

Patrick Orlando is out, more than a year after agreeing to buy Donald Trump's social media platform.

Illustration of a cell phone displaying the Truth Social app logo on a shattered screen.  

Truth Social

Monumental Sports & Entertainment, the owner of the Washington Wizards, Mystics and Capitals and Capital One Arena, is planning a major rebrand and investment in NBC Sports Washington, the regional sports network it fully acquired from Comcast last September, a top executive told Axios. 

Why it matters: Owning the network insulates Monumental from the distribution crisis hitting dozens of sports teams around the country. It also gives Monumental the resources needed to create its own local sports streaming app, which it plans to launch next year. 

"Overleveraged operators are experiencing distress, but that should not be conflated with the incredibly strong and stable demand for local sports rights," said Zach Leonsis, president of media and new enterprises at Monumental. 

"Live sports viewership continues to be on a growth trajectory and Monumental Sports believes that this is the right time to invest back into those live rights."

Details: The new name of the rebranded network and app will be revealed this summer, ahead of a fall 2023 launch, Leonsis said. 

Construction is underway at Capital One Arena in downtown Washington, where Monumental plans to build out a two-story production facility that includes two full-scale studios, two smaller studios and six control rooms. 

New linear programming will feature new game day shows leading up to major basketball and hockey games, alternative feeds, and betting shows. 

In addition to livestreams of the linear feed, the streaming app will include a library of exclusive on-demand content (including original programming), betting integrations and subscriber-only perks, like integration with Ticketmaster.  

By the numbers: In total, Monumental plans to invest around $20 million in the network's technology, infrastructure, space and new content for the linear channel and app. 

The investment matters, Leonsis argues, because far more people engage with its teams on television and digitally than in person. 

"While 3 million+ fans annually come to Capital One Arena to watch games in person, tens of millions more consume the competition on television or digitally and half the games are on the road," he said. 

"We know we can do more with our live rights than what has been traditionally seen, and it will enhance our product for distribution opportunities and partners, advertisers and — most importantly — our fans."

Zoom out: Monumental sees media revenues, and particularly those at the local level, as a driving force in its path to reach $1 billion in revenue in the next few years, Leonsis said. Today, the company is more than halfway toward that goal.

In 2022, local and national media revenues made up roughly 39% of Monumental's total revenue, with around half of that money coming from local media and half from national. By the end of this fiscal year, Monumental expects that number to swell to 46%. 

Monumental initially acquired a 33% stake in the network from Comcast in 2016. 

Between the lines: Monumental Sports is one of a few privately owned sports conglomerates that houses several local teams and venues under one umbrella.

All of the company's sports franchises, media channels and other bets — like its professional esports and NBA 2K League teams — share a single management team that leverages shared fan data and insights.

Be smart: The company also benefits from serving one of the most affluent markets in the country. 

Regional sports networks that serve bigger markets, such as The Yankee Entertainment and Sports Network, MSG Networks in New York, and Marquee Sports Network in Chicago, tend to be more stable. 

The big picture: Sports teams — rich in intellectual property that can be leveraged for everything from media rights to betting and merchandise deals — are becoming lucrative bets for private investors. 

Last year, Monumental announced that billionaire Jeff Skoll would become a minority investor in the company. That deal gave Monumental an enterprise value of $4.1 billion, per Forbes. 

While most sports teams are currently privately owned, a company of Monumental's size could one day opt to go public instead. 

What to watch: Monumental plans to reach its billion-dollar revenue goal both through organic growth and acquisitions, Leonsis said.

It was reported last year that Ted Leonsis, the founder, chairman, CEO and majority owner of Monumental, had emerged as a suitor for the Washington Nationals baseball team. 

Owning the Nationals would expand Monumental's portfolio meaningfully. Monumental today can't air games for teams it doesn't own. 

Washington D.C.

D.C. Alerts

Washington, DC Members

A daily look at the most significant and interesting stories affecting Washington, DC. Written by Chelsea Cirruzzo, Cuneyt Dil and Paige Hopkins.

Axios D.C. Thought Bubble

Axios D.C.

Monumental readies $20M overhaul of D.C.'s regional sports network

The investment is notable given the TV distribution crisis hitting dozens of local sports teams around the country.

Shifts in technology and media are changing the way we play, watch and understand sports. Business models are adapting and social change is forcing those in charge of teams and leagues to reconsider decades-old practices.

Sports

Countries with targeted bans on TikTok

Correction: The map has been updated to show that Indonesia's ban on TikTok was not permanent but temporary and has been lifted. Data: Axios Research; Chart: Rahul Mukherjee/Axios

More than a dozen countries around the world have introduced full, partial or public sector bans on TikTok amid heightened national security concerns. 

Why it matters: Most of the bans that have been introduced are limited to public sector or government devices. But a growing number of private companies are unilaterally blocking the app as the U.S. government considers an outright ban if TikTok's Chinese owners don't sell the U.S. version of the app.

Driving the news: The U.K. and New Zealand last week announced measures to block TikTok from government devices, adding to tensions between the app's owners and the Western World.

In the U.S., The White House last month gave federal agencies 30 days to remove TikTok from all phones and systems.

The Department of Justice and the FBI are currently investigating TikTok for surveilling journalists through the app.

Be smart: As public sector concerns about TikTok spread, private companies and networks are also beginning to take action. 

Several U.S. colleges are also banning TikTok from their local Internet networks, citing security concerns.

The BBC, a government-funded news outlet in the U.K., told staff on Sunday to delete TikTok from their devices unless they need it for "editorial and marketing purposes."

The big picture: TikTok CEO Shou Zi Chew argues that selling TikTok to a U.S. company wouldn't address any national security concerns, and instead points to data privacy measures TikTok is taking as a better solution. But lawmakers are still skeptical.

What's next: Chew is expected to testify before the House Energy and Commerce Committee on Thursday.

Go deeper: The political realities that make a national TikTok ban tricky

TikTok bans spread globally

More than a dozen countries around the world have introduced full, partial or public sector bans on TikTok.

TikTok

Big Tech

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Fox News is seeking a temporary restraining order against a senior producer named in Dominion Voting Systems' defamation lawsuit against the network.

Driving the news: Abby Grossberg, who's worked with Fox News hosts Tucker Carlson and Maria Bartiromo, filed lawsuits against the network in New York and Delaware Monday, alleging the firm coached her in "a coercive and intimidating manner" ahead of her September deposition in the Dominion case, per the New York Times.

She also alleges a culture of misogyny and discrimination at the network. 

What they're saying: "Ms. Grossberg has threatened to disclose Fox’s attorney-client privileged information and we filed a temporary restraining order to protect our rights," a Fox News spokesperson said in an emailed statement on the court filing seeking a temporary restraining order.

On Grossberg's lawsuit allegations, a Fox News spokesperson said the company had "engaged an independent outside counsel to immediately investigate the concerns raised by Ms. Grossberg, which were made following a critical performance review." 

Fox News will vigorously defend against the claims, according to the spokesperson.

The other side: "Having just received and read Fox News’ frivolous attempt to silence Abby Grossberg, we are happy that the full story regarding her case will now be heard by three separate courts," Parisis Filippatos, the attorney representing Grossberg, said in a statement to The Daily Beast's Confider.

Filippatos added they're confident that in each of these courts "she will receive the justice she deserves and certainly the fair treatment which she hasn't experienced thus far from her employer Fox News."

Fox News seeks restraining order against producer over Dominion lawsuit

Abby Grossberg, who's worked with Tucker Carlson and Maria Bartiromo, has accused Fox of discrimination in her own lawsuits, per the NYT.

 People walk past 1211 Avenue of the Americas the headquarters for News Corp on February 04, 2022 in New York City. 

News Corp. headquarters in New York City. Photo: Spencer Platt/Getty Images

Fox News

2020 election

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Bruce Springsteen, Mindy Kaling and Vera Wang are among 23 honorees who will receive medals at the White House, press secretary Karine Jean-Pierre said during Monday’s daily briefing.

Driving the news: President Biden will host the 2021 honorees on Tuesday with first lady Jill Biden in attendance. The awards were delayed for a year because of the pandemic, NPR notes. 

Details: The National Medal of Arts is awarded to those who have "advanced the arts in America and offered inspiration to others," according to a White House statement. 

The National Humanities Medal is given to those “whose work has deepened the nation’s understanding of the humanities and broadened our citizens’ engagement with history, literature, languages, philosophy, and other humanities subjects," per the statement.

By the numbers: 11 artists and organizations are scheduled to receive the National Medal of Arts and 12 for the National Humanities Medal.

Joan Shigekawa, producer and arts administrator

The International Association of Blacks in Dance

Bruce Springsteen among 23 to receive medals at the White House

Designer Vera Wang and actress Julia Louis-Dreyfus are among the honorees.

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