Yesterday, Politico announced it bought Capital New York, a New York-based media company, for an undisclosed sum. This comes six weeks after Politico owner Robert Allbritton sold seven television stations the family owned for $1 billion. Flush with cash, Allbritton picked up Capital New York “to do in New York what we did in Washington with Politico,” he said in a statement.
Politico burst onto the media scene in 2007 after two former Washington Post editors, Jim VandeHei and John Harris, wanted to cover politics through an always-on lens. It quickly became a must-read of the D.C. elite.
Capital New York was founded in 2010 when Josh Benson and Tom McGeveran, two former New York Observer editors, went out on their own to show that there was an audience for a digital magazine about “how things work in New York.” The site raised $1.7 million in 2011.
“We always thought that we want a site for intellectually ambitious New Yorkers who actually care about the town,” Mr. McGeveran explained in a 2011 AdAge piece. “The more they know, the better. That’s the fun thing about being in this environment — we don’t begrudge our readers spending time with the Times or the Observer because that makes them smarter readers. At the same time, we plan to be super competitive.”
While Capital New York is a small publication (according to comScore, it doesn’t reach the threshold to be measured; Quantcast placed it at 134,000 U.S. uniques last month), Politico sees an opportunity to focus on New York local news, mainly politics and media. But there’s stiff competition: the New York daily media landscape is a bit congested with the likes of the New York Times, the Wall Street Journal, the New York Post and the New York Daily News. There’s also the bevy of other New York-centric outlets, like Gawker, NY Mag, New York Observer and Gothamist, which cover similar turf.
Local New York media has taken its fair share of hits on the chin recently. The New York Post loses anywhere between $20 million and $110 million a year, according to competing estimates. The Post doesn’t separate out digital and print revenue. In the past two years, according to the Pew Research Center’s Project for Excellence in Journalism, the New York Daily News has seen an 11.5 percent drop in total circulation. By purchasing a New York publication, Politico thinks it can buck this trend: It plans to hire two dozen more people, or three times the size of Capital New York’s now-eight-person staff.
Ultimately, as with any similar deal, the acquisition can be interpreted as a marriage of convenience for both parties. Capital New York gets a much welcomed injection of, well, capital and Politico gets to dips its toes into the New York media market where the Big Apple goes to the polls soon to elect a new Hiz (or Her) Honor.
Benson and McGeveran will remain as Capital New York’s editors. Politico’s Jim VandeHei will act as president of Capital New York. Katherine Lehr will be its vp of operations, while Cally Stolbach will serve as its director of business development. Capital New York makes its money through ads, though Politico says that subscriptions are in the cards. According to Politico, Capital New York will retain its independence.