WaPo Can Solve Many of Its Problems With Its B2B Business

The Washington Post has more problems than it can handle. Numerous subscribers ran away because it correctly got rid of political endorsements. It’s losing talent left and right to competitors. Its owner is too busy in mission control to spend any time focused on the brand. Oh yeah, and it’s losing a ton of money and no one is reading it.

Damn, that’s a lot of problems…

And yet, the Washington Post is uniquely positioned to fix many of these problems if it just rights one of the biggest wrongs in its history: letting Politico Pro become the dominant B2B product in Washington D.C.

This product launched in 2010 and is the true power behind Politico’s revenue. In 2018, former owner Robert Allbritton told Vanity Fair that more than half of its $113 million in 2018 revenue came from Politico Pro.

Fast forward to 2020 and reports surfaced that Politico was generating $200 million in revenue. That meant it was generating more than $100 million from its high-priced subscription business. Is it any wonder that Axel Springer wanted to own it and paid a pretty penny—5x total revenue—for it back in 2021? And if we look to today, it could be generating $150m or more from that division alone. Not bad.

There are two reasons for this growth. First, the editorial quality and speed is unrivaled. Its reporters are experts in their specific beats and are able to get information out to the paying subscribers—many of which have contracts worth 5-6 figures—quicker than anyone else. Second, because of how good and fast the content is, churn is likely very low. In a 2015 CJR story, Axios co-founder Roy Schwartz, then the CRO at Politico, said that the renewal rate was 93%.

What’s great about this business is that it makes it possible for Politico to remain a free, ad-supported product. The average user can enjoy all of the political and government coverage they want without needing to pay to subscribe. Lobbyists, special interests, corporations and governments are effectively underwriting the coverage for the average person.

The Washington Post should make this priority number one. The good news is that it’s already trying.

The division is called WP Intelligence, and as a number of job postings describe, this is the “Washington Post’s new professional subscription division.” As the editorial director role indicates, the job is “overseeing a new product aimed at c-suites, policymakers and business decision makers who are seeking a deeper connection to Washington Post insights through analysis, data, private convening and roundtable discussions.”

To help, WaPo hired a former editorial director from Politico Pro as the GM of this new business.

The question I have is whether they’re moving fast enough. There’s an argument that they need to be looking at inorganic growth to help bolster this new division. I’d start with Punchbowl. According to an October story from The New York Times:

In recent months, Peter Elkins-Williams, The Post’s head of partnerships and corporate development, sat down with executives at Punchbowl News, a start-up that has parlayed its obsessive following in the halls of Congress to a robust subscription business and a valuation of more than $100 million, according to two people familiar with the talks.

This is the right approach. The issue is the $100+ million valuation; fortunately for the Post, it has one of the richest men as its owner. Punchbowl could act as the foundation for expansion. Are there star reporters that understand the Pentagon? What about Treasury? WP Intelligence would want to have star reports covering each of these departments, much like Punchbowl has on Congress.

Another possible target could be GovExec. As Tim Hartman told AMO back in November, it bills itself as providing “essential sales and marketing intelligence that connects the government and the contractors who support their strategic initiatives.” You want to do business with the United States government? GovExec thinks it can help.

The time could be right. Growth Catalyst Partners first purchased GovExec in March 2020, so the five-year hold likely means that the PE firm is starting to evaluate options. As is often the case, the most likely buyer is another PE firm, but if the Washington Post is serious about this WP Intelligence business, why wouldn’t a sales and marketing platform be the right intelligence to add?

But taking a step back: how does this help the Washington Post more holistically?

I go back to our recent coverage on both Dow Jones and the Financial Times’ investments into B2B areas. Something Emma O’Brian, senior vice president of strategy at Dow Jones, told AMO jumps out:

There’s a responsibility for us to, in order to support our core journalism and our really important coverage and investigative journalism, and to continue to have a robust presence … we have a responsibility to find other revenue streams. Part of that strategy is increasing our recurring revenue, which is in subscriptions, which are growing.

It is the same thing for the Washington Post. By growing an incredibly strong B2B business in an area of coverage that it should already be the best at, it can then underwrite more of the traditional journalism that it wants to do.

Consider this… WSJ reported that the Post lost $100 million last year. WSJ also reported that advertising revenue dropped to $174 million from $190 million in 2023. On the subscription side, it probably has 2.25 million remaining after the big non-endorsement exodus. Assuming a $75 ARPU (which could be low considering it still has print subscribers), that’s another $169 million. Add in a B2B business built through both organic and inorganic channels and it’d add high margin profits to the P&L and help offset all its consumer losses.

I’m normally not a proponent for consumer media companies going after B2B businesses, but for the Washington Post, it makes sense. Its WP Intelligence reporters and analysts can create content for the four-figure-plus subscribers and then have that content trickle down to the consumer product. It’s not going to be a cake walk, but this is one of the better ideas for the Washington Post.