Like Graham family, Bezos has maverick streak and does not follow Wall Street's tune
In a deal once believed unthinkable, the family-controlled Washington Post Co. has decided to sell its flagship broadsheet and other print publications to Amazon chief Jeffrey P. Bezos for $250 million.
The deal puts one of America’s most storied newspapers – the Post was the first to report the Nixon-era Watergate scandal, and more recently, won a Pulitzer Prize for its 2008 coverage of how war veterans were treated at Walter Reed hospital – in the hands of an iconoclast. Bezos, the founder and chief executive of massive online retailer Amazon.com, has long managed his popular company for long-term growth rather than the quarter-by-quarter performance Wall Street demands. The stance could make him an ideal owner for the old-school newspaper industry, where economics have been undercut by the migration of readers and advertisers to digital properties.
The sale is to Bezos, himself, not Amazon. The Post’s current leadership, including publisher and family scion Katherine Weymouth, will continue. In addition to Weymouth, recently christened editor Martin Baron will remain as executive editor.
The transaction would seem to indicate that every newspaper owner, no matter how entrenched in the business, has its price. The Graham family has controlled the Post through four generations and for decades. Katherine Graham, mother of Post Co. chairman Donald Graham, kept the paper alive through controversial reportage and a her own steep learning curve of how the business operated. But the sale comes several years after the Bancroft family, which held The Wall Street Journal for decades, sold it in 2007 to Rupert Murdoch’s News Corp., and just days after The New York Times Co., controlled for decades by the Sulzberger family, sold The Boston Globe to John Henry, the principal owner of the Boston Red Sox, the last of a series of sales that leave it with few assets other than those connected to its mainstay holding, The New York Times.
“I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post (after a transaction that would be in the best interest of our shareholders).,” said Post Co. Donald Graham in a prepared statement. “Jeff Bezos’ proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post.”
In 1999, revenue from its newspaper division came to $875.1 million. In 2011, it totaled $648 million.On Friday, the Post Co. said print advertising revenue at The Washington Post in the second quarter of 2013 came to $54.5 million, down 4% from the second quarter of 2012; print advertising revenue was $103.1 million for the first six months of 2013, down 6% from the first six months of 2012. The company cited “reductions in retail and general advertising.”
The transaction covers The Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing. Other Post Co. properties will remain with the Graham family. Slate magazine, TheRoot.com and Foreign Policy are not part of the transaction . and the company will also retain Kaplan, Post–Newsweek Stations and Cable ONE. The company will change its name in connection with the deal.
With Bezos, the Post and its staff may have found an owner who shares certain values with its soon-to-be-former owners. The Graham family often made a point of telling investors they managed the Post for the long term, not caring overmuch about meeting Wall Street’s quarterly expectations. The philosophy is one likely instilled by a longtime Post Co. investor and mentor, Warren Buffett. Like his Berkshire Hathaway, the Washington Post Co. never split its stock.
How Bezos will operate the Post and its assets, which include a popular website, remains to be seen. “I understand the critical role the Post plays in Washington, DC and our nation, and the Post’s values will not change,” said Mr. Bezos in a statement. “Our duty to readers will continue to be the heart of the Post, and I am very optimistic about the future.”
While the news raised eyebrows among journalists Monday, the family has in the recent past signaled its willingness to sell iconic assets with storied histories – and in doing so has demonstrated prescience.
In 2010, the company sold Newsweek magazine after proving unable to return the flagging newsweekly to financial health. The magazine was sold to audio magnate Sidney Harman for a price that was said to $1, so long as the Post Co. assumed liabilities associated with the property. Since that time, Newsweek has been merged with IAC property The Daily Beast, and on Saturday, was sold to IBT Media, publisher of the International Business Times. In April, IAC Chairman Barry Diller told Bloomberg Television buying the storied publication was “a mistake.”