On Aug. 5, the Washington Post Company (WPO) , one of the most respected news outlets in the country, agreed to sell its flagship operation the Washington Post to Amazon (AMZN) CEO Jeff Bezos for $250 million. Amazon will have nothing to do with the ownership or operation of the company, as Bezos will be paying for the company out of his own pocket in cash. Bezos will be taking the company private.
Bezos’ purchase ends the Graham family’s four-generational ownership of the newspaper, and ushers in a new age for the famous newspaper outlet. It is ironically fitting that magnate of the internet age would buy out a “legacy” newspaper. The Post has struggled to find its footing since the sea change to digital content began a decade ago. In that same time frame, Amazon has become a $136 billion giant of the new economy, and Bezos himself has become a billionaire with a personal net worth over $35 billion.
So what questions does this purchase raise about the Post, Bezos, and the future of traditional media?
Did Bezos overpay or underpay?
Despite its storied history, the value of the Post as a money-making venture is suspect. Like a sports team or a nice painting, the purchase of the newspaper is seen as more a prestige purchase rather than a shrewd business move. The newspaper has posted losses the last two quarters, for a $49.3 million total operating loss in 2013. The Post itself sarcastically opined following the purchase that the market apparently thinks the Post’s true monetary value is zero.
The Guardian pointed out in July that the Post was in such dire economic straits that they had purchased a furnace manufacturer and were testing out becoming a holding company. After all, Berkshire Hathaway inc ($BRK.A), the most famous holding company in the world, started as a textile manufacturing plant – though no one at the Post is probably the next Warren Buffett.
Buffett – who is on the Post’s board – has referred to Bezos as one of the best CEOs in the country.
What is the history of the Post, and how will its management structure change?
The Post had been run by the Graham family for years. First purchased by scion Eugene Meyer in 1933 at a bankruptcy auction, the Graham family turned the paper around and made it an international leader in news. The family’s reign has long been a respected one, recognized by journalists the world over, and solidifed forever in history since the paper’s landmark Watergate investigation.
The paper had been dogged by allegations of questionable ethics since Graham heiress Katharine Weymouth took over as publisher in 2008. Weymouth was accused in 2012 of having lobbyists pay for access to Post reporters, and the scandal greatly tarnished the paper’s sterling reputation.
Weymouth, along with CEO Donald Graham, are reported to have been the ones to make the decision to sell the paper following a sober look at the paper’s financial future. Bezos says he will keep mangaement structure the same, and retain Weymouth as publisher.
What is Bezos’ political bent?
Politically, Bezos aligns himself with libertarianism, and has given money to both Democrats and Republicans, though more so to Democrats. Along with his wife, Bezos gave $2.2 million to Washington state’s same-sex marriage initiative, making him the single largest donor in the push.
Bezos is also a proponent of an internet sales tax, which is quite progressive for him considering Amazon is the largest internet retailer in the world.
Will the purchase of the paper distract Bezos?
The Amazon CEO has zero experience as a journalist, and has already said he would leave current management in place, and not tinker with the day-to-day operations of the paper. Bezos previously invested $5 million in business website Business Insider. He has been hands-off on that venture.
Washington Post Company's stock was up 4.25 percent on the buyout to hit $592.95 a share. Amazon was relatively flat, dropping .13 percent to hit $300.82 a share.
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