Now, mind you: I’m not taking full credit for the decision of the Graham family to sell The Post to Jeff Bezos. I’m not convinced that the musings of this avowedly social democratic op-ed columnist are in all instances decisive in The Post boardroom. But that said …
My column last week concerned a new study by three economists (two at NYU’s Stern School of Business and one at the Harvard Business School) which showed that privately-owned companies invest 6.8 percent of their assets into expansion, modernization and diversification, while publicly traded companies invest just 3.7 percent. Indeed, they noted, when privately owned companies went public without raising more capital, their investment levels dropped substantially.
The problem with publicly traded companies, the economists concluded, is short-termism. Investors focus on quarterly earnings, which are often diminished by major long-term investments that don’t pay off for many years. And as most CEOs’ incomes are linked to the value of their company’s stock, their incentive to invest is correspondingly diminished.
Donald Graham was decidedly not that kind of CEO — quite the contrary, in fact. It’s clear from his remarks, however, and those of publisher Katharine Weymouth, that they understood The Post stood a better chance of succeeding if it was taken private, that the level of investment and experimentation required to remake a newspaper for the digital age would almost surely be higher if the new owner didn’t have to answer to shareholders. In Bezos, they found a two-fer: a private owner and a guy who led a publicly traded company that has always invested for the long term.
I don’t think this means the Grahams share my overall critique of shareholder capitalism. I really kind of doubt it. Nonetheless, less than 100 hours of my column running in The Post, the deal went down.
There you have it. Draw your own conclusions.