The Graham family’s decision to sell The Washington Post to Amazon.com founder Jeffrey P. Bezos underscores the reemergence of wealthy private owners at the helm of major metro dailies as newspapers seek a refuge from the battering they have experienced on Wall Street.
The news of the impending purchase came just days after the New York Times Co. announced that it is selling the Boston Globe to John W. Henry, the principal owner of the Boston Red Sox who made a fortune as a commodities trader. And several billionaires, including the Koch brothers and Eli Broad, have been eyeing the Los Angeles Times, one of the eight newspapers that the Tribune Co. has been preparing for a possible sale.
The mash-up between The Post, a 135-year-old legacy newspaper, and an Internet pioneer was cast Monday as a bet on the future. But it also represented a throwback to the era when rich industrialists controlled major metro dailies.
“In the olden days, before newspapers became big corporate interests, they were owned by wealthy individuals because to some degree they made money, but also because they gave them a sense of stature and power in their communities,” said media consultant Alan Mutter. “It’s not so much that we’re going back to some format. It’s that what we had in the post-World War II era was the anomaly. If you go back to colonial days, it was always this way.”
In buying The Post, Bezos will be acquiring a newspaper that has been owned by the publicly traded Washington Post Co. — soon to be renamed — and taking it private. With Bezos as its sole owner, the newspaper could be spared the turbulence of Wall Street.
Donald E. Graham, chairman and chief executive of The Post Co., told employees at a town hall meeting Monday afternoon that the Amazon founder offers a path that the current ownership cannot provide.
“As the newspaper business continued to bring up questions to which we have no answers, Katharine and I began to ask ourselves if our small public company was still the best home for the newspaper,” Graham said, referring to Publisher Katharine Weymouth, his niece. “Our revenues had declined seven years in a row. . . . We were certain the paper would survive under our ownership, but we wanted it to do more than that. We wanted it to succeed.”
That is the urgent challenge for the entire industry, which has undergone a severe contraction in the past two decades as publicly traded newspapers have sought to prop up flagging profits. The retrenchment led to the consolidation of major chains and attracted the investment of private equity firms, many of which cut costs further.
As revenue has continued to fall, influential business leaders have jumped at the chance to scoop up metro dailies at a fraction of the price they were once worth. In 2011, hotel developer Doug Manchester bought the San Diego Union Tribune for $110 million. Last year, Philadelphia’s two largest newspapers were sold to a group of regional power brokers and business leaders for $55 million. Both transactions triggered consternation about how the new owners would handle coverage of their business interests — a particular source of controversy in San Diego, where Manchester has dramatically remade the paper.
It remains to be seen how comfortable Bezos and his brethren will be with the uncertain revenue their new assets can offer.
“They didn’t get rich by absorbing a huge amount of losses,” said Craig Huber, an independent media analyst. “Sustaining tens of millions of dollars in losses year after year could accelerate the cost-cutting. There is no easy answer here to fixing newspapers, otherwise it would have already been done by the current parent companies.”
Still, Bezos’s wealth may allow him to be unconcerned about profits, others noted.
“I don’t know if he cares if it makes money,” said Jeffrey Cole, director of USC Annenberg’s Center for the Digital Future. “I think he’s in the business of having influence. I don’t think whether The Washington Post loses or makes $20 million is going to be very central to his calculations at all.”
News of the impending ownership change was greeted with a mixture of shock and optimism throughout the industry.
“It’s as stunning as any industry news I’ve seen in my lifetime,” said Jim Brady, a former executive editor of washingtonpost.com who serves as editor in chief of Digital First Media, which owns 75 dailies. “It’s hard to imagine The Post without the Grahams. From a nostalgia standpoint, it’s incredibly sad.”
But the move also represents confidence in the future of the business, he added. “I think it shows that someone who really, really understands digital and consumer trends and consumer behavior thinks this is a good business to be in,” Brady said.
The Amazon founder’s arrival on the scene “is the best news about the newspaper business that I’ve heard in years,” Mutter said.
“It is the very first time that a true digital native is going to own a newspaper. Heretofore, all the people running newspapers treated them like a 1953 Plymouth: tinkering with them and try to keep them going. What’s really necessary is reinventing the role and the power of a newspaper company in the modern digital era.”
That was the theme Bezos struck in a note to the Post staff.
“The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs,” he wrote. “There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment.”
Despite the hopeful cast of Monday’s announcement, the Grahams’ decision to sell reflects a grim reality of the newspaper industry. “Certain parts of the media business are finding it almost impossible to make money anymore,” Cole said.
“I think The Washington Post lucked out,” he added. “This may end up saving the paper.”
Other industry watchers said they will be looking to Bezos to do more than that.
“If he does do what I hope, which is to experiment and try new things, and if he generously shares his lessons, that could save more than The Post,” said Jeff Jarvis, associate professor and director of the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York’s Graduate School of Journalism.
“I refuse to believe the only path to saving newspapers is through sugar daddies,” Jarvis added. “Yes, he may have performed an act of philanthropy by saving The Post, but I hope his greatest act is innovation. The world of newspapers will be watching what Jeff Bezos does.”