The Washington Post’s parent company announced Monday that it will sell the newspaper to technology magnate Jeffrey P. Bezos for $250 million in cash. Bezos is one of the wealthiest people in the world and the founder and chief executive of Amazon.com. The deal ends the Graham family’s control of The Post, which has endured for four generations:
The deal represents a sudden and stunning turn of events for The Post, Washington’s leading newspaper for decades and a powerful force in shaping the nation’s politics and policy. Few people were aware that a sale was in the works for the paper, an institution that has covered presidents and local communities and gained worldwide attention for its stories about the Watergate scandal and, in June, disclosures about National Security Agency surveillance programs.
Post Co. chairman and chief executive Donald E. Graham and Post publisher Katharine Weymouth, his niece, broke the news of the sale to a packed meeting of employees at the company’s headquarters in downtown Washington on Monday. The mood was hushed; several veteran employees cried as Graham and Weymouth took turns reading statements and answering questions. “Everyone who was in that room knows how much Don and Katharine love the paper and how hard this must have been for them,” said David Ignatius, a veteran Post columnist who was visibly moved after the meeting.
But for much of the past decade, The Post has been unable to escape the financial turmoil that has engulfed newspapers and other “legacy” media organizations. The rise of the Internet and the epochal change from print to digital technology have created a massive wave of competition for traditional news companies, scattering readers and advertisers across a radically altered news and information landscape and triggering mergers, bankruptcies and consolidation among the owners of print and broadcasting properties.
“Every member of my family started out with the same emotion — shock — in even thinking about” selling The Post, Graham said in an interview Monday. “But when the idea of a transaction with Jeff Bezos came up, it altered my feelings.”
He added: “The Post could have survived under the company’s ownership and been profitable for the foreseeable future. But we wanted to do more than survive. I’m not saying this guarantees success, but it gives us a much greater chance of success.”
The Post will not be part of Amazon. Instead, Bezos will own the paper privately. Investors in the paper’s publicly traded parent, The Washington Post Co., saw the deal with Bezos as a windfall:
The purchase price is richer than many of those paid for other legacy print media properties in recent years.
The New York Times Co. agreed to sell the Boston Globe to Red Sox owner John W. Henry for only $70 million. Newsweek sold for a symbolic $1, plus assumed pension liabilities, to billionaire Sidney Harman in 2011.
The Post “has a much stronger position in its market than the Boston Globe does,” said John Morton, an independent newspaper industry analyst. “It doesn’t surprise me that it would command a much higher price.”
Still, Morton suggested that the prominence and the visibility of The Post made Bezos willing to pay a higher price than would be justified by the paper’s finances alone. “I think probably Jeff Bezos was willing to pay a premium to make this happen,” Morton said. “. . . Bezos has enough money that if he wants to make it a hobby, he can.”
The deal was announced after the end of trading Monday. In after-hours trading, Washington Post Co. shares rose about 5 percent to $568. The company’s stock is up nearly 57 percent this year. The purchase price works out to $40.32 a share for Post shareholders.
The transaction is a reflection of how much has changed in the news industry in just a short time amid the rise of online media that have put print advertising business models under steep pressure.
“This newspaper would’ve sold 10 years ago for $2 billion,” said Craig Huber of Huber Research Partners.
Although Weymouth will remain The Post’s publisher, the sale marks the end of a chapter in the storied relationship between the paper and the Graham family:
From Eugene Meyer to Philip L. Graham to Katharine Graham to Donald E. Graham to Katharine Weymouth, it was always a question of when power would shift from one generation to the next, not whether it would.
Until Monday. The Graham family — an icon of both Washington and journalism for the newspaper it led — had made a startling decision. The Post, they said, would be better off with somebody else.
“We have loved the paper, what it stood for, and those who produced it,” said a letter from Donald Graham, the Washington Post Co. chairman and chief executive. “But the point of our ownership has always been that it was supposed to be good for the Post.”
He added: “We were certain the paper would survive under our ownership, but we wanted it to do more than that. We wanted it to succeed.”
It was the same 80 years earlier, when Meyer, a wealthy native Californian, sent a representative to the steps of The Post’s former headquarters on E Street. His winning bid for the bankrupt newspaper was $825,000, and he was not disclosed as the new owner for 12 days.
He drafted the announcement of the sale and stated his intentions: “It will be conducted as an independent paper devoted to the best interests of the people of Washington and vicinity, and hopes to have their interest and support.” . . .
He stressed the “independent” part to dispel rumors that the paper would become a mouthpiece for the Republican Party. He said seven principles would guide The Post, the last of which was: “The newspaper shall not be the ally of any special interest, but shall be fair and free and wholesome in its outlook on public affairs and public men.” . . .
In 1971, a judge had ordered the New York Times to stop publishing reports about the Pentagon Papers, a secret official history of the Vietnam War. The Post obtained its own copy. “Frightened and tense, I took a big gulp and said, ‘Go ahead, go ahead, go ahead. Let’s go. Let’s publish,’ ” [Katharine] Graham recalled saying.
She was best known for her support of Bradlee and two reporters, Bob Woodward and Carl Bernstein, during their reporting on the Watergate break-in. That story, which had been scoffed at by big-name reporters at The Post and elsewhere, led to the resignation of President Richard M. Nixon and became the most famous in the history of American journalism.
“It was a small group of people on the Metro staff against the world. Except we had the backing of Ben Bradlee and Katharine Graham,” said Leonard Downie Jr., who was an editor on the metropolitan staff during Watergate and served as executive editor from 1991 to 2008.
The sale of The Post continues a pattern in which private owners have been taking control of media companies in response to changing conditions in the industry:
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.” . . .
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.
Watch Donald Graham discuss the sale below.