I spent the better part of an hour last week talking to a technologist/ entrepreneur who bought an iconic Washington business from one of the city’s leading families.
That would be Ted Leonsis, a former AOL executive and now owner of Monumental Sports & Entertainment, which owns the Washington Wizards and Capitals, as well as the Verizon Center.
Leonsis may be — along with his friend and former AOL business partner Steve Case — the closest thing Washington has to Jeff Bezos. Bezos, the billionaire founder of Amazon, is personally buying The Washington Post for $250 million from the family led by Donald E. Graham.
Leonsis, 56, has just come off what appears to be a successful turnaround at Groupon, the Chicago-based daily-deals company at which he served as co-chief executive since February and was named chairman this month. Earlier this year, he launched Monumental Network, which includes an array of sports, cultural and news content built around his sports empire.
He has experience in buying legacy family businesses. He bought the teams and arena from the deceased sports mogul Abe Pollin, and he went about shaking up the organization.
So I called him to ask for his thoughts on The Post’s sale, as well as the sale of eight broadcasting stations by Allbritton Communications, another big, family-owned media empire in Washington. Allbritton was sold to Sinclair Broadcast Group for $985 million two weeks ago.
Leonsis talked about the changes occurring in media and the challenges that go with marrying a public trust, whether it’s a hockey team or a newspaper, with the necessities of business — and what to expect from Bezos.
Both the Graham and the Allbritton sales, Leonsis said, “are the natural outcome of the change in media.”
“You have the Allbritton family capitalizing on the peak of the television business. They got a really, really good price. Robert Allbritton, who really understands new consumers, felt it would be in the best interest of the family to make that sale and then repurpose those dollars into new media enterprises like Politico, which, ironically, The Washington Post should have done,” he said.
“The newspaper business, as presently configured, cannot grow.”
So it is going to have to change.
“And hopefully, it will change for the better. Today, newspapers are still the most personality-, human-driven of all media enterprises. At Google, Amazon, Groupon — name the company — machines do the heavy lifting. Algorithms get smarter and better every day.”
Take Amazon, he said. “Their algorithms are smarter today than they were yesterday, because more people used the service than the day before. And the more usage, the smarter the algorithm and the more tuned the service is to the consumer. And the easier it is to precisely target to make money.”
Those clicks, whether we like it or not, increasingly will influence editorial decisions.
“They have to,” he said, “because each person is an individual. Through their click streams and where they spend time, they are deciding and voting” on what they want to read.
Bezos and Amazon have mastered that data intelligence.
“One of the reasons Amazon became so successful is that they have the widest choice of information. You, as a consumer, feel comfortable that anything you want to buy, you can get on Amazon. And Amazon says, ‘If you like this, then you are going to like that.’ ”
Leonsis recounted a personal experience he had with Amazon after reading an obituary in the New York Times on author Iris Chang.
“I went to Amazon to buy the book she wrote called ‘The Rape of Nanking.’ And Amazon said, ‘If you like this, you will like these.’ ” He promptly bought two more books on Nanking, which led him to produce a documentary film on the event. That, in turn, led to his founding of an online movie business, SnagFilms.
The move to digital won’t be cheap.
What Amazon does with search “takes time, effort and money,” Leonsis said. “And it’s risky. And you really can only do that as a private company, because a public company wants consistency and growth, quarter to quarter.”
To turn The Post into a 21st-century platform like Amazon, “you might have to take steps back and invest and lose more money short-term in order to find more users and to make the algorithm smarter.”
That could mean not charging for content, learning more about which subjects draw the greatest interest (known as cohorts), and figuring out how to grow those areas and build advertising “verticals” to appeal to the people on the other end of those clicks.
“Politico is bringing together a large group involved in politics, and they’ve opened up a whole new category of advertising. Maybe The Washington Post ends up with 10 big verticals . . . being a Politico competitor and an ESPN competitor and a Comcast SportsNet competitor.
“It’s also going to have to move rapidly into video. Video is the killer app on the Web, and you are in print. I’m sure the next generation of Washington Post will be filled with video.”
In fact, The Post just opened up a big video operation and invested heavily in employees and equipment.
“You’ve got to be much more adept in mobile and real-time delivery of news,” he said. “That will take investment and infrastructure build-out.”
I changed the subject a bit and asked Leonsis about the challenges of buying a family-owned business. Although The Washington Post Co. is publicly traded, the Grahams control the majority of the voting shares.
You have to convince the seller that “I’m going to take our baby and invest in it and accentuate all of the positives that you built — and then add value from my skill set so that it can thrive in the new world,” he said.
“That’s the outcome that Don Graham and Abe Pollin wanted.”
Taking old cultures and fusing them with the digital world isn’t easy, however.
“I’ve owned the teams for 14 years. It took me 12 years to get the organization to realize that we were an e-commerce platform and media company and social media company. Oh, and yes, we also own sports teams.
“A lot of it is generational. The leagues have been around a long, long time. The Washington Post is going to bring in people from new media and younger people who grew up on the Net and don’t read newspapers. My son, Zach, has never read the physical paper. He reads articles of interest to him. He tweets. His vocabulary is different.”
It is hard to implement change, even when you own the enterprise.
“A lot of things that need to be done seem to be unnatural acts for longtime employees” at legacy companies, Leonsis said.
When the Wizards and Capitals migrated to the efficiency of paperless ticketing last year, “there was dramatic angst internally. We almost had to force the decision. I had to say, ‘We are doing it.’ The world didn’t end.”
Although The Post — and yours truly — occasionally vexes Leonsis, the mogul said he and the rest of the local business community have a stake in Bezos’s success.
“I personally put my hand up [through an e-mail to Bezos] and said, ‘However I can help Jeff and The Washington Post going forward, just call me.’ I would invest time, money, effort, whatever is needed, because our community needs it. My sports teams need it. My investments need a healthy, thriving Washington Post.”