As you’ve more than likely learned by now, Amazon founder and CEO Jeff Bezos is buying The Washington Post for $250 million. The news was announced Monday afternoon, and the Internet (at least the business end of it) just about exploded with excitement, skepticism and other reaction in general.
Can tech mogul Bezos reinvent the newspaper? Let us know in the comments.
Just in case it hasn’t been made immediately clear by whichever source you first learned the news from, Amazon is not buying The Washington Post, but rather Bezos is himself, and reportedly only for less than 1% of his personal net worth, no less.
Bezos wrote a letter to Washington Post employees, which has been published at WashingtonPost.com. He begins by noting that he understands the news will be greeted with “a degree of apprehension,” and that “it is only natural to worry about change.”
“So, let me start with something critical,” Bezos says. “The values of The Post do not need changing. The paper’s duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we’ll work hard not to make mistakes. When we do, we will own up to them quickly and completely.”
He notes that he will not be leading the company day-to-day, and that the Post already has “an excellent leadership team” that is staying on. It was noted in the initial announcement that publisher and CEO Katharine Weymouth, president and GM Stephen P. Hills, executive editor Martin Baron and editorial page editor Fred Hiatt would continue in their respective roles.
“There will, of course, be change at The Post over the coming years,” Bezos continues. “That’s essential and would have happened with or without new ownership. 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. 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. Our touchstone will be readers, understanding what they care about – government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports – and working backwards from there. I’m excited and optimistic about the opportunity for invention.”
“Journalism plays a critical role in a free society, and The Washington Post — as the hometown paper of the capital city of the United States — is especially important,” he adds. “I would highlight two kinds of courage the Grahams have shown as owners that I hope to channel. The first is the courage to say wait, be sure, slow down, get another source. Real people and their reputations, livelihoods and families are at stake. The second is the courage to say follow the story, no matter the cost. While I hope no one ever threatens to put one of my body parts through a wringer, if they do, thanks to Mrs. Graham’s example, I’ll be ready.”
Donald Graham, CEO and Chairman of The Washington Post Company, also put out a letter about the sale. In that, he says, “Our revenues had declined seven years in a row. We had innovated, and to my critical eye our innovations had been quite successful in audience and in quality, but they hadn’t made up for the revenue decline. Our answer had to be cost cuts, and we knew there was a limit to that. We were certain the paper would survive under our ownership, but we wanted it to do more than that. We wanted it to succeed.”
Weymouth put out a letter as well, referring to Bezos as “one of America’s great innovators and most respected business leaders.”
“The Washington Post has earned a worldwide reputation for tough, penetrating, insightful, and indispensable journalism. With the investment by Mr. Bezos, that tradition will continue,” Weymouth says.
“While he expects The Post to remain profitable, his focus is on the essential role that our journalism has on dialogue and the flow of information in our society,” she says. “Mr. Bezos knows as well as anyone the opportunities that come with revolutionary technology when we understand how to make the most of it. Under his ownership and with his management savvy, we will be able to accelerate the pace and quality of innovation.”
To many, the news of the deal came as a pretty big surprise, but as Quartz points out, there were signs that it was coming. They give three of them: Bezos sold roughly $185 million in Amazon shares on Friday, Bezos is friends with Graham, and he “love running unprofitable businesses.”
Okay, that last one might be a bit of a stretch, but writer Tim Fernholz does have a point when he says, “At Amazon, Bezos has focused on market-share and customer satisfaction, often at the expense of his margins. Nonetheless, markets have continued to reward his disinterest in their metrics, sending Amazon’s stock soaring above $300 despite the company’s $7 million in losses last quarter.”
And it’s not as though Bezos hasn’t shown an interest in the news industry in the past. He did, after all, invest in Business Insider, which has quickly become a major web publication since expanding beyond its original Silicon Alley Insider model.
The investment came in April, when BI CEO Henry Blodget had this to say in an email to staff about the $5 million investment (which wasn’t all from Bezos, but also included some financing from other investors):
This capital will allow us to continue to invest aggressively in many areas of the business, including editorial, tech/product, sales and marketing, subscriptions, and events. As we mentioned last night, it will also allow us to expand our office.
Jeff’s investment grew out of a dinner he and I had about a year ago. We talked about the business, and he was excited about it. (He sees some parallels with Amazon). A few months later, he expressed an interest in investing. My reaction was basically “Hell, yeah!”
Naturally, Blodget had some thoughts about Bezos’ purchase of The Washington Post as well. He notes that having Bezos as an investor has been great, then speculates about why he might have bought the Post:
First, I’d guess that Jeff Bezos thinks that owning the Washington Post will be fun, interesting, and cool. And my guess is that, if that is all it ever turns out to be, Jeff Bezos will be fine with that. This is a man who invests in rockets and atomic clocks, after all. He doesn’t necessarily make these investments for the money. Or bragging rights. Or strategic synergies.
Second, I’d guess that Jeff Bezos thinks that there are some similarities between the digital news business and his business (ecommerce) that no one in the news business has really capitalized on yet.
After listing some specific similarities, he suggests that the Washington Post business could be complementary to Amazon in that Amazon already produces content, is in the subscription and media-gadget businesses, and is getting into local deliveries. Also, in the sense that news might sometimes encourage people to buy things.
Some have suggested that Bezos’ purchase of the newspaper business is something of a charity case. You know, like he has a lot of money, and feels that he has some kind of duty to contribute to the saving of journalism.
Washington Post reporter Lydia DePillis doesn’t see it that way. She writes, “First of all, don’t be deceived by the fact that Bezos is buying it himself, rather than Amazon–there’s little reason to believe this is a passion project. It just would’ve been tricky to make it a public takeover, because corporations don’t know how to value a newspaper’s future earnings. And besides, though the markets have been remarkably patient with Amazon’s continued losses, a money pit like the Post would’ve been harder to stomach.”
She notes that while $250 million may not seem like a lot compared to some other acquisitions, it’s a lot for “a company with a lot of liabilities,” noting that the Boston Globe just sold for $70 million.
She speculates that the Post’s site will get a big redesign, and “could become a major new sales and advertising platform”. She also suggests that Bezos can obtain a lot of data from owning a new service, among other things.
Despite Bezos buying the business on his own, rather than as Amazon, plenty are still expecting there to be some Amazon connections. Whether or not these occur remains to be see.
Search Engine Land’s founding editor Danny Sullivan made an interesting comment on Twitter: “The once inconceivable idea Google would buy [The] New York Times took [a] giant leap toward reality with Amazon-Wash Post deal.”
This stems from comments Google executives allegedly made a few years back. Here’s what Eric Schmidt said back then:
“We had a series of conversations about what to do about content, and we ultimately decided to not to get into the content business. We looked at the New York Times but also other institutions. Rather than naming them, let’s just say we did a survey. And our conclusion was we are not very good at [content].
“We like information, but we think it’s better for those to be managed the professionals that are managing them well. I’m careful not to ever rule out anything, because that’s a mistake as a CEO. But I would tell you it’s highly unlikely we would get into the content business.
“It’s fundamentally better for us to be the supplier of platforms and monetization and revenue and advertising and subscription services to all of these players. We desperately need the newspapers, the magazines, the media companies to be successful because we need their content.
“The thing we can offer is better monetization, better targeting and a better user experience viewing content created by very, very sophisticated people. … If it’s content, where you have people producing content that viewers are looking at, we’re better off powering it, not writing it and owning it.”
Of course, a great deal of time has passed, and Google has already had to start putting money toward news publications in some cases. Who knows what’s possible? Some of us would just like to see Google News get actual news right in terms of when it was published.
In addition to The Washington Post, Bezos will get the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing. He will not, however, get Slate, TheRoot.com or Foreign Policy, which will all remain part of The Washington Post Company.
The WaPo Labs and SocialCode businesses, the company’s interest in Classified Ventures and certain real estate assets like the headquarters in Washington D.C. will also remain with the company.
The Washington Post Company will be changing its name in light of the deal, but what that name will be has yet to be determined. The deal is expected to close later this year.
What do you think about Bezos buying The Washington Post? Do you think it will remain completely separate from Amazon? Do you think the move is good for the newspaper? For the industry in general? Share your thoughts in the comments.
Image: James Duncan Davidson (Flickr)