Last week many mourned an end of an era, as the Graham family sold the Washington Post to Jeff Bezos, owner of Amazon.com, for somewhere in the region of $250 million. For the mourners it signalled the end of a golden age in American journalism, during which the paper’s stories managed to bring down a sitting president (the Washington Post’s Woodward and Bernstein’s coverage of the Watergate scandal is forever immortalised in the movie “All the President’s Men”).
The New York Times is now the last high profile US newspaper still being run by a family trust as the Post joins the Wall Street Journal, the Boston Globe and the LA Times in being bought out by wealthy benefactors. But is this necessarily bad news for the industry? The Grahams only sold the Post because they didn’t believe they could turn the fortunes of the paper around. The current business model is completely unsustainable. The Post has made increasing losses over the past few years (44 per cent drop in revenue over the past six years) which led Donald Graham to admit that he couldn’t bring the paper any further.
Graham claimed last week that he only sold the Post to Bezos because he trusts Bezos “to do the right thing: invest for the long term in real journalism.” I have no reason to doubt Graham’s motives for selling but there’s no denying Bezos has paid above market value for the Washington Post. The $250 million price tag is 17 times adjusted profit, or about four times what major metro dailies usually fetch – John W. Henry, the owner of the Boston Red Sox and Liverpool Football Club, just paid $70 million for the Boston Globe.
$250 million may not be very much money to Jeff Bezos, but he didn’t get rich by giving money away, so why did he pay so much for a failing business? Since the details of the sale were announced last week, many theories have abounded from it being a rich man’s toy, to the new mouthpiece for Bezos’ presidential campaign or a channel to promote Amazon’s interests, but in truth nobody really knows.
Bezos says he will no exert any editorial control over his new purchase and he has proved in the past that he is a long term investor. In a brief letter to employees, Bezos said: “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.” Perhaps his most telling comment came in a piece he wrote in the Washington Post. “There is no map, and charting a path ahead will not be easy,” he wrote. “We will need to invent, which means we will need to experiment.”
This experimentation could be the key. Under Bezos, the Post can afford to try new things and if they fail then the owner’s pockets are deep enough to support this. Bezos is unlikely to be concerned with short term losses and surely if anyone is going to save the newspaper industry then the man who has redefined retail over the past decade or so would be a good candidate for the job. Over the past decade he has redefined how books are distributed so who’s to say he can’t do the same for news.
Bezos has expertise in digital content, paywalls, delivery, mobile, local, and advertising — all the problems and conundrums that face the Washington Post, as well as every other legacy print newspaper. He’ll innovate and hopefully help the paper find its way to solvency.
Nobody knows Bezos’ plans for the venerable newspaper but his track record would suggest that he has a plan and he’s not just buying a toy to play with.