August 5, 2013

"The Washington Post Co. has agreed to sell its flagship newspaper to founder and chief executive Jeffrey P. Bezos..."

"... ending the Graham family’s stewardship of one of America’s leading news organizations after four generations."

Wow! What an amazing moment of transition in media this is. The new overcomes the old. It's not Amazon that will own WaPo, but Bezos himself, individually.

I hope he gets rid of the paywall.
For much of the past decade... the paper 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...

Bezos, in an interview, called The Post “an important institution” and expressed optimism about its future. “I don’t want to imply that I have a worked-out plan,” he said. “This will be uncharted terrain and it will require experimentation.” He said, “There would be change with or without new ownership. But the key thing I hope people will take away from this is that the values of The Post do not need changing. The duty of the paper is to the readers, not the owners.”
ADDED: It seems as though the Bezos idea should be to forget about making money — like Citizen Kane — and simply plunge into making a great newspaper. Bezos doesn't need to make money. He can be simply spending money. Do what is good! What else should he do at this point? And even when Amazon was being developed, the need to make money soon was considered a distraction, if I remember correctly. He had the nerve to put that off way into the future. Here's the "Citizen Kane" scene this makes me think of:

"You're right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I'll have to close this place in... 60 years."


Alex said...

You mean those same values that include lying and shilling for the administration? Really Bezos? I'm tempted to cancel my Amazon Prime subscription!

Chase said...

Memo to Jeff Bezo:
1) Hire more politically diverse editors.
That alone will be enough to insure a longer lifespan whatever form the Post takes. Look at poor old Newsweek. The Post sold it to even more liberal Tina Brown and where is it today?.

Are you listening, Time magazine?

Graham Powell said...

With this sale and the Boston Globe sale, obviously some very smart people think that the newspaper industry is about to turn around, or at least stabilize.

They may be wrong, but that must be what they think. Oh, and the LA Times, too.

Peter said...

Couldn't Google easily afford to buy all the major newspapers in the USA?

If it did, would U.S. antitrust force it to divest? If so, how many- 50% ?

Eric said...

Bezos isn't getting the parts (like Kaplan) that actually make money.

I don't see the point. He's going to end up selling it off later for a huge loss like the NYT did with the Boston Globe.

Greg Hlatky said...

Wait around for 10 years and you can buy it from him for five bucks.

The Godfather said...

I lived in Washington for 35 years and read the Post every day (and the Evening Star until it closed). It was a pretty good newspaper. Like the old New York Times, it was usually liberal but fair. Now, when I visit DC on business, several times a year, I still pick up the Post to read with breakfast, and it hasn't changed much. But I don't see a future for papers like this. If you can't make a profit as the voice of the political establishment in Washington, and apparently they can't, what role do you have?

Farmer said...

This is a Drudge headline, coupled with a photo showing Bob Woodward sticking his hands down the back of his pants.

What the hell, Woodward?

Amichel said...

@Graham Powell

I'm not so sure they are buying newspapers per se, as they are really becoming a niche product. What they are buying is the brand, the cache, the reputation. Who would care if Jeff Bezo put out some daily news and opinion under a new name like The Amazon Daily Post? What he's buying is legitimacy, and hopefully, he'll be able to leverage that into something less stale and hackish than the Graham family has been able to.

Tim Wright said...

The point is political protection. Washington politicians are afraid of the Post and Bezos now has bought protection for Amazon from the Washington mob. Tim W.

Terry said...

Bezos is in the content marketing business.

cold pizza said...

My crystal ball shows links to WaPo articles popping up whenever I shop Amazon.

And Amazon gets a great discount on cheap packing materials!

White Elephant Newspapers. The new symbol of status among the uber-wealthy. -CP

Lance said...

There are three known ways to make money on the web:
1. Advertising (Google, Facebook, AdClick)
2. Pay-to-play (Games)
3. Sell something (Amazon, eBay, PayPal, WSJ paywall)

Advertising doesn't apparently work well enough to keep newspapers in business. It worked in print, but hasn't worked for them online.

Amazon makes money through direct commerce. I expect Bezos will apply the same model to the newspaper business, in some fashion. Some possibilities:
- Revive micro-transactions, charge per "click" or "download" or "impression"
- Sell a special "WaPo reader" license in the Apple, Android, and Kindle stores that gives access to premium content.
- Keep the paywall, but offer subscriptions as a premium for Amazon Plus subscribers

Or he could do something completely different. He could produce a special "WaPo App" for iOS, Android, Kindle, Facebook, etc. that provides "free" access to premium content but requires the user to surrender their personal information (not just browsing history, but also contacts, location, etc.), then sell that information to the highest bidder.

Matthew Sablan said...

I wonder if the same people who worry about Koch buying a paper are going to raise red flags on this one.

Sam L. said...

Who is Kaplan? I am not knowing. Given pg 5 of the WaPo story, I can see why he isn't changing their values.

Let the money loss continue.

Left Bank of the Charles said...

It looks like Henry got a better deal for the Globe than Bezos got for the Post, but Bezos paid with pretend Internet money. And his plan is likely to make the post a national online paper, which can sell ads to Amazon and other online retailers, thereby cycling more pretend Internet money.

We'll end up with 3 to 5 national online newspapers, the WSJ, NYT, WaPo, and maybe 1 or 2 others.

ddh said...

After 40 years of subscribing to the Post, I stopped getting the paper in May. In 1974, the Post was doggedly running down the motives behind a third-rate burglary at the Watergate. In 2013, the Post hardly covers [pick an Obama Administration scandal of your choice], which is a local story with local sources who the paper's journalists can't find. That change might be a clue for how the Post has failed its readers.

The Post covers the shortcomings of Republicans while covering for those of Democrats. That, too, might be a clue.

The Post covers local government in the District, where 15 percent of the area's population lives; but the Virginia and Maryland suburbs, where 85 percent live, might as well be terra incognita. That, also, might be a clue.

We'll see if Jeff Bezos can buy a clue, now that he has bought a newspaper.

madAsHell said...

The Boston Globe was sold for $70 million. I don't see how the Post can be worth $250 million.

Bezos paid too much!

n.n said...

I wonder if this is related to the Democratic effort to impose a tax on Internet sales outside of the current criteria establishing nexus. Amazon would in particular be deeply harmed by that marginal increase in their cost of goods. Their profit margins are already at a bare minimum. There are numerous precedents for both private and public interests to capitulate to this administration's demands.

Hagar said...

This is Jeff Bezo's money, not Amazon's, so I think it is a vanity purchase, and Jeff Bezo's is about to get an education.

And so is WaPo. Businesses are not democracies. When they change owners, they change personalities, regardless of all the yada yada about continuity, etc., at the take-over.
Believe me, I've been there more than once!

Steven said...

Couldn't Google easily afford to buy all the major newspapers in the USA?


Google has $54 billion in reasonably liquid assets. That's not market cap/stock price, that's actual cash in the bank and CDs and short-term bonds and such.

Lots of newspaper companies are privately owned or otherwise hard to value. But the New York Times Company, Gannett Co., The McClatchy Company, GateHouse Media, Lee Enterprises, A. H. Belo, the Daily Journal Corporation, and E.W. Scripps combine for a total market capitalization of about $9.4 billion. And that includes a lot of TV stations and such, which really inflate the value.

So, Google certainly can afford to buy essentially every newspaper currently publishing in the US, with cash (not having to offer any stock or borrow any money).

Mark Trade said...

The first thing I thought about wasn't Citizen Kane but Al Jazeera, who has also stated that profits will take a back seat to quality news when Al Jazeera America debuts in a few weeks. They are fully content with spending money and, like Bezos and Kane, all of it is owned by one person, in this case a member of the Qatar royal family.

Jeff said...

So the Post is now just another vanity press. So long as it was owned by the Graham family, the employees could feel like there was some tradition in the ownership. But Bezos wants to be hands on, and he knows absolutely nothing about the business. This is going to go downhill very fast.

Donald Douglas said...

I was thinking, "Hey, maybe he'll buy the Los Angeles Times!"

But now I see this Tech Crunch story, "Bezos In 2012: People Won’t Pay For News On The Web, Print Will Be Dead In 20 Years". So now I'm not so sure. I still like reading hard copy newspapers, and if those are going extinct, will "newspapers" still be a thing on the Internet? In 20 years it could be just blogs and BuzzFeed knockoffs. Who knows? I guess if anyone can navigate the changes Bezos can.

David said...

This will be interesting.

I hope Bezos seeks a profit. He could just "do good" but his idea of good in this context is probably undeveloped. We have plenty of do-gooders. Bezos has enabled millions of people to avoid billions in state sales or use taxes. He did so because it gave Amazon a competative advantage.

Do gooder? Spare me, please.

I simply want him to be fearless.

Of course he can't be, because Amazon has many regulatory and tax vulnerabilities.

Nevertheless this has potential. Someone willing to innovate is in charge.

David said...

Farmer said...
This is a Drudge headline, coupled with a photo showing Bob Woodward sticking his hands down the back of his pants.

What the hell, Woodward?

Woodward finally has gotten into Drudge's pants? Major scoop.

David said...

WAPO has great potential value.

The name still means quite a bit.

Location, location, location has value, especially good locations in Washington, D.C.

Those saying he overpaid think he's simply going to run a newspaper. That almost certainly is not the case.

cubanbob said...

It must be grand to be able to throw away hundreds of millions of dollars on a vanity project and not be affected in the least. The Graham's got $250mm in real money and Bezos get to play Citizen Kane. Give him five, tops ten years before he tired of it and sells it for a fraction of his investment. I suppose for the same amount of money he could have bought a mega yacht. I guess for him a newspaper has more cachet.

Carl said...

It seems as though the Bezos idea should be to forget about making money

That would be a real shame. To make money is to have the services you provide to others (for which they pay you) exceed the services of others you consume (and for which you must pay).

In short, to lose money is to be a social parasite: to consume more of society's resources than you contribute. Bezos has been a nontrivial factor in making millions of lives better (which is why he is rich). It would be a sad loss if he turned in his dotage into a mere swell, an aristocrat sipping champagne and running a vanity press without providing any service for which anyone would willingly buy his champagne.

It has always astonished me that lefties get away with the so self-evidently illogical proposition that social service consists of doing something for which no one is willing to pay you a dime. On what planet does common sense not find that laughable?

Hey! Nobody's willing to pay me to have my dog crap on their lawns -- must be some real social service, there, huh? Dog should get a Nobel Prize or something.

Carl said...

On the actual meaning, though, I'm with Tim Wright. This is just protection money. The Obamanauts are Apple and Google fanbois. Amazon is the odd man out. $250 mil -- or more precisely, the interest on $250 mil from today until January 2017 -- is nothing to keep a lid on their willingness to, say, assign preferential "waivers" or tie some but not others up in court. The timing is good: there are quite a number of stories and possible journalistic investigations that the Chicago Boys would prefer happen after November 2014 and 2016. I imagine Bezos will be able to work out a deal, very much the way Wall Street did.

rcommal said...

Just for the sheer amusement of it, I ask: Hearst or Neuharth? For example.

rcommal said...

It's hard for me to imagine him imagining himself as William Allen White or H.L. Mencken, for a couple of examples.

This is partly why I think my previous question, in my just previous comment, is not just apt, but very much on point.

Jimmy said...

Although I give a lot of stock to the arguments that he bought the post for "protection" (TIm Wright) or to ward off efforts toward an "Internet sales tax" (n.n), it is also true the Bezos is a visionary businessman.

I suspect he has a better idea of how to turn his investment into a moneymaker than, say, AOL did when they bought Time Warner.

Content is still king (with an appreciative nod to our blogess).

Tina Trent said...

He can't be more liberal than the current powers that be. And anyone who spends $42 million to build a clock inside a mountain can't be all bad.

rehajm said...

Bezos and Henry aren't in this to make money, their purchases are little more than sugar daddy philanthropy. Sure, there are synergies that may help their other ventures- the Red Sox are more whole and now Royal Liverpool will get more coverage, and there won't be any Sunday think pieces on internet sales tax any time soon. But these purchases are from the same media mold as Current TV and Air America, and the final outcome isn't pretty.

The shock coming from the swaddled media types this morning is fun though. Glad you've finally taken your dose of reality sheltered children.

Peter said...

Selling access to a single newspaper doesn't work all that well, but perhaps selling access to a big bundle of major newspapers might.

Few are going to buy digital access to more than one newspaper, and even that is hard to sell. But if you could buy full access to 100 newspapers that might be different.

Craig said...

If he gets a big tax break it will seem more like the charitable enterprise it really is.

cubanbob said...

In the clip Kane boasts the he can afford to lose a million a year for sixty years. Bezos can afford lose two hundred and fifty million a year for even longer. Just goes to show a buck isn't worth what it used to be. All thanks to the Federal Reserve Bank. Nice work guys.

madAsHell said...

Those saying he overpaid think he's simply going to run a newspaper. That almost certainly is not the case.

You are a true moron.

The selling price has nothing to do with the potential. If the seller realized the potential, then there would be no sale.