On August 5, Amazon CEO Jeff Bezos bought the 135-year-old Washington Post for $250 million in cash, which is less than 1% of Bezos’ estimated net worth of $28 billion. His other recent large scale investments include private spaceflight company Blue Origin, driver reservation service Uber, and travel rental service Airbnb.
The most common reaction to the news, particularly to those in the news media, was shock. Washington Post opinion writer Kathleen Parker likened it to ”a gut punch of familial disruption,” while New York Times business journalist Andrew Ross Sorkin said, “If it wasn’t clear that newspapers have become trophies for the wealthy with an interest in journalism or power — or a combination of both — it should be now.”
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The Graham family, who controlled the Post through a Depression, the Second World War, Vietnam, and Watergate, was finally bested by the internet, but Washington Post Co. Chairman and CEO Donald Graham was ultimately optimistic, telling the Post‘s Paul Fahri in an interview, ”I’m not saying this guarantees success, but it gives us a much greater chance of success.”
This Was a Jeff Bezos Purchase, Not an Amazon Purchase
This was a personal acquisition for Bezos, and The Washington Post will be a private entity for the first time since the Graham family took the company public in 1971. While Bezos has already shown he excels with business and customer value models, Frank Islam and Ed Crego write in the Huffington Post that acquisition of the Post allows him to add a new model to his repertoire: the public trust model. They write that Bezos’ challenge is to maintain the Post‘s position in news integrity and investigative journalism in what they call ”a journalistic world that has become increasingly partisan, political and pandering.”
Graham, in an interview with Gwen Ifill of PBS Newshour stated that his grandfather bought the Post in 1933 having never worked on a newspaper, and that ”The Post‘s great friend Warren Buffet has called Jeff the best CEO in America.”
Why Bezos Wanted to Buy a Newspaper
Newspaper acquisitions have been popular in the last couple of years, with investor Warren Buffet buying up dozens of smaller dailies, and Boston Red Sox owner John Henry buying the Boston Globe for $70 million in July of this year. Yet despite these high profile purchases, newspaper acquisition is hardly considered a ”hot” investment. But perhaps that’s partly what attracted Bezos. In a Washington Post TV video, Bezos says, ”Never chase the hot thing … you pick something you’re passionate about.”
After Bob Graham made the announcement of the sale to the staff of the Post, his niece, publisher Katherine Weymouth shared part of a letter from Bezos to them in which he promised to maintain the Post‘s values, keep his ”day job” and leave day-today management of the Post to its current leadership team.
What the Transaction Says About the Newspaper Industry
The news industry is still figuring out how the digital news industry can be profitable. Some, like Time‘s Rana Foroohar, think the Bezos purchase means that the future of journalism is brighter. Foroohar cites Bezos’ reputation as not just another rich man buying a plaything, but possibly ”the most visionary technology business leader of our age.” She also refers to Bezos’ commitment to long-form media, with the Kindle beating even Apple in its understanding of long-form content consumption through the tablet format.
Bezos also has somewhat of a track record as a stakeholder in Business Insider, but doesn’t seem to have changed its tone or content. Finally, Bezos may be the right person to bring the business side of the Post up to where it needs to be to live up to its global editorial aspirations due to his global business acumen.
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