Has Bezos bought the Washington Post for the right reasons?

After the shock sale of the Washington Post, Raymond Snoddy asks why should Jeff Bezos, the multi-billionaire founder of Amazon and a West coast citizen of the new world be interested in a fading symbol of the old world?

All those years ago and working in London at one of the most minor outposts of the Washington Post empire – the Los Angeles Times-Washington Post News Service – you could feel the sense of power and pride.

It was just after Watergate and we got to see an early preview of the movie.

The then publisher and owner Katharine Graham came to town and was treated like newspaper royalty. The Post’s star interviewer Sally Quinn, who married the Watergate editor Benjamin Bradlee, sent a message asking would the London office please set up an interview with the Queen. She had to be told politely that the Queen was not in the habit of granting interviews – not even for the mighty Washington Post.

A lot has happened to the economics of the newspaper industry since then but this week’s news that the Post and assorted publishing interests of the Washington Post Company were being cast adrift still came as a huge shock, not least in the newsroom of the Post itself.

It was a triple shock, each aspect of which needs an explanation – why is the Post being sold now, why is it being sold for $250 million and why to Jeff Bezos, the Amazon billionaire?

All three shocks are readily explicable without much need for further consideration.

The numbers for the Washington Post tell their own story. Revenues have dropped by 44 per cent over the past six years and show no sign of recovery. The paper’s weekday circulation has fallen from a peak of 832,332 in 1993 to 474,767 today.

Perhaps more tellingly, Don Graham, chairman of the Washington Post Company whose grandfather bought the business at auction in 1933, admitted in a letter to staff that the newspaper business was continuing to bring up questions “to which we have no answers.”

The parallels between the plight of the Washington Post and News UK are striking except that Rupert Murdoch decided to split but stay and Graham decided to split and go. The profitable educational and television interests of the Washington Post Company will march on – under a different name.

At first glance $250 million seems a pittance for such an illustrious title. Alas it is no such thing.
The sad truth is that the combination of continuing losses and significant pension obligations have led analysts to conclude that the deal is a good one for shareholders, erring if anything perhaps on the generous side.

But why should Jeff Bezos, the multi-billionaire founder of Amazon, a West coast citizen of the new world, be interested in a fading symbol of the old world? Critics of Amazon and how it has first disrupted the book publishing industry and now threatens to do the same for all of retailing are suspicious that he is now also trying to amass political power on the cheap.

Maybe, but all the signs are that Graham was simply trying to find a good home that might respect and pay for a tradition of investigative journalism that does not come cheap and is everywhere in financial danger.

Graham asked the famous boutique media merchant bank, Allen & Co, to run a beauty parade for six potential suitors and Bezos was chosen after two three hour sessions at the bank’s legendary deal-broking conference at Sun Valley.

On closer examination Bezos is not such a bizarre person to own an important US newspaper. Rich men have often bought newspapers as toys, trophies or for political access.

While the Amazon founder has not displayed overt political ambition until now he has shown interest in political issues from a libertarian point of view – support for gay marriage and opposition to increased taxation for the rich in Washington state.

So far, and of course it is early days, he has been making the right noises about not wanting to get involved in the day-to-day running of the paper. It is probably true. He has much bigger fish to fry and with personal wealth of $25 billion the losses of the Post are unlikely to trouble him.

He has given a few interesting pointers while declining all requests for interview.

“The path ahead will not be easy. We will need to invent which means we will need to experiment,” Bezos said.

Who can doubt such wisdom and if Bezos managed to both invent and experiment, eventually the entire newspaper industry might benefit.

For now Jeff Bezos is entitled to the benefit of the doubt as should Don Graham’s judgement that the Amazon executive wants to buy the Washington Post for the right reasons and that he understands what newspapers do “and why this newspaper in particular is important and that he would be willing to stand up for it.”

The sale of the Post naturally made headlines around the world and was front page news in the US with large analysis pieces inside.

In reality the sale is only part of a wider trend.

Last weekend there was another “celebrity” purchase of a well known US newspaper – the Boston Globe. The paper was bought by John W. Henry, owner of the Boston Red Sox, for a mere $70 million.

The New York Times Company which originally paid $1.1 billion for the paper in 1993 is also retaining $110 million worth of pension obligations.

Then there is that other multi-billionaire interested in newspapers – Warren Buffett.

Buffett is a fan of local community based newspapers but has expressed doubt about the future of regional newspapers such as the Los Angeles Times and the Washington Post.

And so the departure of the Graham’s from the Post marks almost the end of the great newspaper-owning families in the US – families who tended to put public purpose before profits.

The last family standing are the Sulzbergers, owners of the New York Times.

Maybe we should all be grateful for the Internet entrepreneurs, and even baseball club owners, coming into newspapers so long as they understand what newspapers are for.