Amazon founder Jeff Bezos to buy Washington Post for US$250m
Amazon.com founder Jeff Bezos will buy the Washington Post newspaper for US$250 million in a surprise deal that ends the Graham family’s 80-year ownership and hands one of the country’s most influential publications to the tech entrepreneur.
Bezos, hailed by many as a visionary who helped transform internet retail, called his acquisition a personal endeavour and reassured Post employees and readers he will preserve the paper’s journalistic tradition, while driving innovation.
The acquisition, the latest in a flurry of recent media deals including the New York Times Co’s sale of the Boston Globe for US$70 million, is a further indication of the unprecedented challenges newspapers face as advertising revenue and readership decline.
Shares of the Washington Post Co climbed more than 5 per cent to US$599.85 after hours – their highest level in almost five years.
“I understand the critical role the Post plays in Washington, DC, and our nation, and the Post’s values will not change,” Bezos said in a letter addressed to employees and published on the newspaper’s website.
“There will of course be change at the Post over the coming years. That’s essential and would have happened with or without new ownership,” he added. “We will need to invent, which means we will need to experiment.”
Bezos, who has built Seattle-based Amazon.com into a shopping and online technology force over the last two decades, made a small foray into media earlier this year with a small investment in internet news site Business Insider.
The Washington Post, home to journalists as the “Watergate” team of Bob Woodward and Carl Bernstein, is among the rapidly dwindling number of US newspapers with a profitable business – a function of the rapid migration of readers to Internet and other digital media sources.
Warren Buffett owns a slice of its parent company, Washington Post Co, whose operating income has plummeted almost 40 per cent since 2008, to US$146.2 million last year.
“I doubt it is a financially oriented investment for him as much as a chance to play a more important role as a steward of an important public trust/asset,” said James Barksdale, president of Atlanta investment firm Equity Investment.
Barksdale said his firm did not own Washington Post shares because he thought they traded higher than he thought justified, “probably due to the Buffett halo”, he added.
Bezos will buy the Post along with other newspaper assets from the Washington Post Co. Amazon.com is to be kept separate from the Post deal, according to the Washington Post.
The deal, which caught many industry watchers by surprise, was arranged in private by Allen & Co. It comes on the heels of near-unprecedented media deal activity this year, with the Globe transaction announced just over the weekend, the Tribune Co hiving off its publishing and broadcasting businesses and the Los Angeles Times reportedly up for sale.
Washington Post chairman Donald E. Graham, whose family owns the paper, explained his decision to part ways with the publication, which will continue to be headed on a daily basis by chief executive Katharine Weymouth.
“As the newspaper business continued to bring up questions to which we have no answers, Katharine and I began to ask ourselves if our small public company was still the best home for the newspaper. Our revenues had declined seven years in a row,” Graham said in his letter to employees.
“Jeff Bezos’ proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post.”
The transaction covers the Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.
Bezos is the world’s 19th richest person with a fortune of US$25.2 billion, according to Forbes magazine. His other major personal project is called Blue Origin, which aims to be one of the first non-government funded ventures to send people and cargo into space, potentially winning lucrative contracts that were once fulfilled by Nasa.
Bezos has already spent millions of dollars on this project, with millions more in the pipeline.
He did not elaborate in great detail on his motivations behind his latest deal on Monday. But in 2009, when asked at the debut of the Kindle 2 whether the electronic-reader could help print media, Bezos said he thought there were “genuine opportunities” to save journalism.
“And we’re excited about helping with that,” he added, according to the International Herald Tribune.
Here are some notable events in the history of the company since the founding of its flagship daily in 1877:
1933 - Financier and former chairman of the Federal Reserve Eugene Meyer buys the Washington Post at a bankruptcy auction. His daughter, Katharine Graham, would go on to lead the company through its coverage of the Watergate scandal.
1946 - Philip L. Graham, who had married Katharine in 1940, takes over the company, which incorporates as the Washington Post Co the following year.
1961 - Purchase of Newsweek magazine.
1963 - Philip L. Graham commits suicide with a shotgun; Katharine Graham becomes president of the Washington Post.
1971 - Katharine Graham takes the Washington Post public with the sale of Class B stock at a price of US$26 per share.
1972 - The Washington Post publishes the first article concerning a break-in at the Democratic National Committee’s office at the Watergate complex. Subsequent coverage by reporters Bob Woodward and Carl Bernstein that detail a connection to the White House is instrumental in president Richard Nixon’s resignation in 1974.
1973 - Warren Buffett makes his first purchase of Washington Post stock. The company becomes a permanent holding of Buffett’s Berkshire Hathaway.
1980 - The Washington Post publishes Janet Cooke’s story on an eight-year-old heroin abuser that goes on to win the Pulitzer Prize. The award is later stripped after it becomes clear that the subject of the story did not exist.
1984 - The company purchases Stanley H Kaplan Education Centers for US$45 million.
1986 - Company purchases cable systems serving 350,000 subscribers from Capital Cities/ABC for US$350 million, making it the 20th-largest US cable company.
2008 - Katharine Weymouth, Katharine Graham’s granddaughter, takes over as publisher of the Washington Post.
2010 - The company sells Newsweek magazine to Sidney Harman for US$1.
This year - Amazon.com founder Jeff Bezos agrees to buy the Washington Post for US$250 million in cash.