It has just come to light that - acting as an individual, and not in any way, shape or form in his role as CEO and founder of Amazon - Jeff Bezos is buying The Washington Post and a variety of the Washington Post Co.'s other businesses. Although many of us still view The Washington Post as a must-read (even if it is to mostly disagree with it) the company has suffered the ongoing indignities of online and mobile advertising eating print core business - to the tune of operating losses that reached $53.7 million in 2012 and $21.2 million in 2011.
The transaction follows close on the heels of the New York Times selling the Boston Globe, for which it had paid roughly $1.1 billion, for all of $70 million while still having to retain the cost of paying the Globe's employee benefits, whcih adds up to about $30 million (that leaves the Times with about $40 million for the deal). As for the Post, Bezos will personally acquire The Washington Post Co.'s flagship newspaper and various other publishing assets (though not all of them) for $250 million - a drop in the bucket for Bezos, who is currently worth in the neighborhood of $25+ billion. Bezos will take these entities private, which opens the door to flexibility relative to what Bezos will be able to do with the Post. Bezos has also personally invested in rocketship technology and recently invested $42 million to build and embed an atomic clock into the side of a mountain. OK, he likes to do fun stuff with his cash!
Washington Post Co. Chairman and CEO Donald E. Graham clearly did not have much of a choice in the matter. There was simply no way that the media property as it currently exists would be able to survive on its own. We ourselves certainly believe that if anyone can turn the business around it is Bezos, who perhaps more than most others from the original .com era is responsible for creating the Internet and Web possibilities that were destined to doom print publications.
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Graham fully agrees with our view that Bezos is the right person at the right time. He noted that Bezos' "technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post."
Bezos, of course, managed to say all the right things following the announcement. For the company's employees Bezos pointed out, "The paper's duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we'll work hard not to make mistakes. When we do, we will own up to them quickly and completely. I understand the critical role the Post plays in Washington, D.C., and our nation, and the Post's values will not change."
The newspaper's values may not change - at least not immediately or overtly, but it will certainly be interesting to see how the ways the company does business will change and evolve. At least initially, the Post's current CEO and publisher, Katharine Weymouth, will continue in those roles. Likewise, Stephen Hills will remain as president and general manager, Martin Baron will remain as executive editor and Fred Hiatt will hang in there as editorial page editor.
The Washington Post Co. itself is an interesting public entity with a market cap of about $4 billion. One thing that will change is the company's name. The Washington Post Co. will exist no longer, though what the new name will be remains to be seem. The company's collection of assets include the Express newspaper, the Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing - all of which will transfer to Bezos. We're not sure what Bezos will do with any of those - the only plum here is the big, bad boy and the influence that comes with it.
What Bezos doesn't end up with is also quite interesting. Assets that were not included in the deal include the company's Kaplan education business, Post-Newsweek Stations and Cable One, Slate Magazine, TheRoot.com and Foreign Policy.
In our opinion, the company has clearly been in way over its head and essentially lost in the high weeds relative to its media properties. Why else would it have looked to a collection of oddball acquisitions? What were the odds that the company could possibly have managed to change its course by, according to the Wall Street Journal, acquiring such entities as a maker of parts for industrial furnaces from United Technologies Corp. and a majority stake in Celtic Healthcare Inc., a provider of hospice and home healthcare services? Truly, the odds were zero that this sort of madcap diversity effort would work - what was management thinking?!
The Post's employees, meanwhile, should be ecstatic with this turn of events. Bezos believes hugely in unhesitatingly investing in his assets and driving them until they finally turn the corner and prove themselves. Go large for the long term or go home has always defined Bezos' approach. We've been covering Amazon since 1996, and we've always been amazed at how resilient and ambitious Bezos is. If anyone can prove there is gold to be found in "old time" media assets, it is Bezos. We especially look forward to seeing how he applies today's technologies to these assets. One thing we know - it will be bold.
This all leaves us with the question of why Bezos wants the Post - but we'll leave that for another day.
As for ourselves, we'd love to see a certain few columnists disappear. Oh wait, that's the editors' job. Ah well.
TechZone360 Senior Editor
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