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Wednesday Sep 25, 2024
Wednesday, 7 August 2013 00:00 - - {{hitsCtrl.values.hits}}
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% 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% since 2008, to US$ 146.2 million in 2012.
“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 Corp.
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 and Chief Executive 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 CEO 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.
