Just imagine the headlines if Amazon.com Inc.
(NASDAQ:AMZN) had bought a controlling interest in the Washington Post
newspaper for $250 million.
Investors in Amazon are resigned to watching company founder Jeff Bezos plough fabulous sums into expansion, and wait patiently for a payoff in the distant future. So distant, in fact, that in its latest quarter, the company took in $15.7 billion in revenue and still managed to lose $7 million on the bottom line.
But buying a money-losing newspaper? Amazon’s investors would have gone all Kingslayer on the dude.
That’s why Monday night’s big headline was: “Bezos Buys the Washington Post.” Surely a newspaper is no crazier a gamble than space colonization, another venture that Bezos is personally dabbling in. As the world’s 19th richest person, worth about $25 billion, Bezos can buy a lot of crazy.
The question is, why the Washington Post
Here’s as good a guess as any: He wants to reinvent the newspaper business. It may sound as old-school as Citizen Kane
, but it’s not.
News on the Web has intrinsic qualities that make it far better than it ever could be in print. Unfortunately, there’s no money in it, or very little so far, and approximately 60% of that goes straight to Google
(NASDAQ:GOOG) in the form of advertising revenue.
Meanwhile, at Amazon, Bezos has already begun to produce as well as distribute content, through such ventures as the Amazon book publishing arm and Amazon original video programming.
Amazon is also making a good chunk of change—more than $600 million last year—on advertising sales. Almost under the radar, it is making money on ad placements in its own search results, sucking money that might otherwise have gone to the lackluster Google Shop, if anyone knew it existed.
So, his new toy will allow Bezos to experiment with ways to package advertising and content (and oh, how his new employees will hate that word), in ways that are appealing to people on the Internet, millions of whom already download Amazon media onto Amazon devices.
If he can pull it off, it seems reasonable for Bezos to move the Washington Post
from his own balance sheet to Amazon.com, Inc. That can’t happen until it looks like a sound investment to Amazon’s shareholders, who don’t have his patience or his deep pockets.
For the time being, Bezos seems psyched for his new role as newspaper baron. In his announcement,
he sounds like every city editor who ever lived: “Our touchstone will be readers, understanding what they care about—government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports—and working backwards from there.”
If you don’t like that explanation for why Bezos bought the Post
, here are a few of the others that popped up within hours of the announcement, for what they’re worth:
Buying the Washington Post instantly makes Bezos “a player” in Washington, DC. What was he before, chopped liver? Last week, President Barack Obama flew to Chattanooga to visit an Amazon warehouse. And are you also wondering who ratted out Apple (NASDAQ:AAPL) to the government when it got the book publishers together to chat about increasing their prices? In any case, the Bezos name is not unknown in Washington.
Buying media is a thing that billionaires do. This comes from Bloomberg News, and it ought to know. Others in the club include Warren Buffett, who owns some community newspapers, and John Henry, who just bought the Boston Globe.
He wants to be Rupert Murdoch. Not really. The owner of News Corp. (NWS) has built an ultra-conservative empire of newspapers and talk television. Bezos, who is believed to lean libertarian, keeps his politics mostly to himself, and is a positive cheapskate as a political donor. His only known political donation of any size was to a campaign for gay marriage in Washington State.
But why bother with all the other pundits when we can turn to the Washington Post
itself for coverage?
When the announcement was made in the newsroom, “the mood was hushed,” the newspaper reports
Yes, it turns out that the folks who broke the Watergate scandal never saw this one coming. They were totally gobsmacked.
Investors in The Washington Post Co.
(NYSE:WPO) were pretty cheerful, though. Immediately after the announcement, in after-hours trading Monday, the stock closed up 5.06%, to $597.50.
For $250 million, Bezos is getting the flagship newspaper, plus a number of regional Washington-area newspapers and DC insider publications.
The Washington Post Co. will change its name, and continue as owner of broadcast and cable television assets, as well as the Kaplan Inc. educational services company and the website Slate.com.
From the view of WPO investors, $250 million ought to sound like a good deal. Ironically, Newsweek
, which in its heyday was owned by The Washington Post Co., was also just sold, to IBT Media. The price was not disclosed. But since the magazine last changed hands in 2010, for $1, and has since closed its print publication, the price is unlikely to be impressive.
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