Jeff Bezos, founder and CEO of Amazon.com, has purchased the Washington Post for $250 million. The purchase is wholly separate from Bezos' ownership of Amazon.com and Bezos will own the paper privately. The Washington Post is one of the most influential and successful newspapers in history, but like most of print journalism, it was struggling to keep pace with the changing environment brought on by a 24/7 news cycle and the competition of digital journalism.
By agreeing to own the paper privately, Bezos seems willing to incur losses while he works on a plan to re-engineer the company. Operating revenue for the paper has dropped 44% over the past six years and print circulation, including the Sunday edition, has dropped an additional 7% over the first six months of 2013. That would seem to indicate that the print edition has a short shelf-life, as did Newsweek magazine — a former property of the paper. The newspaper sold Newsweek magazine in 2010 and that publication ceased print publication in 2013. Newsweek itself was recently purchased by digital news company International Business Times (IBT).
In a letter to the employees of the paper, Bezos wrote that he does not intend to take a day-to-day role in the management of the paper, but “we will need to invent, which means we will need to experiment.” Bezos said “I’m excited and optimistic about the opportunity for invention.”
It is hard to imagine what form the invention and experimentation will take but Bezos is well on his way. He worked with the paper on the strategy for featuring newspapers on the Kindle, and Kindle Singles recently scored an interview with President Obama.
At a minimum the Washington Post acquisition allows Bezos to secure more content for his digital e-reader platform and video content platform and provides him with a staff of seasoned journalism professionals that can take advantage of the Kindle Singles distribution model.
He will still have to address a medium that has seen revenue drop 14% in the last year, but short-term gain has never been his style.
James Barksdale, president of Equity Investment Corp., told The Chicago Tribune “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.”
Washington Post Chairman and Chief Executive Donald E. Graham said, “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.”
Back in 2009, Bezos said that e-Readers, like the Kindle 2, provided “genuine opportunities” to help save print journalism. He must have foreseen the 499% increase in circulation revenue from bundled services reported by the Newspapers Association of America in 2012.
Without Bezos' acquisition, WaPo was at serious risk of shutting down. “Our revenues had declined seven years in a row,” Graham said. Bezos now has the challenge of turning those numbers around using the technology-driven innovation and business acumen that has made him one of the wealthiest men in the world. Katherine Weymouth, publisher and CEO of the paper, wrote “Under his ownership and with his management savvy, we will be able to accelerate the pace and quality of innovation.”
The market reacted favorably to news of the acquisition. According to the Chicago Tribune shares of the Washington Post Co. climbed to their highest levels in five years.