A newspaper that has helped to defined American history is changing ownership.
In Washington, a newspaper that has defined American history changed ownership as the Graham family, who has run The Washington Post for more than 80 years, sold their company to Jeff Bezos, the founder and chief executive officer of Amazon.com, for $250 million in cash.
Listed by Bloomberg as the 16th richest man in the world, with a net worth of $27.9 billion and recognized by the Harvard Business Review as the second best CEO in the world (after the late Steve Jobs of Apple, Inc.) Bezos’ purchase of the financially-struggling newspaper is being seen as a saving move for a media group under severe revenue stress and months away from being forced to close shop.
Amazon, via its Kindle tablet format, has positioned itself to be a leading digital content provider, challenging Apple for market share. The addition of The Washington Post adds news gathering capability to Amazon’s portfolio as well as a well-known and well-respected brand.
However, for The Washington Post, it’s the end of an era. The 135-years-old newspaper, which broke the Watergate scandal and which, in conjunction with the Guardian and der Spiegel, revealed the National Security Agency’s efforts to surveil on American communication in one of the largest national security leaks in modern times — seems to be but the latest of the once-powerful newspaper conglomerates collapsing under its own weight and the realization that the news industry has shifted.
Recently, The New York Times has placed its New England Media Group up for sale, with the group’s flagship property — the Boston Globe — being purchased by Red Sox owner John Henry Saturday morning.
The Times bought the Globe in 1993 for $1.1 billion. They sold it for $70 million.
Selling the press
The Tribune Co. has recently split its operations to separate its publishing operations — including the Chicago Tribune and the Los Angeles Times — from its broadcasting functions in what many business analysts are seeing as a prerequisite to selling off the profit-draining newspapers. News Corp. has recently separated its print media business from its broadcasting and motion pictures arm in order to prevent its sinking newspapers from swamping the profitability of the rest of the company. The New Republic was recently purchased by Chris Hughes, co-founder of Facebook.
The purchase has been met with both excitement and apprehension. “I have high hopes that today’s announcement will represent a great moment in the history of a great institution: recognition that a new kind of entrepreneurship and leadership, fashioned in the age of the new technology, is needed to lead not just The Post, but perhaps the news business itself, in combining the best of enduring journalistic values with all the potential of the digital era –- including a profit model that will finance a renaissance of the kind of reporting that is essential for Washington, for American journalism, and for the world,” wrote Carl Bernstein, the 1973 Pulitzer Prize winner who — with Bob Woodward — covered the Watergate scandal for The Washington Post, in an email to the Wall Street Journal.
“Jeff Bezos seems to me exactly the kind of inventive and innovative choice needed to bring about a recommitment to great journalism on the scale many of us have been hoping for—while employing all the applicable tools and best sensibilities of a new era and the old. The Washington Post is the ideal place for it to happen.”
“It’s very sad,” said Woodward to the Daily Beast. “But if there’s somebody who can succeed, it’s Bezos. He’s the innovator, he’s got the money and the patience, so we’ll see. I think in some ways, this may be the Post’s last chance to survive, at least in some form of what it was.”
The Washington Post Company, seller of the newspaper, was the former owner of Newsweek and is the current owner of Kaplan, one of the world’s largest for-profit educational services providers, Slate, Cable ONE, the Post-Newsweek television station group and The Washington Post Writers Group. Upon completion of the sale of the newspaper, the company will take a new name.
“For the first time in either of our lives we said to each other: is ownership by The Washington Post Co the best thing for the newspaper? We could keep it alive, that wasn’t the issue. The issue was could we make it strong,” said Donald Graham, chairman and CEO of The Washington Post Company, on his and Post’s publisher Katharine Weymouth’s decision to sell the newspaper. “I named a price and Jeff agreed to pay it. To my surprise, when (Allen & Co) said they would call him, I said that would be great but I didn’t think he would be interested.”
Bezos and Amazon
There is, of course, a fear of monopolization. With Bezos’ purchase of the Post, he has created a vertical distribution channel in which he has both the means to create a good and sell that good to the public, without the need to negotiate fair pricing or use. This use of vertical distribution has become a common occurrence as more and more media conglomerates — such as Disney and News Corp. — seek out and acquire distribution networks that permit favorable terms for the sharing of their content.
Under Amazon’s Kindle platform, it is feasible and reasonable to assume that Bezos may seek to create a “preferred news service” for the Kindle, similar to Microsoft’s use of its in-house search engine, Bing, for its products. This will create a value-added asset that would differentiate the Kindle from other consumer tablets and would be the first step in building a digital content platform to rival Apple’s iTunes.
However, those familiar with the situation feel that Bezos’ intentions in buying the Post was nothing short of altruistic. “This isn’t Rupert Murdoch buying The Wall Street Journal, this is somebody who believes in the values that the Post has been prominent in practicing, and so I don’t see any downside,” Woodward said on MSNBC’s “Morning Joe.” “I think anyone will tell you in the news business, we don’t dig deep enough. I think this is somebody who digs deep,” Woodward said. “He gave a very interesting speech nine years ago in which he said whenever there is something that is big that’s done inefficiently, it’s an opportunity. And if there’s anything that’s done inefficiently, it’s the news business. And so we need to be shaken up.”
A dying industry
This does not mitigate the fact that newspapers as they are now are fading away. Last week, the Cleveland Plain Dealer announced that it will cut a third of its newsroom staff, following an announcement to cut home deliveries of newspapers to three days a week. The New Orleans Times-Picayune and the Birmingham News are now only published three days a week. The Tucson Citizen, the Rocky Mountain News, the Baltimore Examiner, the Kentucky Post, the San Juan Star and the Honolulu Advertiser have all folded since 2007, and more newspapers are inching toward the chopping block — including the Detroit News, the Christian Science Monitor, the Syracuse Post-Standard and the Seattle Post-Intelligencer.
Revenue for the newspaper industry has been in decline for six consecutive years, although the rate of decline decreased last year. As it stands now, the print newspaper industry has ceased to be self-sustaining. However, that does not necessarily mean that the print newspaper is dead, as many still find value in the single, venerable news source.
“One of the great achievements of the Internet has been the explosion of websites, blogs, etc., dedicated to politics and the news, providing a platform for every political opinion imaginable,” wrote Mark Rice, a professor of American Studies for St. John Fisher College in Rochester, N.Y., for the Huffington Post. “This very same achievement, however, has paradoxically resulted in the erosion of a common frame of reference for understanding the news, particularly news about politics. Thus, the failure of my colleague and I to understand the premises from which the other sometimes operates.”
“At the risk of sounding nostalgic, I lament the loss of that common frame of reference,” Rice concluded.