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Here are a few thoughts on the recent Washington Post acquisition:
$250 million? Only $250 million? This is the newspaper that broke Watergate! It was worth several Billion dollars just a few years ago. There are wealthy magnates that spend as much on their yachts every year. This is partly because of a couple poor investments made in the 2000s, but still.
The Totally Unsurprising:
Those investments: In 2005 The Washington Post Company acquired Kaplan Inc., a for-profit education company. That was a terrible idea. That probably made its sale inevitable. For-profit education is generally scummy and is hitting all sorts of regulatory walls. The Post also bought Newsweek in 2010 and the magazine foundered soon after.
Free access to The Post for Kindle users. The Post has on a staff a clutch of nationally syndicated columnists – George Will, Charles Krauthammer, Michael Gerson – so that could actually be worth something.
There’s now only one family that owns a major newspaper in the U.S., the Sulzbergers and the New York Times. There used to be a dozen or so.
Jeff Bezos, the founder of Amazon, is worth about $25 billion according to Forbes Magazine. That estimate doesn’t include his $250,000 investment in Google in 1998 that could be worth another $2.25 billion.
That means Bezos’s purchase of the Post is about equivalent to an average American buying a new car.
Without shareholders and for such a relatively small investment, Bezos will be able to do some interesting things with the newspaper. Or he’ll do nothing and be completely hands-off. Either way, I’d breathe easier if I worked in the newsroom. Bezos doesn’t feel like a corporate raider that wants to strip the paper of its assets and leverage it to the hilt like Sam Zell and the Chicago Tribune.
I don’t think Bezos can make the national newspaper model profitable at scale, however. Warren Buffett’s company Berkshire Hathaway bought up a collection of local papers in 2011. He made it clear in his yearly letter to investors that he has faith only in local papers. That makes sense. There’s been no viable replacement for the delivery of local news.
National newspapers are a different matter. Readers are more likely to go to online only sources for national news. Politico proved this for Washington coverage. Huffington Post, Business Insider, Mashable are other examples. A big, overhead-heavy newspaper like the Washington Post can’t survive just on local coverage. Besides, what happens in Washington is often national news anyway. Right now the newspaper is path dependent. The whole process needs to be broken and started over.
I’ve heard it argued that newspapers should be owned by a public trust. Since they perform a Public Service the Public should support them. This almost feels like that. Bezos will treat The Post like a lab for digital news delivery. Some things will fail, some will be successful, but journalism will be advanced to some degree.