08th Aug 2013

Why has Bezos bought the Washington Post?

In a totally unanticipated move, on Monday Jeff Bezos, founder and CEO of Amazon agreed to personally buy the Washington Post for $250 million. The deal, which also includes the purchase of a number of affiliate publications, brings to an end the Graham family’s 80 year stewardship of the newspaper. Over the last six years the Washington Post Company’s newspaper division has suffered a 44% decline in operating revenues. We all know that the print newspaper industry is struggling. So, why has Bezos bought the Washington Post?

Bezos (49), who is worth a reported $25 billion, founded Amazon in his garage at the age of 30. He is known as a libertarian and philanthropist, and in business, as a perfectionist, and a long term strategic thinker with a so-called ‘patience for profit’.

Amazon is the world’s largest online retailer. Yet for the first 9 years of its operations Amazon failed to turn a profit, to much frustration from investors and analysts. But Bezos had a long term vision which he was unwilling to compromise for immediate profitability. Bezos has explained “We believe in the long term”, adding “but the long term has to come”. Bezos plays the long game. For years he has refused to realise Amazon’s immediate profit potential, because he is building towards something bigger.

These days, print media looks like a very unattractive business investment. And naturally, skeptics have been happy to raise their hands and question the prudence of Bezos’s decision. Yet Bezos’s long sightedness may go someway to explaining the purchase.

Has the newspaper industry finally reached its lowest level? Is this what Bezos has anticipated? The industry is changing there is no doubt, yet some papers are successfully adapting to these changes by increasing their cover charges both online and in print. Encouragingly, the total revenue for American newspapers declined only 2% in 2012.

Bezos’s plans, broadly speaking, involve guiding the paper into the digital age while remaining to loyal to its readership. Despite the change of ownership, Donald Graham, CEO, and Bezos have made it clear that management and operations of the Post will continue undisrupted. Graham will stay on as CEO, while his niece Katharine Weymouth will stay on as publisher. As regards his specific plans for the future of the Post, Bezos is being coy “I don’t want to imply that I have a worked-out plan… This will be uncharted terrain, and it will require experimentation.” It sounds like Bezos is doing what he knows best - playing the long game. We will be watching new developments at the Post with great interest.

Hilda Goold

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