Bezos Buys Washington Post for $250M in Surprise Deal
[Updated 6 pm Eastern.]
Amazon founder Jeff Bezos has long talked about his knack for operating businesses on very low profit margins. Now, he’s getting another chance to test that muscle.
In an announcement that shocked the media industry, the Washington Post Co. says it is selling its flagship newspaper “and affiliated publications” to Bezos for $250 million in cash. Amazon itself is not involved in the purchase, which makes the paper a personal asset for Bezos.
The Post’s parent company (NYSE: WPO) is publicly traded, but controlled by the Graham family, which has run the newspaper for generations. In a letter to Post employees, published by the newspaper, Bezos noted his friendship with Post Co. Chairman and CEO Don Graham: “I do not know a finer man.”
The secrecy involved in the sale was considerable, given that a company full of reporters was apparently clueless about the possibility of a sale. The paper’s publisher and editor will stay in place, and no layoffs are being considered, the Post reported.
[This paragraph has been updated to correct outdated earnings figures.]
As with most American newspapers, the Post has struggled to make money as news and advertising have moved online. While the overall Washington Post Co. is profitable, the newspaper operations are not, losing more $14.8 million last quarter.
The purchase is an intriguing one for Bezos, who made his fortune turning Amazon into one of the original dot-com era success stories. He’s since transformed the company into a sprawling technology empire with significant operations in cloud computing and Web infrastructure services, along with tablet computers and e-readers.
As a private investor, Bezos also has put money into diverse projects including private spaceflight and a clock that will keep time for 10,000 years. The Post, of course, is one of the crown jewels of American journalism, still most famous for breaking the Watergate scandal that led to the resignation of President Nixon.
Independence from its new owner’s business and policy agendas will be closely watched. Amazon has been criticized by traditional publishers over the years for its dominance in the book-selling industry, where rival Apple was successfully sued by the federal government for fixing book prices.
Amazon also has come under fire for conditions in its shipping warehouses, including one in Pennsylvania where the company parked ambulances outside because of heat-related health problems.
Amazon also is in the midst of finalizing a years-long campaign to get Congress to pass a national framework for collecting sales taxes for online purchases. The Seattle-based company has long fought state-by-state efforts to enforce online sales taxes, preferring to wait for a sweeping national solution, which now seems possible. That battle pits Amazon against eBay, which says the sales tax plan as proposed could harm its independent sellers.
At least for now, Bezos certainly is saying all the right things as his purchase of the Post hits the headlines. “There would be change with or without new ownership. But the key thing I hope people will take away from this is that the values of The Post do not need changing. The duty of the paper is to the readers, not the owners,” Bezos said.
Coincidentally, Bezos is just a few months too late to own a paper closer to home. The Post completed its sale of The (Everett) Herald, based north of Seattle, just this March.