Could Amazon and Jeff Bezos Make the Washington Post Profitable?
The recent announcement of Jeff Bezos' plan to buy the Washington Post -- and just the Post, along with a few other smaller publications, but not the parts of the Washington Post Company that are actually making money, like Kaplan Inc. -- has prompted a lot of speculation.
The speculation seems to be based on a simple syllogism: traditional newspapers are no longer capable of making a profit; Bezos bought a traditional newspaper; therefore, Bezos has some other motivation besides making a profit. So, the speculation continues, what could Bezos have in mind? Political leverage? A bail-out of the Grahams? A rich man's hobby? Or, as Sharon Waxman at Reuters suggested:
He bought it because as an Internet age mogul and a member of the New Establishment, he wanted a platform that would validate him within the Old Establishment.
In other words, as a nouveau riche billionaire, Bezos is buying social respectability, like a car dealer buying a country club membership.
But what if Bezos knows what he's doing? Let's see if we can make sense of the purchase as a business, and not merely a billionaire's bauble.
What does the Washington Post offer? It's certainly a respectable and respected paper, a reliable voice of the Ruling Class, and still riding on the myth of Watergate power. (One of the repeated warnings to Bezos from naysayers: he'd better not even think of changing that.) It has a reasonable circulation, a good reputation, and a well-established bunch of reporters, along with a massive printing and distribution operation.
Like most big papers, it's also losing money at a prodigious rate: $22 million in 2011; over $50 million last year.
What does Bezos bring? This has been a puzzle for many; after all, he's a mere retailer, a tradesman, and while he did attend Princeton, his degree wasn't in a proper field like political science or history -- it was in engineering. What's more, he doesn't plan to live in Washington, he apparently doesn't like cocktail parties, and he declined to be interviewed by his own paper.
All Bezos offers is his ability to make $30 billion by launching a business that has reshaped retail worldwide -- and his oft-stated opinion that print will be dead within a few years.
Oh, and one more thing: the dominant e-publishing platform in the Kindle.