All Hail the Amazon Post!
Jeff Bezos, the founder of Amazon, purchased the Washington Post today for $250 million. Here are some quick thoughts, and a round-up of reaction around the Interwebs. First up, to put Bezos' purchase price into perspective, Mark Steyn writes:
Re Jeff Bezos buying The Washington Post for $250 million, I mentioned here yesterday that in 1999 The Worcester Telegram & Gazette (that’s in Massachusetts) sold for $295 million.
Fourteen years later, one of the media’s A-list titles – the establishment paper of the capital city, the one that took down a president and made Woodward, Bernstein and Ben Bradlee the Holy Trinity of American journalism’s First Church of Itself – can barely command 80 per cent of that price.
No other industry’s management is in quite such poignant inversion to its self-regard.
Per DrewM, the combined value of the Washington Post and Boston Globe these days is more than $100 million less than the least valued major league baseball team — or, if you prefer, half the amount that the Qatari royals paid for Current TV. If you’ve got $250 million to play with, what’s a better use of your money, a yacht with all the trimmings or the political influence that comes with owning the paper of record in the capital of the most powerful country in the world?
Naturally, the Post, which once prided itself on being the greatest investigative paper in the world, suddenly has no clue what its new owner's politics are, as Mark Krikorian writes at the Corner:
The Post story on its sale to Jeff Bezos notes toward the end that the owner of Amazon “has given little indication of his ideological leanings over the years.” It then goes on to say that “he and his wife have regularly donated to the campaign of Sen. Patty Murray (D-Wash)” and that he is in “the top ranks of financial backers of gay rights in the country.” I think that gives a pretty clear indication of his ideological leanings. His leftism is no surprise, given the political inclinations of our elites, but it’s hilarious that the reporter, Paul Farhi, and his editors could list those data points and then not draw the obvious conclusion. I don’t think it was disingenuous — they just see liberalism as the natural state of thinking people, and not as any kind of ideological leaning. And that’s why, despite Bezos’s business acumen, the Post will likely continue down the path of clueless, parochial liberalism, and keep hemorrhaging readers.
At least until the announcement that the Democrats' "Mistress of Disaster" Jamie Gorelick joined their board last year, Amazon has always maintained a far quieter political stance than the in-your-face "Progressivism" of Google, which Allahpundit believes might tone down some of the increasingly reactionary leftwing stances of the Post in recent years:
Ace thinks Bezos will keep the Post reliably Democratic in orientation. I don’t know. It may be that he cares less about shaping the news than about the challenge of building a news outlet that succeeds online where others have failed miserably. If I were him, I wouldn’t want any political grief from a comparatively tiny asset like the Post bleeding over into my main business. He just bought himself a lot of cachet. All he can do now is annoy half of his Amazon customers by wielding it in a manner that’s too politically antagonistic.
Perhaps a good indicator on what if any changes will occur at the Post will be if any of the JournoListas are given their walking papers. Speaking of which, Matthew Yglesias reassures his fellow left-wing readers at Slate that Bezos did not also acquire that asset in his transaction:
The news just broke that Jeff Bezos, CEO of Amazon, is buying the Washington Post. Two points to make about this. First, Slate is a property of the Washington Post Company but is not part of the Washington Post. Neither it nor Foreign Policy nor the Root have been sold. In fact, Bezos isn't even buying the building in which the Post is currently located. Second, I'm reading a lot of jokes on Twitter about Post subscriptions and Amazon Prime tie-ins, but to be clear Bezos personally is buying the Post. Amazon is not buying anything. Bezos is a personally wealthy man, and newspapers sell for cheap these days—he's paying "only" $250 million for it—while Amazon the company has a market capitalization of $136 billion.
A further thing to understand about this is that even though the Washington Post Company is obviously named after the daily newspaper, the paper is a rather small part of the company. As of this morning the Post Company was a diversified conglomerate with interests that included education (primarily Kaplan), cable television (Cable One, which is a major operator in some unfashionable parts of the country), hospices, and even industrial equipment. Obviously the company is going to have to be renamed, and on a symbolic level, this is a major change in the company's identity and in the Graham family's relationship to the city of Washington. But from a corporate viewpoint, this represents the sale of just one asset out of many.
Bezos didn't also assume the Post's "endless legacy pension costs," TechCrunch reports:
Print revenue is drifting downwards, as circulation slips. In the first half of 2013, the Washington Post saw its daily circulation decline 7.1% to 447,700.
It’s difficult to tell how much money the Washington Post loses, if any. The larger and now all-but -former newspaper division lost $49.3 million in the first two quarters of 2013. However, of that loss, $39.7 million was related to pension expenses. Also, in the first half of 2013, $19.6 million in “early retirement and severance expense” was recorded.
If there had been no retirement costs, and we deducted the pension expenses, the newspaper division would have been profitable, it appears.
Turning to pensions, a SEC filing states that:[T]he Purchaser shall assume all liabilities that relate to providing post-retirement welfare benefits to Post Employees, and the Seller shall retain all liabilities that relate to providing post-retirement welfare benefits to Former Post Employees.
So, Bezos will not be responsible for endless legacy pension costs. And, according to AllThingsD, Bezos will be given “what amounts to $50 million” to help with the costs of newly acquired employee’s pension promises. That sweetens the overall deal, and lowers its effective price.
By the way, Jeff Bezos and Egon Spengler of Ghostbusters both agree: Print is Dead. "Bezos In 2012: People Won’t Pay For News On The Web, Print Will Be Dead In 20 Years," TechCrunch reports in a separate post on how Bezos might start changing the layout of his new electric train set:
Before Jeff Bezos bought the Washington Post for $250 million, he had some choice words for the ailing print news industry. In a wide-ranging interview with the German paper, Berliner-Zeitung, the newly-minted media mogul said at the time that no one would bother paying for news online and print would be dead in 20 years (translation from our awesome writer, Frederic Lardinois).
“There is one thing I’m certain about: there won’t be printed newspapers in twenty years. Maybe as luxury items in some hotels that want to offer them as an extravagant service. Printed papers won’t be normal in twenty years.” said Bezos. That’s a pretty long timeline (think what happened in technology since 1993), but it does given an indication that Bezos may pressure his new newspaper to accelerate abandonment of their print version.
And, while I hate to lean too much on Allahpundit's item at Hot Air on the Post sale, it's worth flashing back to the 2004-era "Epic 2014" video he mentioned, which we linked to a bunch of times during the early freeform days of Ed Driscoll.com, and which forecasted the state of the media world a decade out -- AKA, next year. Bezos' forecast that printed newspapers will ultimately only exist as luxury items dovetails well with Epic 2014's prophecy for the New York Times -- though they might be want to get going, if they still want to make their prediction come true next year....
Who knew that 2013's first billionaire-libertarian-buys-major-American-newspaper story didn't involve the name Koch? And how far the once-infallible business model of newspapering has fallen....
Bezos, who was named one of Reason's "35 Heroes of Freedom" in 2003, has contributed money in the past to the Reason Foundation, the 501(c)3 nonprofit that publishes this website. Reason on the Amazon founder here.
Will the professional left tune out the Post as result of Bezos' purchase? Has Obama given it his tacit blessing, given that he visited Bezos' Amazon.com less than a week before its founder's latest acquisition? Will conservatives boycott Amazon now that its founder owns the second-most prominent DNC house organ in the country? We'll know soon. In the meantime, the Daily Caller has fun sticking the shiv in. How will the husk of the Washington Post that Bezos didn't purchase make its money? "Washington Post Co. looks to deathbed care provider as last hope."
One huge reason the Post was sold, and at such a deep discount, is that, as TechCrunch notes, online classified advertising has slipped dramatically there:
Online advertising revenue for the newspaper division rose 25% in the second quarter. However, online classified revenue fell 7%. What does all that mean? Essentially that the online portion of the Washington Post is growing at a decent pace, even as one of its revenue streams – online classifieds – stutters.
The MSM began to really hemorrhage money when Craigslist stole what was once a huge source of revenue for newspapers -- their classified ad revenue. Beyond the loss of ad revenue of all sorts, to get a sense of why the Washington Post, which, as Mark Steyn noted in our quote at the top of this post, once "took down a president and made Woodward, Bernstein and Ben Bradlee the Holy Trinity of American journalism’s First Church of Itself" is now in such a (comparatively) feeble state, it's worth flashing back to the laundry list post I wrote back in 2010, "Studying the Washington Post Kremlinologist-Style," which I'm reprinting on the following page.
(Bumped to top.)