Amazon.com Inc. (
NASDAQ: AMZN,
Stock Forum) founder Jeff Bezos is buying the Washington Post (
NYSE: WPO,
Stock Forum) from the Graham family for $250 million.
It's a move that raises obvious questions, such as what can Bezos do to rescue a moribund sector that hasn't been tried already?
News of the deal comes as major newspaper publishers in Canada and U.S. are struggling to replace declining print advertising with revenue from the digital side of their operations.
For example, Canada’s Torstar Corp. (
TSX: T.TS.B,
Stock Forum) has seen its stock price plunge in the past year to $5.61 from around $9, and last week the Toronto Star publisher said profit plunged 44% in the second quarter, due in part to falling print revenue.
It has been a similar story at other Canadian companies, including Postmedia Network Inc. (
TSX: T.PNC.A,
Stock Forum) (
TSX: T.PNC.B,
Stock Forum), Sun Media, and even the Globe and Mail, which have been cutting staff to reduce costs and throwing up paywalls in a bid to force newspaper readers to pay for digital content.
Still, Washington Post Co. class B shares were up 1.56% to $568.70 Monday on the news of the Bezos deal, leaving the newspaper company with a market cap of $4.2 billion, based on 7.4 million shares outstanding. The 52-week range is $563.20 and $327.
The Washington Post isn't just any old newspaper. Original reporting of the Watergate scandal by Post reporters Bob Woodward and Carl Bernstein led to the resignation of U.S. President Richard Nixon in 1974.
With Mr. Bezos as our owner, this is the beginning of an exciting new era,’’ said Katharine Weymouth, CEO and
Publisher of the Washington Post in a press release. Weymouth will continue as CEO and Publisher, she said.
In a note to Post employees, Bezos said he understands the critical role the Post plays in Washington, DC, and the nation, and vowed that the Post’s values will not change. “Our duties to readers will continue to be the heart of the Post and I am very optimistic about the future,’’ he said.
However, he acknowledge that the Internet is transforming almost every element of the news business, shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news gathering costs.
“There is no map, and charting a path ahead will not be easy,’’ he said.
“We will need to invent, which means we will need to experiment. “Our touchstone will be readers, understanding what they care about – government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports – and working backwards from there.’’
Bezos went on to say that he is excited and optimistic about the opportunity for invention.
The transaction covers The Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.
Bezos will remain in Seattle, leaving the running of day to day operations to Weymouth.