Last year, Amazon founder Jeff Bezos told German newspaper Berliner Zeitung that the only future for printed newspapers was as an extravagant service in luxury hotels. So the news that one of the world’s richest men was to buy the Washington Post, one of America’s leading newspapers, came as quite a surprise. While the $250m price tag was effectively loose change alongside Bezos’ $28bn fortune, the question of why a lynchpin of the “new economy” would buy an unprofitable business in a deeply troubled industry intrigued many.
What the commentators said
“Jeff Bezos has confirmed what investors long ago concluded,” said Rob Cox on Breakingviews. “Newspapers in the United States and other developed markets have ceased to be an attractive business – they are toys for today’s plutocrats.” The firm’s newspaper division reported an operating loss of $54m last year on revenues of $582m. There is little commercial appeal in that, but Bezos can backstop the losses and, in return, “he gets to own, for his personal enjoyment, the publication that brought President Richard Nixon to his knees”.
That may be too pessimistic, suggested Jordan Weissmann on TheAtlantic.com; returning the paper to profitability may be easier than some expect. Much of the paper’s losses were due to pensions obligations, which Bezos will not be taking on. The paper still has to worry about declining print advertising and a tricky shift to a sustainable business model, “but its new owner might not have to worry about a flurry of red ink”.
In any case, focusing too much on short-term profitability may underestimate Bezos’ intentions. Announcing the sale, the Graham family – which has controlled the Post for 80 years – said it had never intended to sell, but wanted the paper to do more than just survive, noted Katherine Rushton in The Daily Telegraph. “You can bet Mr Bezos wants it to do more than just survive as well.”
While he will be buying the paper personally rather than through Amazon, it’s impossible to imagine that the two businesses will not work together (indeed, Bezos referred to the potential for digital channels, such as Amazon’s Kindle, to reinvent newspapers in his Berliner Zeitung interview). Bezos is noted for an exceptionally long-term view – Amazon continues to run at a loss “for the sake of future scale” – suggesting that he will offer the Post the investment and time it needs to evolve.