Washington Post sold to Amazon founder Jeff Bezos
06 August 2013
The venerable and widely respected newspaper The Washington Post announced on Monday it will be sold to Jeff Bezos, founder of Amazon.com, for $250 million, taking even its employees by surprise.
Post publisher and chief executive Katharine Weymouth, a granddaughter of the legendary Katharine Meyer Graham, made the announcement to Washington Post employees at 4:30 pm.
The paper itself cited its executives as saying that "with extraordinary secrecy, Weymouth hired the investment firm Allen & Co to shop the paper.
''Allen's representatives spoke with a half-dozen potential suitors before the Post Co's board settled on Bezos, 49, a legendary tech innovator who has never operated a newspaper."
The news that the historic Washington newspaper is being sold sent shockwaves through networking sites, mainly Twitter.
The Washington Post Co's newspaper division includes The Gazette, which publishes weekly editions throughout Montgomery and Prince George's counties.
Also included in the sale are the tabloid Express and Southern Maryland, Fairfax County Times, Spanish-language newspaper El Tiempo Latino and Greater Washington Publishing.
In addition to its publishing business, Washington DC-based Washington Post Co is a diversified education and media company. The company owns six television channels and cable television services. Its subsidiary Kaplan Inc provides a wide range of educational services both inside and outside the US.
Washington Post Co's chairman and CEO Donald Graham said, ''I, along with the newspaper's CEO Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post''
''Jeff Bezos' proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post,'' Graham further stated.
Weymouth along with the top management team will continue in their present roles.
''With Bezos as our owner, this is the beginning of an exciting new era,'' she said.
Washington Post Co will retain its online magazine TheRoot.com and global magazine Foreign Policy along with the newspaper's digital wing WaPo Labs, advertising business SocialCode and its interests in Classified Ventures and certain real estate assets including the headquarter building in Washington DC.
The names of Kaplan, Post-Newsweek TV stations and Cable ONE will be changed in connection with the transaction, the company said.
''I understand the critical role the Post plays in Washington, DC and our nation, and the Post's values will not change. Our duty to readers will continue to be the heart of the Post, and I am very optimistic about the future.'' Bezos said.
Profitability of the company's newspaper division has been on the decline in recent times due to reduction in retail and general advertising.
Last week, the division reported an operating loss of $49 million for the first six months, nearly 50 per cent higher than the loss of $33 million reported for the first six months last year. Revenue declined 2 per cent to $266 million for the first half year from $272 million in 2012.
Overall, the Washington Post's revenue registered a 2-per cent increase in the first six months at $1.98 billion while operating loss for the period increased 38 per cent to $116 million from $84 million a year ago, primarily on account of the newspaper division. However, its other major businesses, education, cable TV and broadcasting performed stronger and registered stable or positive growth during the half year.
The sale will end the reign of the Graham family as owners of the paper, which has reported some of the biggest stories in journalism.
Financier Eugene Meyer, the late Katharine Graham's father, bought The Washington Post in 1933 at a bankruptcy auction. His daughter led the newspaper for more than two decades, overseeing its most famous period, the Watergate coverage that eventually led to the resignation of President Richard Nixon, and the Pentagon Papers. Her memoir, Personal History, won the Pulitzer Prize in 1998.
Bezos, 49, who is buying the Washington Post as a personal investment for $250 million, has funded an eclectic array of ventures through an entity called Bezos Expeditions, including the business news website Business Insider and Twitter, the messaging service.
He has not previously expressed deep interest in newspapers or journalism, though Amazon's forays into electronic books, tablet computers and television programming have placed it squarely in the media business. By his own description, he is a voracious reader of newspapers.
From modest beginnings as an online bookseller, Bezos and Amazon branched out into almost every product category available, ending up taking on established retail giants such as Wal-Mart Stores Inc.
Under Bezos, Amazon launched the Kindle e-reader and revolutionized the way books are distributed and read. The company has also been a pioneer in cloud computing - a trend that has begun to turn the traditional IT business on its head.
Amazon, headquartered in Seattle, Washington was founded in 1995 as an online bookstore. Since then the company has grown to a global e-commerce giant with revenue of $61 billion through several acquisitions and partnerships.
More recently the company has moved into grocery delivery and begun experimenting aggressively with same-day delivery services. That experience could come in handy at the Post, given that production and distribution of printed newspapers remains the company's central business.