By Jennifer Saba
Aug 5 Amazon.com Inc founder Jeff Bezos
will buy the Washington Post newspaper for $250 million in a
surprise deal that ends the Graham family's 80 years of
ownership and hands one of the country's most influential
publications to the businessman whose Internet company has
Bezos, hailed by many as technology visionary, called his
acquisition a personal endeavor and reassured employees and
readers of the 135-year-old newspaper he will preserve its
journalistic tradition, while driving innovation.
The acquisition, the latest in a flurry of deals for print
publications including the New York Times Co's sale of
the Boston Globe for $70 million, is a another sign of the
unprecedented challenges newspapers face as advertising revenue
and readership decline.
Shares of the Washington Post Co climbed more than 5
percent to $599.85 after hours - their highest level in almost
Donald Graham, the chairman and CEO of the Washington Post
Co, said in an interview that he and his niece Katharine
Weymouth, the Post's publisher, made the decision to put the
newspaper up for sale earlier this year after looking at its
"For the first time in either of our lives we said to each
other: is ownership by the Washington Post Co the best thing for
the newspaper? We could keep it alive, that wasn't the issue.
The issue was could we make it strong?"
Graham and Bezos discussed the deal at two meetings in Sun
Valley, Idaho during the annual Allen & Co media and tech
conference in July. The investment bank had been retained
earlier in the year to gauge potential buyer interest, and is
now the banker on the deal.
Graham's company had talked to no more than a dozen parties
about selling the paper. He declined to name the other parties.
"I named a price and Jeff agreed to pay it," said Graham,
who initially thought Bezos would be an unlikely buyer. "To my
surprise, when (Allen & Co) said they would call him, I said
that would be great but I didn't think he would be interested."
The investment bank ended up advising on the deal.
At a meeting in January, Graham said longtime friend and
former Washington Post board member Warren Buffett referred to
Bezos as the best CEO in the United States for his technology
and business acumen.
"I asked (Bezos) why he wanted to do it and his reasons are
the best ones: he believes in what newspapers do and what the
Post does and that it's important to the country," Graham said.
The Amazon CEO took that message directly to employees in a
letter posted on the newspaper's website.
"I understand the critical role the Post plays in
Washington, DC and our nation, and the Post's values will not
change," Bezos wrote in the letter.
"There will of course be change at the Post over the coming
years. That's essential and would have happened with or without
new ownership," Bezos added. "We will need to invent, which
means we will need to experiment."
In addition to the newspaper, Bezos gets other publishing
businesses, including the Express newspaper, The Gazette
Newspapers, Southern Maryland Newspapers, Fairfax County Times,
El Tiempo Latino and Greater Washington Publishing.
The real estate, including the paper's headquarters business
and online news sites such as Slate, will remain with the
Washington Post Co. And the paper's operations will be kept
separate from Amazon.com, according to the Washington Post.
The Washington Post is the seventh largest daily in the
United States and was where journalists Bob Woodward and Carl
Bernstein broke the "Watergate" story which led to the
resignation of President Richard Nixon in 1974.
While its legend and status loomed large, the Washington
Post represents only a fraction of the company which has
expanded into a stable of holdings, including education and
health care services and most recently an industrial supplier.
The collection of companies that make up the Washington Post is
akin to that of Warren Buffett's Berkshire Hathaway Inc
, which owns disparate businesses from railroads to
underwear as well as a stake in the Post.
And yet, the Washington Post suffers from the same hurdles
besieging big city newspapers across the United States. The
company's newspaper division reported an operating loss of $49.3
million for the six months ending June compared to a loss of
$33.2 million during the same period last year.
Weymouth, who will continue to serve as the paper's CEO and
publisher after the sale, told Reuters she did not think there
was a "magic bullet" to resolving the problems. But the
resources Bezos brought to the table were a plus.
"He's smart and innovative and has access to a lot of smart
people," she said.
Bezos, who has built Seattle-based Amazon.com into a
shopping and online technology force over the last two decades,
made a small foray into media earlier this year with an
investment in Internet news site Business Insider.
Bezos is the world's 19th richest person with a fortune of
$25.2 billion, according to Forbes magazine. His investment
vehicle, Bezos Expeditions, is invested in a number of companies
including Twitter and Business Insider.
His major personal project is called Blue Origin, which aims
to be one of the first non-government funded ventures to send
people and cargo into space, potentially winning lucrative
contracts that were once fulfilled by NASA.
Bezos has already spent millions of dollars on this project,
with millions more in the pipeline.
He did not elaborate in great detail on his motivations
behind his latest deal, which caught many industry watchers by
surprise. He does not play a prominent role in politics but has
been described by friends as holding libertarian views. He and
his wife did make public a $2.5 million contribution to a
Washington state campaign to legalize same-sex marriage last
The deal comes on the heels of near-unprecedented media deal
activity this year, with the Globe transaction announced just
over the weekend, News Corp spinning out its
newspapers, and the Tribune Co hiving off its publishing
business like the Los Angeles Times and Chicago Tribune from its
Free of its print assets, the Washington Post could continue
to snap up other properties that align with the six TV stations
in cities like Houston, Washington DC and Miami and cable TV
services in more than a dozen states.
"It will be interesting to see, is this the first step in
the transformation of the business?" said John Miller, senior
vice president at Chicago's Ariel Investments, a top-10 investor
in the Washington Post. "The board is making the right decision.
They obviously felt like it was a good deal. It will be
interesting to see how they allocate capital going forward."