Jeff Bezos, the chairman of the internet retail giant, Amazon is now set to be the owner of US capital’s most prestigious news outlet after he has announced a foray into the newspaper business by buying The Washington Post for USD 250 Mn in cash, which would only be 1% of his total wealth.
The sale is expected to be completed in the next 60 days, and after that Bezos will become the sole owner of the newspaper, ending the Graham family’s 80-year ownership. Bezos will buy the Post along with other newspaper assets from the Washington Post Co. The sale will be completed by Jeff and Amazon will be kept separate from the deal.
Shares of the Washington Post Co. climbed more than 5% to USD 599.85 within hours of announcement which was highest level in almost five years.
“The values of The Post do not need changing. The paper’s duty will remain to its readers and not to the private interests of its owners,” said Jeff Bezos in a letter To the employees of The Washington Post. He also added, “There will, of course, be change at The Post over the coming years…The internet is transforming almost every element of the news business..We will need to invent, which means we will need to experiment…”
The Washington Post Company’s newspaper division, of which The Washington Post newspaper is the flagship title, has faced 44% decline in revenues over the past seven years. Though it has continued to win a string of Pulitzer prizes, but in recent years it closed all of its regional bureaus across the US, and also made reductions in the correspondents overseas.
The main focus after the purchase is likely to remain on increasing profitability and soaring share price as well.
Washington Post Co. Chairman and CEO Donald E. Graham while praising Jeff Bezos, said that his proven technology and business genius, long-term approach, and his personal decency make him a uniquely good new owner for the Post.
The newspaper gained worldwide attention for its various stories including the Watergate scandal and the recent disclosures about National Security Agency surveillance programs. According to the Alliance for Audited Media, a newspaper auditing firm, The Washington Post was the seventh most popular daily newspaper in the US this year, with a total circulation of 474,767 – a 6.5% decline on last year.
“It will be interesting to see, is this the first step in the transformation of the business? 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.” said John Miller, senior vice president at Chicago’s Ariel Investments, a top-10 investor in the Washington Post.
Bezos previously also has made a USD 5 million investment in the internet news site Business Insider.
In recent years, several of print media organisations have been facing challenges due to massive shift of the readers from print to digital media leading to decline in readership and the advertising revenue as well. This shift has also led to mergers, shut down or consolidations of several newspapers. The New York Times Co. selling the Boston Globe to Red Sox owner John W. Henry for 70 million, is one such example.
To view the SEC filing, click here.