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COZY CORNER: Jeff Bezos found a rapt audience in Washington Post legend Katharine Graham and her son, current CEO Donald Graham, during the 2001 edition of the Alllen & Co. media mogul conference in Sun Valley, Idaho. Twelve years later the founder of Amazon.com has agreed to buy the storied newspaper. (
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In a stealth move that shocked the media world and beyond, the venerable Washington Post newspaper is being sold to Amazon founder Jeff Bezos for $250 million.
Bezos, one of the world’s richest people, with a net worth of $27.9 billion, will own the paper individually, with no involvement from Amazon.
CEO Donald Graham made the announcement to the surprised staff yesterday at 4:30 p.m.
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“There was an audible gasp,” Marty Baron, the executive editor of the paper, told The Post.
Baron said he had only been brought into the process “last week” and said he was not part of the blow-by-blow that prompted the Graham family, which has owned the newspaper for 80 years, to decide the paper had to be sold.
“Every member of my family started out with the same emotion — shock — in even thinking about” selling the Post, said Graham in an interview with the Washington Post. “But when the idea of a transaction with Jeff Bezos came up, it altered my feelings.”
The Washington Post, like many newspapers, has been buffeted in recent years by circulation declines and stiff drops in advertising revenue.
Daily circulation of the famed daily, which helped uncover the Watergate scandal and topple President Richard Nixon, has fallen 14 percent during the past three years, to 474,767.
The Washington Post Co.’s newspaper group, which also includes smaller community papers, had an operating loss of $53.7 million last year.
“The Post could have survived under the company’s ownership and been profitable for the foreseeable future,” Graham said. “But we wanted to do more than survive. I’m not saying this guarantees success, but it gives us a much greater chance of success.”
Baron said he had not met personally with Bezos but had assurances that current management would stay in place.
Indeed, Bezos, in a letter to employees, pledged not to replace management and to be a hands-off boss working in Seattle, which he called “the other Washington.”
“The values of The Post do not need changing,” Bezos said in the letter. “The paper’s duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we’ll work hard not to make mistakes. When we do, we will own up to them quickly and completely.”
“I don’t want to imply that I have a worked-out plan,” Bezos said. “This will be uncharted terrain, and it will require experimentation.”
The Graham family had hired the Allen & Co. investment firm to shop the paper. Bezos was one of six suitors, the company said.
It is the third legacy media brand to change hands in recent days — and the one which has fetched the handsomest price.
IAC/InterActive Corp., headed by Barry Diller, who also happens to be a board member of the Washington Post, on Saturday said it was selling Newsweek to the IBT Media, a collection of 10 digital publications, for what is believed to be a low seven-figure price tag.
The same day, the New York Times Co. agreed to sell the Boston Globe to Boston Red Sox owner John Henry for $70 million.
The Washington Post was at its zenith in the early ’70s, when reporters Carl Bernstein and Bob Woodward broke many of the stories in the Watergate scandal that ultimately led to Nixon’s resignation.
The Washington Post enjoyed national stature, but its problem was always that it served a midsize city with inner-city problems in its core circulation area.
“I think generally, national newspapers are not a good business,” said Craig Sterling an analyst with EVA Dimensions.
“They have the infrastructure of a national paper, but nobody outside of Washington bought it,” said Sterling.
In Bezos, who saw Amazon lose money for years before it broke into the black, the Washington Post may have found a owner similar to one of its most loyal shareholders, Warren Buffett.
Buffett, CEO of Berkshire Hathaway, began buying stock in the Washington Post Co. back in 1973, just before the market tanked with the mid-’70s recession.
Buffett built a long and cordial relationship with then-Chairman Katharine Graham and for many years held a seat on the Washington Post Co. board.
He gave up the seat in 2011.
Buffett still holds 27.9 percent of the Class B stock, according to Bloomberg, which makes him the largest single shareholder outside of Graham family.
Bezos fostered a close relationship with both Katharine Graham and her son Donald, who took over as CEO following her death.
“My sense is that the Graham family was looking at the next three to five years and realized that it was going to be even tougher than it had been for the past five,” said Ken Doctor, a news industry analyst. “Once they figured that out, my sense is that they came to the conclusion that they’d probably have to go outside.”
“On valuation, the Washington Post, though unprofitable, has had among the top penetrations in its market — both in print copies and reach and in online reach/audience for many years — often No. 1, always near the top,” he said. “It is that reach, plus the Graham relationship and glow of the Post brand, that justified the price.”
With Bezos, they had a deep-pocketed buyer — and there was a social connection, Doctor added.
Still the challenges are profound.
In addition to circulation and ad revenue declines, WaPo management just this summer decided to put a first-ever pay wall around its website, trying to persuade consumers to pay for Web content for the first time.
Advertising in the past six years has dropped 44 percent, the company said. While the decline has slowed recently, it has not abated.
Said Ed Atorino, an analyst with Benchmark Co.: “They will need someone with deep pockets to ride out the curve.”
Bezos’ deal includes the flagship WaPo paper and the smaller community papers. It does not include Slate.com or Foreign Policy magazine.
The Washington Post Co. will retain its Kaplan educational brands; Cable One, the No. 10 cable company in the US; and six TV stations.
Also not included in the deal is the company-owned real estate.
With its flagship newspaper gone, the publicly traded company that remains will pick a new corporate name, the company said.