Jeff Bezos is an owner who knows how to deliver
As the American newspaper business began its red-ink slide in the late 2000s, I fully expected a billionaire to rescue the financially struggling Washington Post. But I never thought its savior would be Amazon founder Jeff Bezos, who purchased the paper today for $250 million.
I put my money on Michael R. Bloomberg’s money, in a July 2012 column titled “How Bloomberg can still run Washington” because he seemed like such a logical buyer. Unlike Bezos, Bloomberg already owned a media empire comprised of a news service, a cable channel, a weekly magazine, and more. Unlike Bezos, Bloomberg had toyed in semi-public with the idea of buying either the New York Times, the Wall Street Journal, or the Financial Times. Unlike the 49-year-old Bezos, who has been building spaceships and an eternal clock with his mad money, the aging (71 years old) Bloomberg seemed to need one last great gesture in his career before called to paradise. He wasn’t ever going to be president, a campaign he had gamed out. As for running the World Bank, a job Bloomberg was reportedly shopped to fill, well, that would be a step down from Emperor of New York City.
My matchmaking ploy failed. Washington Post Co. CEO Donald E. Graham, whose family owns a controlling interest in the company that owns the paper, humorously rebuffed my proposal in a tart email. Bloomberg didn’t knock on my door offering to pay me a finder’s fee. My idea was completely forgotten — even by me! — until today.
How could I have missed Bezos as a candidate for ownership?
Bezos has the means. He is worth $25.2 billion to Michael Bloomberg’s $27 billion. Buying and operating the money-losing Post – its newspaper division lost $49.3 million in the first six months of this year — wouldn’t scare him. To paraphrase Charles Foster Kane, Bezos could absorb $100 million a year losses for 250 years before going broke. Bezos’s politics aren’t that different from Graham’s. To cherry-pick a conceit from my summer 2012 column, Graham and Bloomberg are “beyondists,” David Brooks’s clever term for people whose politics appear to be centrist but strive to occupy a political space beyond left and right. Bezos’s non-doctrinaire, fluid politics make him a kind of West Coast beyondist, and as such an acceptable owner for Graham, who has resisted political labeling throughout his career. Although the libertarian movement claims Bezos as one of its own and he runs his company as free of government influence as he can, the political donations made by the Amazon PAC mark Bezos as a very practical beyondist: He contributes to both parties almost equally.
In acquiring the Washington Post, Bezos enters a business that is not radically different from the ones he already owns. Reporters and editors like to think their literary arts are central to newspapering. But it’s better to think of a newspaper as a coordination problem that manufacturing and distribution solves daily: Copy, art, and advertising is beamed from newsroom to printing plant, bundled newspapers flow from the plant to trucks, are transferred to carriers, and are delivered to your front door. Nobody knows more about deadline deliveries and distribution than Bezos’s Amazon, which has spoiled several nations with its reliable service. I can’t imagine what plans Bezos has for the print edition of the paper — if I did, I’d be worth $25.2 billion — but I’m confident that he will maximize the value of the existing Post delivery system in novel ways. It would not surprise me to see him use the Post network of trucks and carriers to enter the local delivery business as a pilot project. Obviously, he’s learned a lot from same-day delivery he could share with the paper.
Although most of us think of Amazon as a retailer, the computer sector has long regarded it as a tech company, competing with IBM, Microsoft, Google, and others as a seller of “cloud” computing power through its Amazon Web Services subsidiary. It’s also a computer devices company, via its Kindle readers. The sort of computer resources and ingenuity Bezos can bring to the Post – or more properly the washingtonpost.com – rival that of almost every other regional purveyor of news, entertainment, communications, and advertising. Any competing web property, cable systems, mobile phone system, or broadcasting operation in the Washington area should be on notice: Bezos means to use this foothold to go after the most lucrative parts of your businesses in one of the richest corners of the country. He’ll spend you to death.
The sale to Bezos echoes the Post‘s last sale, which came in 1933, when Don Graham’s grandfather, Eugene Meyer, won the paper in a June 1 auction on the steps of the Washington Post building after his lawyer bid $825,000. (One appraiser had estimated its assets as being worth $100,000 at most.) For his money, Meyer was mostly buying the name for a money losing operation. For his $250 million, Bezos is mostly buying a money-losing operation. Like Bezos, Meyer had immense resources. His stock in Allied Chemical alone was worth about $650 million in today’s money, and it paid dividends. And like Bezos (apparently) he was willing to lose money in the short term to eventually make money. It wasn’t until 1954, when Meyer bought another paper and merged it with his, that the Post was financially successful. “The real significance of this event,” Meyer told a friend, “is that it makes the paper safe for Donnie.” Don Graham was eight years old at the time.
I’m certain that the safety of the paper and its continuation as a journalistic force was paramount in Graham’s mind as he arranged its sale. In Bezos the Post has a guardian whose treasure chest may never empty. As for what sort of journalism the Bezos Post will produce, my crystal ball has no answers.
Disclosure: I worked for the Washington Post Co. from 2005 to 2011 at its Slate property and was treated like a prince. My wife currently works at the Washington Post as an editor. Send your disclosures to Shafer.Reuters@gmail.com. My Twitter feed doesn’t live in the cloud. It lives underwater. Sign up for email notifications of new Shafer columns (and other occasional announcements). Subscribe to this RSS feed for new Shafer columns.
PHOTO: Amazon CEO Jeff Bezos (R) arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013. REUTERS/Rick Wilking