Jeff Bezos, founder and CEO of e-commerce behemoth Amazon, has decided to use his personal fortune to purchase the Washington Post newspaper for $250 million. The news falls hard upon the announcement that another iconic American paper — the Boston Globe — was sold to John W. Henry, the billionaire owner of baseball’s Boston Red Sox. And world-famous investor Warren Buffett has spent the past couple of years buying up newspapers such as the Winston-Salem Journal and the Richmond Times-Dispatch.
None of these men are fools. In fact, they’re three of the most successful businessmen in America. So it comes as a surprise that they’d spend their hard-earned millions on a business model that’s in such disarray. According to the Pew Research Center, for every $16 newspapers are losing in print revenue, they gain just $1 in digital revenue.
In other words, it is an industry in rapid decline. So why are some of America’s sharpest businessmen falling over themselves to get a piece? Of the three, Buffett has the clearest case. In his most recent letter to Berkshire Hathaway shareholders, Buffett explained his interest in the newspaper business, arguing that though the industry as a whole is in serious trouble, there’s still room for newspapers with monopoly businesses in small towns, as long as they stick to delivering local news that readers can’t find anywhere else.
The Boston Globe and the Washington Post certainly don’t fit this description, however. They’re both big-city broadsheets with large cost structures and, until recently at least, aspirations for covering global events and, for the Post in particular, setting the national political agenda. As such, both are beset by intense competition. The Post, for instance, competes with countless bloggers, national newspapers like the New York Times, online political organs like Politico, and does it all while losing millions of dollars per year — $54 million in 2012, in fact. The Boston Globe’s financials aren’t broken out in public, but according to industry reports, the paper’s revenue has been falling at a pace of about 7% a year and its print circulation even faster, at about 9% a year.
So why is a guy like Bezos — who’s made his billions by eviscerating business models that hadn’t the foresight to adapt to the Internet — buying such a quintessentially pre-Internet company? One would assume that a man of his track record would be looking to shake things up and find profits in this long-declining industry. But his letter to Washington Post employees tells a different story. Writes Bezos:
So, let me start with something critical. 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. 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 won’t be leading the Washington Post day to day. I am happily living in ‘the other Washington’ where I have a day job that I love. Besides that, the Post already has an excellent leadership team that knows much more about the news business than I do, and I’m extremely grateful to them for agreeing to stay on.
This doesn’t exactly sound like words of a man who is looking to radically change what the Post is doing. He goes on to write, “Journalism plays a critical role in a free society, and the Washington Post — as the hometown paper of the capital city of the United States — is especially important.”
These are the words not of a pitiless capitalist, it would seem, but of a philanthropist who’s committing his money to protect a public good. Of course even philanthropists don’t give their money away entirely without regard to their own self-interest. Ownership of a major American newspaper will give Bezos even more access to America’s political and intellectual class, and will give him forum in which to push his own political views (Bezos is a supporter of gay marriage and other libertarian causes).
So whether you’re a Warren Buffett who’s picking up newspapers for profit, or a Jeff Bezos whose motives appear to be more complicated, the fact remains that newspapers still play a significant if waning role in American life. And even if fewer Americans are willing to drop a dollar on an issue each morning, that might not matter for as long as the Jeff Bezoses and John Henrys of the world are willing to spend millions.