Amazon.com founder Jeff Bezos, above, bought The Washington Post last year for $250 million. Bezos is among the slew of billionaires investing in the newspaper industry. Photo courtesy of Business Insider.
When it comes to the world of newspapers, it’s no secret that the industry has been steadily declining. The uptick in technology — rather, the growing use of smartphones, tablets and e-readers — has many newsrooms across the country battling with print advertising-revenue losses, production staff layoffs and building-size reductions. Some publications, like the Rocky Mountain News and the Seattle Post-Intelligencer, have even been forced to fold.
Yet, despite the current state of the industry, many of its once-billion-dollar institutions — including The Washington Post and The Boston Globe — continue to be eaten up by billion-dollar business moguls for next to nothing. While the deflation of the storied companies has enabled more purchases, the reasons behind them remain rather ambiguous.
For example, the sale of The Washington Post last summer to Amazon.com founder Jeff Bezos was neither “for immediate profits,” nor was it altruistic,according to The New York Times. If it wasn’t either, then what compelled Bezos to purchase the newspaper for $250 million?
“(Bezos’ purchase was) a combination of good will and real estate,” said Ken Doctor, an analyst at Outsell, a research and consulting firm for the publishing industry, in an August interview with the Times. “I mean good will in the moral sense, not the financial sense.”
The same moral sentiments seemed to be echoed last week by Alice Rogoff, owner of the Alaska Dispatchwho purchased the 68-year-old Anchorage Daily News from the McClatchy Company for $34 million. Rogoff, who moved to Alaska out of her own personal interest, had the interests of her community in mind when making her purchase.
“Alaska is one of those unusual places where community-based newspapers in print are still a business model that readers and advertisers care about,” she told The New York Times. She went on, saying she wanted to use the paper to “do more journalism, more multimedia and more stories about Alaska.”
Another high-profile, community-based purchase was made last year by Boston Red Sox owner John Henry, who purchased The Boston Globe for $70 million. Although some viewed Henry’s purchase as an impulse buy, he said his investment went far beyond that.
“I began analyzing the plight of major American newspapers back in 2009, during the throes of the recession, when the Globe’s parent company, the New York Times Company, considered shutting down the paper,” he told the Globe in an opinion piece. “I invested in the Globe because I believe deeply in the future of this great community. …I invested in the Globe because it is one of the best and most important news organizations in the world.”
While Bezos, Rogoff and Henry have alleged to be in it for the community, there are several others that have outwardly regarded their past or future transactions as just another business deal.
The biggest, most notable culprit of the business-deal mentality is Warren Buffett, whose company, Berkshire Hathaway, in the last few years acquired 28 daily newspapers, including The Omaha World-Herald and the Roanoke Times, for $344 million. While he has said he likes buying small, community newspapers because of the built-in audience that comes with them, Buffett discussed the business strategy of his acquisitions in his annual shareholder letter.
“Charlie and I love newspapers and, if their economics make sense, will buy them even when they fall far short of the size threshold,” he said, adding that they “believe that papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible Internet strategy will remain viable for a long time.”
Warren Buffett reads The Buffalo (N.Y.) News, one of the many papers he has acquired through his involvement in the newspaper industry over the years. Last year, Buffett bought 28 daily newspapers for $344 million. Photo courtesy of The New York Times.
While not a billionaire on the order of Bezos or Buffett, Minnesota businessman Glen Taylor has been the latest to make a high-profile investment in a newspaper company. Taylor, whose formal offer for the Minneapolis StarTribune will close late May, pending a 60-day due-diligence review of the media company, was not shy about his underlying decision to buy the paper when asked if he was purchasing for business or altruistic reasons.
“Let’s just say 50/50,” he told a TV reporter at the end of March. “It is both of those things.”
While it may not have been inherently clear that newspapers have become trophies for the wealthy with an interest in journalism or power, it should be now.