In a meeting this past January, CEO and chairman of the Washington Post Donald Graham mentions to former Washington Post board member and longtime friend Warren Buffett that Jeff Bezos is the best the US CEO for business acumen and technology.
Jeff Bezos, founder of Amazon.com, is going to buy the Washington Post newspaper for a total of $250 million. This is a surprise deal, and it will end the Graham family’s 80 years of ownership. It’s one of the United State’s most influential newspapers, and Jeff’s Internet business has transformed the retail world forever.
Many people look at Jeff Bezos as a technology visionary. He ensured the readers and employees of the 135 year old newspaper that he plans to preserve its journalistic tradition, but also plans to bring about innovation.
The sale of this newspaper is just another major sign that newspapers are facing unprecedented challenges. This is due to readership decline and a decline in advertising revenue. This follows suit with the sale of the Boston Globe for $70 million by New York Times Co.
In after-hours trading, because of the surprise sale news, shares of the Washington Post rose more than 5% to reach $599.85. This is the highest level the shares have seen in five years.
In an interview, Kathryn Weymouth and Donald Graham both agreed to put the newspaper up for sale. The financial forecasts were the main driving factor in this choice.
“For the first time in either of our lives we said to each other: is ownership by the Washington Post Co. the best thing for the newspaper? We could keep it alive, that wasn’t the issue. The issue was could we make it strong?”
Jeff Bezos and Donald Graham had two meetings in Sun Valley, Idaho where they discussed the deal. This took place during the Allen & Co. tech and media conference this past July. Earlier in the year, the investment bank was retained in order to check out potential buyer interest. It is now the official banker of the deal.
Graham’s company only spoke with no more than a dozen parties about the sale of the Washington Post. He did not name any of the other parties.
“I named the price and Jeff agreed to pay it,” Graham said, who initially expected him to be an unlikely buyer. “To my surprise, when (Allen & Co.) said they would call him, I said that would be great but I didn’t think he would be interested. “
The investment bank ended up being an advisor on the deal.
The CEO of Amazon directly took that message to employees in a letter posted on the website of the newspaper.
“I understand the critical role the Post plays in Washington, DC and our nation, and the Post’s values will not change,” mentions Bezos in the letter.
“There will of course be change at the Post over the coming years. That’s essential and would have happened with or without new ownership,” added the Amazon CEO. “We will need to invent, which means we will need to experiment.”
Additionally, besides the Washington Post, Bezos will obtain other publishing businesses, including The Gazette Newspapers, Fairfax County Times, Southern Maryland Newspapers, Express newspaper, Greater Washington Publishing and El Tiempo Latino.
The Washington Post Co. will retain the newspaper’s headquarters and Slate, an online news site. Amazon.com and the Washington Post will be run separately, we learned from the Washington Post.