The Washington Post, the legendary newspaper that broke the Watergate scandal, is being sold to Amazon founder Jeff Bezos as it seeks to survive the onslaught of the internet.
Donald Graham, grandson of Eugene Meyer, who bought the Post during the Great Depression in 1933, stunned the U.S. media industry on Monday, announcing the sale of the storied title to Bezos for $250 million.
Graham, chief executive of the Washington Post Co., had given no hint that the newspaper of record for the nation’s capital was up for sale, despite sinking earnings and plunging subscriptions.
But he admitted that he and his niece, Post publisher Katharine Weymouth, “have no answers” to the challenge the newspaper faces from the internet, after seven years of falling revenues, which finally led to the deal.
“I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post,” Graham said in a statement.
“Jeff Bezos’ proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post.”
Annual operating losses more than doubled to $53.7 million last year and were $14.8 million in the second quarter of this year.
Multi-billionaire Bezos, who created Amazon, the world’s dominant online retailer, said he was buying the Post in his personal capacity and hoped to shepherd it through the evolution away from traditional newsprint.
“The internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs,” he said in a statement to Post employees.
“There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment.”
The deal involves only the newspaper assets of the Washington Post Co., including its free commuter daily The Express, the Spanish language newspaper El Tiempo Latino, and Robinson Terminal, a warehouse asset.
The Washington Post Co. will retain the large educational testing service Kaplan, Foreign Policy magazine, Slate.com, and a cable television operation, as well as the Post’s downtown headquarters in the U.S. capital.
Weymouth, granddaughter of legendary post publisher Katharine Graham, will stay on as the newspaper’s CEO and publisher, Bezos said, along with other top management.
Weymouth said in a statement to readers that she and her family had never expected to sell the newspaper they had owned for eight decades, during which its reporters, editorial writers and world-famous columnists have wielded huge influence over the White House and Congress.
The Post is best known for its Watergate reporting, in which now legendary journalists Carl Bernstein and Bob Woodward exposed lawbreaking by the White House of Richard Nixon, leading to the president’s 1974 resignation.
Most recently the Post broke, together with Britain's Guardian, the story of the US National Security Agency's extensive domestic and global spying operations.
However, as at other papers, circulation is plummeting, down 8.6 percent last year and falling at a 7.1 percent rate for the first half of 2012, to around 448,000 daily.
The decision to sell was made “with a heavy heart,” Weymouth said, but “with an absolute conviction that Mr. Bezos’ ownership represents a unique and extraordinary opportunity for The Washington Post.”
“While he expects The Post to remain profitable, his focus is on the essential role that our journalism has on dialogue and the flow of information in our society,” Weymouth added.
Media analyst Jeff Jarvis said the sale could be considered a philanthropic move by Bezos, but it provided an opportunity for the paper to relaunch itself.
“I hope and pray the real value he brings is his entrepreneurship, his innovation, his experience, and his fresh perspective, enabling him to reimagine news as an enterprise,” Jarvis wrote in a blog post.
However, the sale underscored the desperation of the U.S. newspaper industry for new cash support to survive the rapid transition of the news business to the Internet, where a lot of content remains free. The Post, like several leading US newspapers, recently erected a paywall on its website.
The sale announcement came just days after the New York Times offloaded the Boston Globe newspaper for $70 million to the owner of the Boston Red Sox baseball team - 20 years after paying $1.1 billion for the paper.
Like the Post, the Globe had been bleeding subscribers to its physical newspaper and has been challenged to persuade consumers to pay to read it online.
Amazon's Bezos buying Washington Post for $250 million