Bezos buys Washington Post. Really.

[SteveEisenberg]

Originally Posted by frahse

Only the specialty magazines will survive.

The kind of magazines read by the Washington Post core constituency, such as Harper's, Atlantic, The Nation, and The New Republic, haven't been generally profitable and are mostly subsidized by their owners. They will survive because a few of their subscribers are likely rich enough, and care enough, to keep them afloat.

I can't believe Bezos is dumb enough to think that the Washington Post is a good investment. Donald Graham probably picked Bezos not just because the price was right, but also because he thought Bezos was a rich friend who would accept loses.

In the likely event that the newspaper business continues to decline, look for the best to turn non-profit. By keeping the Post separate from Amazon, Bezos keeps that option open. Bezos also keeps open the possibility of trying to run the paper's business side, but he has no experience in that area and has another job.

If I'm wrong, and Bezos tries to run the Washington Post like he does Amazon Publishing, he'll destroy the brand while gaining the enmity of the kind of people he likes to hobnob with. More likely he will send eastward a few ideas that don't quite work, and eventually help it to go non-profit.

[fjtorres]

Originally Posted by SteveEisenberg

I can't believe Bezos is dumb enough to think that the Washington Post is a good investment.

Time will tell, but the "wise man of Omaha" has been buying newspapers left and right. I don't think many people would dare call Buffet dumb.

Bezos is enough of a contrarian that he might indeed see a good investment where others see unending losses. He has enough of a track record that I woudn't bet against him.
http://www.washingtonpost.com/blogs/...at-that-means/

Media economics have, of course reversed. Now the great constraint is not on the ability to deliver information, but on the capacity of readers to consume it. Every media organization competes with every other one, and the cost of information is something very nearly free.

The winners in this new world of media economics, if there are any, will be those who are willing to take big financial risks, and endure the possibility that those risks won’t pay off for years, if ever. It is the kind of patience that public companies that report earnings every three months do not have.

Jeff Bezos, with an estimated $25 billion net worth, can afford to be patient, and has demonstrated it year after year in his stewardship of Amazon, which reports terrible profit numbers as it plows money into investing for the future. We at the Washington Post can only hope that has the same inclination, and entrepreneurial juice, as he becomes our boss.

The case can be made that there is unrealized potential in his new property:
http://www.washingtonpost.com/blogs/...or-jeff-bezos/

Similarly, the case can be made that Bezos really intends to let the WP be:

http://www.washingtonpost.com/blogs/...m_business_pop

There’s a whole constellation of retail sites that Amazon has bought and essentially allowed to continue operating as is, with little to no Amazon branding, and sometimes even with overlapping and competitive business models. Case in point: Zappos.com, which founder Tony Hsieh has run almost completely independently since Amazon purchased the shoe marketplace in 2009 (though they’ve since found some efficiencies through merging warehouses). There’s also Shopbop, which is evolving on its own to sell designer clothes, Quidsi’s Daipers.com, the cloth store Fabric.com, and the digital photography review site dpreview.com. And then there’s Brilliance Audio, which seems to overlap both with Amazon Publishing and Audible.com, another recent purchase that’s building its own partnerships.

So what’s the strategy here? Amazon could want these properties just to keep them out of other big companies’ hands, or it could believe that they’ll innovate better with their original founders. Finally, it may figure there are communities that will identify more with the “independent” brands than Amazon itself.

Like so many of Bezos' moves at Amazon (selling fine art online?!) his purchase of the WP is initially confounding but so far he has been right more often than not.

It is going to be interesting to see where this move takes him and the WP.

[SteveEisenberg]

Originally Posted by fjtorres

Time will tell, but the "wise man of Omaha" has been buying newspapers left and right. I don't think many people would dare call Buffet dumb.

Since I don't live in Omaha, it wouldn't be too daring.

Reading this, I would conclude that Buffett's interest in newspapers is a little emotional, and also that there is no way he would buy the WaPo:

http://www.businessinsider.com/warre...spapers-2013-3

A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan . . .

Does the above give any idea why Buffett didn't buy the Post for Berkshire Hathway?

Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound communities . . .

The WaPo is distributed over an unusually wide area -- I see it in 7-11's that are 100 miles from DC. Doesn't sound tightly-bound to me.

At appropriate prices – and that means at a very low multiple of current earnings – we will purchase more papers of the type we like.

Ignoring the punditry in my next link (since I don't agree with it besides greatly hoping it to be wrong), check out the fact of the Washington Post Company having lost money last year from newspaper publishing:

http://www.forbes.com/sites/avaseave...me-profitable/

This means that the Washington Post was sold to Mr. Bezos at an infinite multiple of current earnings. That's not the kind of paper the alleged sage of Omaha, or any other value investor, buys.

[frahse]

Originally Posted by fjtorres

Similarly, the case can be made that Bezos really intends to let the WP be:

[

Right now the WaPo is a bleeding unbound wound that is being continually aggravated. It is just going to get worse.

Bezos has to keep infusing cash indefinitely into the WaPo or he has to change it.

[pastanley]

I wished he would have bought a sports team like the Washington Capitols with that money. Only a nerd like Bezos would buy a news paper.

[fjtorres]

Originally Posted by pastanley

I wished he would have bought a sports team like the Washington Capitols with that money. Only a nerd like Bezos would buy a news paper.

He's the contrarian's contrarian.

Larry Ellison buys a Hawaiian island, Paul Allen buys sports teams and mega-yachts and mama Bezos' boy builds rockets and buys a newspaper.

He just might get drummed out of the billionaires' club if he keeps it up.

[frahse]

Originally Posted by fjtorres

He's the contrarian's contrarian.

Larry Ellison buys a Hawaiian island, Paul Allen buys sports teams and mega-yachts and mama Bezos' boy builds rockets and buys a newspaper.

He just might get drummed out of the billionaires' club if he keeps it up.

Personally, I like the island idea the most.

Last year the WaPo lost $54 MIL, which of course was more than it lost the year before, and on, and on. I also don't quite understand the structuring of the Pension. There were some contradictory statements about that.

There were some of those financial calculations which stated that Bezos actually paid over $200 Million more than he should have. i.e. it should have gone for $50 Million.

Again, a bleeding wound!

Maybe I should modify that. A bleeding "cancerous" wound!

[SeaKing]

I would go so far as to say the Post also
needs an ATNAA (atropine shot).

I am waiting to see who picks up the NY Times.

[GA Russell]

Bezos is allowing Katherine Graham's granddaughter to continue to run the show.

I wonder how long that will last. I don't have any faith in her.

[fjtorres]

Originally Posted by GA Russell

Bezos is allowing Katherine Graham's granddaughter to continue to run the show.

I wonder how long that will last. I don't have any faith in her.

Some of the commenters in the WP blog articles think she'll be allowed to discretely go on her own timetable. It's a friendly takeover and nobody's rep is going to be tarnished with a public firing. Any changes that might come will be very hush-hush and genteel like.

[fjtorres]

Originally Posted by frahse

Personally, I like the island idea the most.

Me, too.
But there's only so many Hawaiian islands to go around and the locals might object.

The WP lost about $11M operationally. The rest were pension costs.
Those numbers were racked up, pre-paywall, however.

The NYT paywall is currently generating on the order of $150M and their digital efforts are generating over $300M a year.

http://www.cjr.org/the_audit/the_nyt...-a-year_pa.php

The WP won't do anywhere near that well but they need but a quarter of that to get to breakeven.
It won't happen overnight so there *is* some red ink ahead but the WP isn't a zombie. The brand and rep can probably carry them through the transition to digital just fine.

[frahse]

Originally Posted by fjtorres

Me, too.
But there's only so many Hawaiian islands to go around and the locals might object.

The WP lost about $11M operationally. The rest were pension costs.
Those numbers were racked up, pre-paywall, however.

The NYT paywall is currently generating on the order of $150M and their digital efforts are generating over $300M a year.

http://www.cjr.org/the_audit/the_nyt...-a-year_pa.php

The WP won't do anywhere near that well but they need but a quarter of that to get to breakeven.
It won't happen overnight so there *is* some red ink ahead but the WP isn't a zombie. The brand and rep can probably carry them through the transition to digital just fine.

Question: Did you say that right?

The NYT paywall is currently generating on the order of $150M and their digital efforts are generating over $300M a year.

Shouldn't one of those be "print?"

Other than that question, I bow to your financial know.

On Ellison, did you know that a "village" was also included in the "island" package, as were some Pineapple farms so the natives could keep their jobs. It seems like he acquired 87% or so of the island. Some Govt stuff might have been excluded.

Now on the future for the NYt and WaPo --- I don't see as rosy a picture as you do. The real test will be if and when the NYt and WaPo go to a real wall like the WSJ. The current ones are so porous as to be laughable.

[fjtorres]

Originally Posted by frahse

Question: Did you say that right? Shouldn't one of those be "print?"

Other than that question, I bow to your financial know.

On Ellison, did you know that a "village" was also included in the "island" package, as were some Pineapple farms so the natives could keep their jobs. It seems like he acquired 87% or so of the island. Some Govt stuff might have been excluded.

Now on the future for the NYt and WaPo --- I don't see as rosy a picture as you do. The real test will be if and when the NYt and WaPo go to a real wall like the WSJ. The current ones are so porous as to be laughable.

The source said the paywall alone was $150M and the entire Times digital operation was $300M. That is revenue, not profit, but it also says that those digital revenues are the only thing keeping the NYT corp afloat.

I'm not necessarily all gung ho about the deal, but I *am* open go the idea that the WP can maintain its reputation for quality news gathering and be at least minimally profitable. It's been a while since I was a subscriber but I never had issues with their service or their coverage so I have a larger store of goodwill for the paper and staff than other prominent papers.

[manfred63]

The problem is that most people already pay some digital subscriptions. Music 10 bucks, movies 10 bucks, and then a single newspaper wants 10 bucks per month. That's a bit much just for digital content. And you pay for the internet you're using right now, too.

As an Internet Service Provider I'd buy such subscriptions and offer them free to my customers. Maybe we'll see WP content free for Kindle users sooner or later, and other people would pay 10 bucks per month. I don't think that paywalls work for newspapers. It doesn't work if you get 24/7 TV entertainment for almost the same price.

[Fbone]

Originally Posted by SteveEisenberg

Reading this, I would conclude that Buffett's interest in newspapers is a little emotional, and also that there is no way he would buy the WaPo:

http://www.businessinsider.com/warre...spapers-2013-3

Does the above give any idea why Buffett didn't buy the Post for Berkshire Hathway?

Warren Buffet already owns The Washington Post. He's their largest shareholder and recently stepped down from its Board.