Does Amazon chief Jeff Bezos’ purchase of the Washington Post give hope for the future of journalism? Or is it just a sign of desperation that we get excited when an eccentric investor shows an interest in what we do?
Bizos has put millions into Blue Origin, a plan to put humans into colonies that orbit the earth, and the $42-m Clock of the Long Now, which will tick for thousands of years in the mountains of Texas. So a newspaper which has been shedding readers, advertisers and money, is one this futurist’s more conventional ventures.
He is one of a number of the super-rich picking up US newspaper assets cheap, particularly as the old families who have controlled some of them run short on ideas, cash and hope for turning them around. Warren Buffet is scooping up local papers because he is convinced they will always have a place in communities. He has 28 so far.
John Henry, the private equity billionaire, has bought the Red Sox, Liverpool Football Club and now the Boston Globe for $70-m (just 7% of what the New York Times paid for it in 1993). Chris Hughes used his Facebook fortune to buy the New Republic magazine. The Koch brothers have been looking at buying the Tribune group, which includes another once-major newspaper, the LA Times.
Bezos has drawn the most interest, because he is a long-term investor who has shown at Amazon that is prepared to throw money for long periods of time into his ideas, and a brilliance for turning old industries into new digital empires. It may be that he is confident that he can find the internet business model for news or it may be that this is just a cheap plaything, like a clock and a spaceship. Maybe he values the influence the paper can have in his tax and other political battles in Washington, which may be worth a lot more than the $250-m it cost him.
One can speculate on whether he plans to do something with the Kindle, the device that has helped him get a fierce grip on the international e-book market. Or use his distribution system, as he is building warehouses across the US to allow for same-day delivery of all the other goods he sells. But this does not add up, especially since this purchase was done in his personal capacity, and not through Amazon.
Maybe it was just that his wife asked him to pick up a newspaper on his way home, and he misunderstood.
It does seem, though, that these ownership changes might signal a shift away from the relentless demands of huge listed companies chasing high margins and short-term profits. Both Bezos and Buffett have made it clear that they value the news business and think the current owners have messed it up. Maybe the smart money was just waiting to get these assets at the right prices. Maybe they are watching the NY Times and Wall St Journal paywalls, which are showing that if you stick with quality content then people are prepared to pay for it online.
At home, newspapers are watching closely. The latest circulation figures released last week rang loud alarm bells. In the previous quarter there were a handful of newspapers still looking positive, but this time the the best spin is that there are a few which have stopped falling and held their circulations. The rest are in collapse.
Faced with this, most South African newspapers have been cutting back, with a severe impact on news coverage – and therefore anyone’s reasons to pay for it. But the lesson from around the world is that it is an investment in content that pays off. Strong brands are not enough, nor is technical gimmickry. At the end of the day, what matters is producing information that people need, want and value enough to pay for.
In case you don’t believe it, note that Rupert Murdoch last week paid $70m for 5% of the hyper-trendy Vice magazine, which values it at $1,4bn – that’s six times the value of the WashPost.
*This column first appeared in Business Day, August 22, 2013