Nieman Journalism Lab |
- Don Graham on the sale of The Washington Post, Jeff Bezos, and the pace of newsroom innovation
- Google’s new search feature makes it easier to find seminal articles on big topics
- Invisible hand or thoughtful design? Ownership and influence in the sale of The Washington Post
- Summer Reading 2013: “The Press in Perspective” by Ralph Casey (1963)
- Summer Reading 2013: “Journalism Tomorrow” by Wesley C. Clark (1958)
- The newsonomics of Jeff Bezos Buying the Washington Post
| Don Graham on the sale of The Washington Post, Jeff Bezos, and the pace of newsroom innovation Posted: 06 Aug 2013 06:31 PM PDT
Graham and I spoke by phone shortly before he left to meet with employees at a printing plant included in the sale, a trip that reminded me of another Graham surprise — the 2008 appointment of his niece Katharine Weymouth as publisher of the Post. That day, Graham told me Weymouth's job would be to manage the "transition from a world we know very well to a world that's changing." The real unknown, he said then, "what it's a transition to." Now we know: it is a transition to a new owner. Graham and I talked about that decision, why Bezos has the seal of approval from Graham advisor and former board member Warren Buffett, and why innovation incubator WaPo Labs, Social Code, Slate, TheRoot and Foreign Policy are staying with the yet-to-be-renamed parent company. Staci Kramer: Is there anything in the last 24 hours that’s given you a bout of seller’s remorse? Donald Graham: No. Other way around really. I was somewhere between concerned and way too concerned about being able to tell the folks who work here about this without a leak. I wanted to tell my colleagues what we were doing and why and I’m glad we did. I’m glad we did. I would say many of them — not all — many of them expressed sympathy and understanding. Jeff’s personal letter to the employees, which he wrote, is so good that it helped a lot. Kramer: You not only kept who it was sold to a secret, but you kept the fact that you were actively selling it a secret. Why go so far to be so quiet about it? Graham: Because it spared people here the uncertainty of the period where you know the property you work for is up for sale and you’re not sure where the future is. Kramer: Is that something you learned from the Newsweek sale? Graham: No. The sale of Newsweek was also kept quite quiet until we announced it, but I’ve seen this over and over again through the years. Talk to the people today at the LA Times and Chicago Tribune. [Note: The Newsweek sale process was public.] Kramer: What did you take from the Newsweek sale? Graham: That’s a very good question. But I honestly don’t think anything that was relevant to this process. Kramer: Anything about the kind of person you were selling to or the kind of structure you were trying to make sure was set up? Graham: No. I wasn’t focused exclusively on buyers with a technology background. I wanted to look for someone who would bring something to the Post that we didn’t have and Jeff was a very, very good buyer on all accounts. Even better than I expected. Kramer: Whose idea was Jeff? Graham: It was a screamingly obvious idea both to me and to Katharine and to our investment bankers. I have to admit I did not think he would be interested because he’s famous for his single-minded focus on Amazon. But when it turned out he was, I was surprised. As I’ve said … Allen & Co talked to him on the phone a couple of times. He then stopped returning their calls and my assumption was 'he’s not interested.' Kramer: Screamingly obvious in a lot of respects but the two of you managed to stand next to each other at Sun Valley and be photographed and not set off any alarms. Graham: We did. July 8, the Monday before Sun Valley, he emailed and said ‘let’s get together during the week’ and I said I’d love to. Kramer: Were there any active negotiations going on with anyone else when you got that email? Graham: We did — this I have said publicly — directly or through Allen & Co. I haven't done an exact count but I think it would be right to say we reached out to fewer than a dozen potential buyers. One thing I’m not going to tell you is who we reached out to. It was not all technology people or technology companies. We reached out to people I thought could bring the Post something. Kramer: Do you have any qualms about the Post no longer being owned by someone in DC? Graham: No. Many newspapers, probably most newspapers are owned today by somebody who doesn’t live in the city of publication. I think it’s great when they are … Warren Buffett has bought newspapers this year; he bought the paper in Omaha, where he lives, but he bought the paper down the road in Richmond where he does not. I don’t think anybody’s insulted by having Warren Buffett as the owner. Kramer: Although there’s a suggestion today that if the Washington Post was really a good business buy Warren Buffett would have bought it, not Jeff Bezos. My response to that was, ‘I don’t read minds but I would think Warren Buffett would suggest you sell to Jeff Bezos.’ Graham: Yeah. Warren’s quite a fan of Jeff’s. I didn’t really know that. I heard him in a large group in January saying he thought Jeff was the best CEO in the United States and I asked his permission to quote him when we went public. He’s a big fan of Jeff’s long-term focus , patience and not being distracted by Wall Street. He certainly won’t be distracted by Wall Street with this because it will be owned privately. Kramer: How much does that matter in today’s world? Graham: Even in running a public company, he is unusually long-term focused and unusually resistant to the idea that he should do things for short-term profitability. That’s why Warren says he likes him so much. But that’s also true of Warren himself. You can run a public company and be long-term minded but being a private company takes that out of the conversation altogether. We have no complaints when it comes to our ability on the long-term. That has not been our problem. Our problem has been that we haven’t come up the right ideas. Kramer: You’ve managed through five rounds of buyouts. Could you have continued to run the paper without going to layoffs? Graham: I don’t know. One gigantic plus for the Washington Post — and it will be a plus for Jeff, too — among companies of our type, we’ve had a hugely over-funded pension plan and we have used some money from that pension plan from time to time over the years to fund buyouts and therefore to make it easy for people to step up and say ‘it’s time to go.’ I don’t know the answer to your question but, as I said yesterday, one reason we made this decision was this is our seventh straight year of declining revenue. I think we’re more innovative than most companies — I think you’ve written that. I’m very proud of the quality of innovation around here but it hasn’t reversed the trend for revenues. If in the next three years revenues were to decline, you’re going to wind up with more cost cuts however those cost cuts were achieved. After a few more years … we absolutely would have survived under family ownership and company ownership but our aspirations for the Post have always gone beyond survival. Kramer: When did you personally realize you would be able to make the decision? Graham: The very end of last year, the beginning of this year. Kramer: Until the end of last year you never thought to yourself, ‘If I have to sell the Post I can do it?’ Graham: The very end of last year, the beginning of this year. Kramer: People have said they’re surprised that you could sell. I was surprised by the timing and the person who bought it but not by the idea that you could sell it. Graham: Katharine and I not only hadn’t wanted to do it; we literally hadn’t thought about it. Seven years of declining revenues will give you new ideas. Kramer: Why are you keeping the digital assets and WaPo Labs? Were they for sale at all? Graham: The Labs team is going to experiment in news products and it’s part of the contract is if it becomes profitable the Post will get a percentage of the profits. [The letter of agreement filed with the SEC gives WaPo Labs a five-year content license for the Labs' social news aggregator; in exchange, the paper gets 10 percent of any profit.] I hope we have a big success — and if we do, it definitely will be good for Slate and the other properties we own. What the Labs team needs to do now is put its head down and get out a great new product and make it a success. The Labs team at the moment is on the brink of what I think can be a very impressive new product. At the moment, we have no revenues so it’s not an attractive buy. Kramer: What about Slate and the others? Was there any thought of selling them? Graham: It’s a completely different business. I really enjoy Slate, The Root and Foreign Policy being part of us. It has nothing to do with the business of the Washington Post and our company’s proud to own them. Staci D. Kramer, the former editor of paidContent, has been writing about and taking part in the intersection of technology with media, entertainment, and sports since the days before the web. Image by Stuart Isett used under a Creative Commons license. |
| Google’s new search feature makes it easier to find seminal articles on big topics Posted: 06 Aug 2013 11:59 AM PDT When big news breaks, readers clamor for updates — but they also yearn for context. For example, when word got out Monday afternoon that Jeff Bezos had spent $250 million to become the new owner of The Washington Post, there was suddenly a demand for all kinds of information. Who are the Grahams? How long have they owned the paper? What kind of leader has Bezos been at Amazon? What’s the status of other historic newspapers — have any others been purchased recently? Some of this information would have been clear after a quick Google search, but piecing together a full portrait of the significance of what happened would likely have taken a combination of queries and resources — maybe a Wikipedia article, some breaking blog posts, a couple of company biographies — to put it all together. Google wants to change that. Today, they announced a new search feature that aims to put in-depth and longform coverage of people, places, events and themes at your fingertips. “We’ve done research that suggests this is a fairly common kind of information need, not a specific need but a broad interest,” says Google product manager Jake Hubert. For example, Hubert says that while most people who search for the term “YouTube” are looking for a video, or to be navigated to YouTube.com, some might be looking for, say, the essential essay on YouTube’s history, operations, business model and leadership. The new algorithm will help you do that. It’s key to note that unlike doing an image search and specifying a type (“face” “clip art” “animated”), or a doing a news search and specifying a time period (“within the last month” “archives”), the in-depth feature is not something you can choose. Instead, if you search a broad term — ”happiness” and “Taylor Swift” are two examples — you might see an inset box with a few headlines from major publications pop up. Hubert wouldn’t go into detail about how the algorithm works, so we don’t know what factors are incorporated into the final results — renown of publication, length of article, number of views, publishing date. (He was clear, however, that there is absolutely no element of human curation.) “This content can come from anywhere on the web. You’ll find content from well-known publishers, but also from lesser known publications and blogs,” he said. “Sometimes, for local angles on an in-depth topic from your hometown or a particularly niche subject, a smaller, lesser known publication may actually have the best in-depth content.” Of course, as the feature rolls out over the next few days, publishers will increasingly want to know how to get their own content promoted as seminal works on a topic. To that end, Google has provided some support via their help center. Structuring article data in a certain way — specifically annotating HTML so that authors, headlines, text body, images, date are clearly demarcated — will help Google surface the kind of in-depth articles the algorithm is looking for. For example, Hubert was particularly proud that doing a search for “Gloria Steinem” not only turned up a couple of key interviews and profiles, but also her fundamental 1969 essay, “After Black Power, Women’s Revolution.” To find that kind of needle in the haystack of the internet, it can really help if the author is clearly marked. One possible result of the new search might be that more eyes are turned toward content produced by journalists in newsrooms rather than the aggregators we have come to rely on when looking for background information — Wikipedia, IMDb, or WebMD. It also suggests that Google is aware of an information gap that others are also trying to fill, a centralized hub for background and context on an issue. The motivation is similar to what, for example, Fast.Co Labs was aiming for when its team started experimenting with stub posts, which Chris Dannen described as a “way of telling the reader, ‘If you're not up on the story, if you need context, go back and read the stub and it will make sense why this is timely, and why this is a person we're talking to.’" Google says they’ll keep experimenting with the feature depending on feedback, but they’re excited to take steps towards surfacing the content that remains useful and interesting long after its published, but can easily be lost in the fire hose of content that is the internet. But there’s also a note of warning to publishers that increasingly advanced search may be doing a better job of giving readers what they want than the publications are themselves. “It’s a tricky thing. Unless you really know what publications have written this kind of content, you’re going to find yourself going to these publications and trying to find them. We really want to help users find it all from across the web,” says Hubert. “This makes it easier for users to discover this kind of content, that used to be not as easy to discover.” |
| Invisible hand or thoughtful design? Ownership and influence in the sale of The Washington Post Posted: 06 Aug 2013 09:58 AM PDT Yesterday, Amazon founder and CEO Jeff Bezos bought The Washington Post, effectively ending the Graham family's 4-generation long stewardship of one of the country's most accomplished newspapers. Bezos's purchase matters to journalism because it suggests a new era in the meaning of media ownership — one that requires tracing influence through infrastructure design. First, a few distinctions: Bezos, not Amazon, purchased The Post; the paper will not be a subsidiary of Amazon or share a parent company. The paper's editorial leadership remains, with Katharine Weymouth (niece of Post Chairman Don Graham) staying on as Publisher and CEO. But beyond these points, it's unclear exactly what the purchase means. Which makes this precisely the right moment to ask: going forward, how might we trace what the purchase could mean? Ownership, control and the newsIt's incredibly difficult to study how ownership influences the media, and why such influence might matter. Sometimes media ownership matters because there's evidence that too much media power in too few hands is bad for democracy: concentrated ownership doesn't produce the kind of diversity self-government needs; it makes it less likely that powerful people will be held accountable; and it prevents markets from self-adjusting and reallocating resources to newcomers. Other times, ownership is a way to see organizational priorities. Owners and publishers get to exert what Murdock calls "allocative control": influencing policy and strategy, merger and acquisition decisions, profit distributions, shareholder communications, or labor allocations. These moves are distinct from the day-to-day "operational control" that individual editors and reporters have as they decide what issues to cover, what headlines to write, which sources to interview, or where to place a story. At other times, ownership is thought to be about more blatant ideological influence — elite media owners imposing their values and priorities on their journalistic employees, if not in editorial page statements, ensuring that news coverage reflects how they see the world and how they think it should change. Even when news organizations aren't financially profitable, they might still give their owners valuable channels for political influence. And, finally, media ownership can correlate with self-censorship. Even without explicit instructions, journalists might simply sense — through the tacit social cues and agreed-upon patterns that often structure newsrooms — that their time and attention would simply be better spent elsewhere, not on issues that are implicitly understood to be out of alignment with what their organization's culture or leadership is thought to value. Bezos's purchase of The Post, though, made me think not of these types of control but of more subtle and less visible dynamics of control that Daniel Chomsky (not that Chomsky) found at The New York Times in the 1950s and 60s. By systematically combing through an archive of correspondence between Times editor Turner Catledge and Times publisher Arthur Hays Sulzberger, Chomsky observed the following pattern: Sulzberger would write to Catledge with "suggestions, instructions, complaints, and orders" (at least several hundred times over a 7-year period); Catledge would then strip these memos of identifying information and forward them to his employees as feedback from an "interested reader" (suggestions from Sulzberger's wife were described as being from "a friend of an interested reader"). In all but two cases, Catledge ensured that Sulzberger's wishes were reflected in paper's coverage, letting reporters be under the impression that they were simply receiving direction from their editor. Their sense of professional autonomy from their owner's control remained intact, Catledge retained his colleagues' respect as an independent editor, and Sulzberger enjoyed anonymous control over the paper. This kind of influence is probably rare and most reasonably seen as a function of the Sulzberger-Catledge relationship. But it has two notable features that bear relevance today: the true nature of the influence was invisible (Catledge was a willing accomplice in protecting Sulzberg's anonymity) and it was enacted through organizational structures that let reporters retain a false sense of autonomy (they didn't even know that they were being influenced by their owner). It's the relationship of these two things—invisibility and organizational structure—to professional autonomy that made me pause when I heard about Bezos's purchase of The Post. What does this sale mean for understanding contemporary owners' influences on online news organizations? The answer, I think, lies in seeing influence in infrastructure design. Invisible infrastructure and ownership influenceAmazon is infrastructure. It isn't just an online retailer or a technology maker, but rather, one of the principal creators of the digital "scaffolding in the conduct of modern life". Star & Ruhleder define infrastructure, in part, as: transparent (you usually don't notice it until it fails); embedded within other technologies (it can't exist completely on its own); standardized (dependent upon predictable behavior); and wide-reaching (it's often surprising just how many dimensions of life a seemingly narrow infrastructure can influence). Recall Senator Joe Lieberman's influence that made Amazon.com stop hosting WikiLeaks after the website carried classified information that had been leaked. It's a mistake to see Amazon as simply a recommendation engine or a just-in-time shipper (although it's those, too). Instead it should be seen as a maker and regulator of largely invisible infrastructure, which helps us see how the organization exerts "logistical power" to influence the social and technological conditions under which information can circulate. This is how Bezos's ownership might be analyzed. It seems highly unlikely that he's going to exert editorial control over Weymouth in the way that Sulzberger influenced Catledge — or even that he's going to pull a Post story that the government doesn't like. Indeed, Weymouth retains her title as Publisher, in addition to Post CEO. Bezos explicitly states that The Post's "duty will remain to its readers and not to the private interests of its owners," and there's no reason to doubt the sincerity of his statement. What's less likely, though, is that Bezos will curb the design thinking and infrastructure building instincts that helped him make Amazon a phenomenal internet success. The place to potentially see Bezos's influence is in how he aims to reinvent "almost every element of the news business." Indeed, it seems that The Post selected Bezos as its buyer for his skills and experience as an internet entrepreneur and networked system builder. As Weymouth puts it, "Mr. Bezos knows as well as anyone the opportunities that come with revolutionary technology when we understand how to make the most of it. Under his ownership and with his management savvy, we will be able to accelerate the pace and quality of innovation." Don Graham seemed to agree as he described how he had reached his leadership limit: "the newspaper business continued to bring up questions to which we have no answers." The Post needs new infrastructure. I’ve previously described the infrastructure underpinning networked news production as "newsware": the "networked technologies, algorithms, interfaces, practices, and norms that constitute the shared, embedded and largely invisible set of material and ideological conditions and logics governing press-public interactions online." Every time a news organization relies on Facebook News Feed algorithms to surface its stories, on third-party widgets to organize its "most popular" reports, on Google News to index its content, or on Twitter to teach its journalists social media best practices, it must reinterpret the meaning of press freedom. It must find ways to define and assert its identity and values through infrastructure — infrastructures created and managed by new media organizations with very different histories that those of the family-owned Post. To be clear, I don't see Bezos's purchase of The Post as some conspiratorial step in Amazonian expansion, nor as a way for Bezos to personally steer The Post's journalism. This isn't that kind of ownership move. Rather, my hunch is that it represents a moment in a new era of understanding what ownership and influence means for news organizations. If we are to see Bezos's influence over The Post, it's probably going to come from tracing how his understanding of successful internet entrepreneurship intersect with the aims of democratic press. This overlap exists not in him directing The Post to cover particular issues or interview specific sources that align with his personal priorities (the way Sulzberger influenced Catledge at The Times). Rather, we might more accurately see his influence in The Post's next generation of networked systems that control the role audiences play in news production, that use automation, relational databases, recommendation engines, and user interfaces to create online news experiences that "work" for audiences. Indeed, Bezos has already set a tone by saying that The Post's "touchstone will be readers, understanding what they care about." This is a laudable goal, and an important element of any news business that wants to build an audience and earn revenue — but the kinds of systems that deliver stories readers care about — that earn clicks, recommendations, likes, shares, and advertising revenue — are not necessarily the same systems that produce stories in the public interest. What would it mean to recast media ownership concerns in terms of infrastructure design? What kind of design market produces sufficiently diverse newsware? What's the difference between "allocative" and "operational" control when designing newsware — e.g., between systems that make it likely for news to circulate versus those that give individuals the power to share particular stories? Might news technology designers self-censor just as journalists sometimes have, creating systems that align with what social media signals and big data sets suggest readers will likely click on and share? Tracing these kinds of infrastructural influence is different, but no less important, than uncovering the kind of control that Chomsky's found at play at The Times in the 1960s. But we can't afford to wait fifty years for the evidence to surface. Image by ptufts used through a Creative Commons license. Mike Ananny is an assistant professor at USC Annenberg, where he researches the public significance of systems for networked journalism. He is also a faculty associate with Harvard’s Berkman Center for Internet & Society, holds a Ph.D. in communication from Stanford, a master’s degree from the MIT Media Lab, and a bachelor’s from the University of Toronto. |
| Summer Reading 2013: “The Press in Perspective” by Ralph Casey (1963) Posted: 06 Aug 2013 08:00 AM PDT Editor’s Note: The Nieman Foundation turns 75 years old this year, and our longevity has helped us to accumulate one of the most thorough collections of books about the last century of journalism. We at Nieman Lab are taking our annual late-summer break — expect limited posting between now and August 19 — but we thought we’d leave you readers with some interesting excerpts from our collection. These books about journalism might be decades old, but in a lot of cases, they’re dealing with the same issues journalists are today: how to sustain a news organization, how to remain relevant, and how a vigorous press can help a democracy. This is Summer Reading 2013. This essay, “Press and World Affairs,” was written by the hugely influential political reporter James “Scotty” Reston, who would serve as The New York Times’ executive editor and was “the quintessential Washington insider.” He argues for a more proactive approach to covering politics, one that monitors people and ideas daily as they become the forces that shape domestic and foreign policy. His views on journalism were forged with a clear belief in the role of the press in helping Americans understand what their politicians do and whether they support those actions. “We should be asking what our institutions can do to adequately prepare the country adequately for its decisive role in the world affairs,” he wrote. His solution? Rethink the structure and the content. Short news stories, based on a single day’s events, focusing on “the bright, the startling, the bold, the sharp, and the clear simple fact,” might make the most interesting reading, but those features are all less important than reporting the essential truths.
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| Summer Reading 2013: “Journalism Tomorrow” by Wesley C. Clark (1958) Posted: 06 Aug 2013 07:45 AM PDT Editor’s Note: The Nieman Foundation turns 75 years old this year, and our longevity has helped us to accumulate one of the most thorough collections of books about the last century of journalism. We at Nieman Lab are taking our annual late-summer break — expect limited posting between now and August 19 — but we thought we’d leave you readers with some interesting excerpts from our collection. These books about journalism might be decades old, but in a lot of cases, they’re dealing with the same issues journalists are today: how to sustain a news organization, how to remain relevant, and how a vigorous press can help a democracy. This is Summer Reading 2013. What Syracuse professors saw in the future was a very different media landscape than the one we currently inhabit, and brings to mind the creeping question of have things really changed that much after all? In the excerpt below, Professor Robert D. Murphy predicts that by 2000, daily newspapers will have had the sense knocked into them and abandoned the rush to break the news of the day before anyone else. Newspapers, Murphy hopes, will have become purveyors of analysis rather than just the facts, and will no longer preach that the latest is always best. He could still be right; analysis has grown steadily as a share of the traditional news media’s work. Also of note is Murphy’s conditional: “if we have a democratic society in the year 2000.”
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| The newsonomics of Jeff Bezos Buying the Washington Post Posted: 06 Aug 2013 07:16 AM PDT
Jeff Bezos’s surprise buying of the Washington Post whipsaws media, and a media-watching world, intrigued by Red Sox owner John Henry’s winning of the Boston Globe auction, announced Saturday (“The newsonomics of John Henry buying the Boston Globe”). It compounds the curiosity of Warren Buffett becoming a small city newspaper magnate last year. It builds the suspicion that the few remaining people with the stomach to run daily newspapers have bank accounts with at least nine zeros after a non-zero numeral of some kind. It proves, yet again, that truth can trump fiction. Web historians: remember the 2004 Googlezon video, EPIC 2014, that postulated a Google/Amazon takeover of the news, and other, worlds? Forgetting memories of the Bancrofts, the Ridders, the Cowles, the Bonfils and the Binghams, the world expected the Graham family — heirs to the fabled Watergate profile in courage — to last as owners of the Washington Post forever. Instead, it will last 80 years. For $250 million — the price named by CEO Don Graham when he decided to abandon ship — the Graham family turns over its publishing assets and fades into history among those other clans, leaving the Sulzbergers, almost alone among America’s newspaper elite, to go forward in that tradition. Why sell? Why now? There are two fairly simple answers. For the Post, quite specifically, its Kaplan genie ran out of Post subsidy wishes. As other newspaper companies turned south, with the one-two punches of digital ad and reader disruption and then the Great Recession, Kaplan — the Post Company’s separate education business — offset lost Post profits. Then, with government pressure on the excesses of the digital education business, Kaplan lost its mojo, its revenues and, in 2012, its profits. For Post execs, it was time to face the financial music. The tune they heard was off-key. It’s a reckoning I now hear widely across the newspaper industry, from the U.S. to middle Europe: the next five years may be as tough a digital transformation as the last. Yes, the positive of digital/All Access reader (circulation) revenue is great, a ray of hope. Marketing services and events businesses are offering new revenue streams unthought of three years ago. Yet, the accelerating print ad decline, coupled with tepid (if any) digital ad revenue growth, casts a dark cloud over the next several years. The meager profits (5-10% in many cases) of daily newspaper companies are fading from solid black to gray, in danger of turning red, or in the case of the Washington Post publishing division, staying in the red. So, if you are Donald Graham, facing these realities, it was time to look into the family mirror. For lack of either financial wherewithal or willingness or familial stomach, the Graham family dynasty ended, and quickly. It was the annual Sun Valley Allen & Co confab that provided a useful setting for getting the deal done; who says conferences are a waste of time? Enter the White Knight, Jeff Bezos. And what prince doesn’t carry baggage. (Let’s peek into the bag, below.) The stunning sale raises a Sunday Post full of questions. Let’s take on, quickly, the first nine: Why not Mark Zuckerberg?After all, Don Graham is on the Facebook board, got his famous private tour of the social mothership and has worked closely on social initiatives with the company. (Great WSJ piece and headline: “When Zuckerberg Met Graham: A Facebook Love Story“) Zuckerberg, alas, is an almost purely digital guy, while Jeff Bezos is known as a voracious reader of news. Amazon was of course founded on books, another classical text medium. Why are these billionaires buying into the press?First of all, because they can. For post-WW 2 decades, the press was a tight fraternity. Family-owned and then chain-owned newspapers dealt with each other; when newspapers changed hands, they were handed to those within the circle of trust. Brokers knew who in the circle were buying and who were selling. Auctions were rare. Prices were high at multiples (the multiplier of annual earnings) twice to thrice what we see today. After Lee Enterprises overpaid for Pulitzer Inc. (2005) and McClatchy almost choked on its purchase of Knight Ridder (2006), newspaper owners have largely tipped on one side of the transaction boat: sellers, not buyers. Combine that aversion to buying with a devaluation of newspaper currency — they are worth about a tenth of what they were in 2000, or in the case of the Globe, 4% (adjusted for inflation) of what the Times Company paid for it 20 years ago . All kinds of new would-be owners have come out of the woodwork. The Manchesters, Kushners, Lorings, Buffetts, Henrys and Bezos, just to name a few, share some common traits, though — quite importantly — in different quantities. What drives them? It comes down to three factors:
It’s a mix of those three that defines these new owners. You can play the parlor game of how the chemistry works within any one of them. Are newspapers any longer creatures of the market?When former Star Tribune Publisher Joel Kramer started up MinnPost in 2007, he explained that newspapers were no longer “creatures of the market.” He meant that what came to be known as the “advertising subsidy” (Good Jay Rosen explainer) was going away and that huge ad volumes that paid for huge newsrooms would be obsolete. Flash forward, and that’s become painfully omnipresent, with significant new cutbacks coming this very week throughout Gannett. So this new private ownership takes newspaper companies out of the glare of public company profit pressure and scrutiny. The Globe and the Post will be just the latest to move from publicly traded companies into private hands, following the Orange County Register, the Philadelphia Inquirer, Journal Register Co, and MediaNews Co, among others. It’s a logical move. In an environment of multiple hazards, only a long-term view, and investment that may mean diminishing profits in the short term, may get these companies to the other side. The legal, fiduciary responsibility of maximizing return for investors can be counter-productive to long-term viability. The painful alternative for the Grahams, for instance: deeper cutting of the newsroom, which, under Bezos, may be averted. In a strong sense, it’s full-circle. Newspapers started as mass vehicles under strong, private ownership. Then they enjoyed the fruits of the public markets from the ’70s on. Private to public, and now back to private. Isn’t this trend of super-wealthy ownership bad for the press?Not necessarily. Take the long-standing argument about chain newspaper ownership vs. family ownership. The truth: some chains produced the best journalism in the country — and the worst. The same has been true among the family-owned. For every Doug Manchester turning the local daily into a personal platform, there may be an Aaron Kushner gung-ho on product and content. The good news: We’re going to have far less uniformity in the daily press, as we leave the chain days. The bad news: The lows will be lower. So what is in White Knight Bezos’ bag of tricks?This may be the most fascinating question of all. Bezos’ Amazon has widely distinguished itself in two major ways, both of which may portend good things for the new Post. Number one, he’s built — and continues to build — the company with a long-term perspective. He has long frustrated investors impatient with losses and meager profits, as revenues are plowed back into growing the business. That’s a long-term perspective the newspaper business needs more of. Number two, he has focused obsessively on customer experience. Amazon is the gold standard of utility on the web. Know an industry that could use a revolutionary thought or two about how to present and deliver news on the tablet and smartphone? If Bezos can apply the same focus to the Post that he has to Amazon, we could see a new leader emerge in the industry. Historically, the early WashingtonPost.com was an early leader, and can be again. WaPo Labs has created an array of innovative products, but none has reached scale-changing heights. Two things Bezos knows: scale and data. Expect him to concentrate on those values at the Post, as he reviews such recent initiatives as the Post’s new paywall. Isn’t there a big downside to the owner of Amazon owning the Post?Certainly. Ask anyone in Seattle about Jeff Bezos’ willingness to throw around his Amazonian weight. Though the sales tax issue seems largely resolved (with Amazon jujitsuing a seeming loss into a win, “The Newsonomics of Amazon vs. Main Street“), many big political issues related to the company remain. Privacy is a top one. Amazon needs more friends in D.C., and it’s hard to imagine what’s better than owning the editorial page of the Washington Post in that quest. In the abstract, it’s much better to have newspaper owners who don’t have major stakes in powerful, non-newspaper companies. Those days are apparently drawing to a close. Cave, lector. Isn’t the Post special?Well, it is, in several ways. Thirty years ago, it was on a par with The New York Times. The Times opted to go national, while the Post opted to emphasize regional. Who made the better bet is still to be seen. The Times, of course, sees a huge, potential global upside, but the Post has long dominated audience in its highly affluent region, first in print and then digitally. While the Post has a large non-local audience — national politics and government is in its very DNA — it hasn’t well-monetized that crowd. Look for Bezos to take a fresh approach to local, national and topical segmentation. Does the sale price tell us something about the new valuation of the metro press?I doubt it. Bezos agreed to Graham’s asking price of a quarter of a billion. That seems rich for a paper and publishing assets that are unprofitable, losing somewhere between $10 million and $50 million in 2012, depending how you account for pension expenses. Yet, that’s one percent of his $25 billion net worth. (Americans, on average, donate 4.7% of their income annually.) So, he’ll hardly know it’s gone. The low Globe price — which, recall, was semi-artificially heightened when the New York Times Company opted to keep its Globe pension obligations — is much closer to the mark. That’s about three times annual earnings. In the end, it may have been that outsized regional reach, the closeness of the Graham/Bezos relationship, a little DC real estate and the special glow of Post brand that sealed the deal and the price. So, what about the Sulzbergers and the Times?How lonely is it as one of the few remaining family-controlled big newspaper companies? The Times is clearly doing better than it was four years ago when it was forced to sell part of its building and take a usurious loan from Carlos Slim (whose wealth is 3X times Bezos’). Debt is done; cash is up. Yet, it faces all the same news company issues that the Post faces. Does it have the financial wherewithal, willingness and stomach to push into another tough half-decade. If not, look for another billionaire to expand his news interests: Michael Bloomberg. Image by Max Borge used under a Creative Commons license. |
Washington Post Co. chairman and CEO Don Graham kept the decision to sell the heart of the family business exceptionally quiet for months, avoiding public drama and employee angst while he went white-knight shopping. He spent much of the first 24 hours after the 
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