The media industry woke with a shock this morning to discover Amazon founder Jeff Bezos, hailed as a pioneer of online retailing and eBooks, has purchased The Washington Post newspaper for $US250 million ($A280m) – in cash.
The move is an example of how old media stables are becoming consolidated and snapped up by new entities, and a surprising one by Bezos, who is typically known for high-tech ventures.
However, media experts have already pointed out synergies between Bezos’s passion for tech and The Washington Post, saying he isn’t buying a newspaper, but a publishing platform.
“I believe he will probably look at synergies between the publishing platform, the content and his Kindle business,” Telsyte research director Foad Fadaghi told SmartCompany this morning.
“It might very well lead to a more rapid transformation of the online news model – it might bring a different perspective.”
The Washington Post Company said in a statement last night it decided to sell the prestigious newspaper after “years of familiar newspaper-industry challenges”.
The company is owned by the Graham family, with Don Graham serving as chairman and chief executive. In the statement, he said Bezos’s proven technology and “business genius”, along with his long-term approach, make a “uniquely good new owner for the Post”.
Bezos’ own statement to staff suggests he will take a hands-off approach, although he says there will be “changes…over the coming years”.
“That’s essential and would have happened with or without new ownership,” he says.
The concept of Bezos purchasing a newspaper business might appear strange, but is in line with his investment strategy.
Bezos has been hailed as the sole figure responsible for popularising the eBook, while Wall Street has been a huge fan of Amazon’s diversification. Over the past few years Amazon has transformed from a retailer to add cloud services and video on demand – Amazon servers are responsible for hosting many of the world’s most popular websites.
Although Amazon toys with low margins and recorded a loss of $US7 million in the three months to June, the company’s shares have risen 16% during that time.
The optimism is a reflection of Bezos’s strategy to pursue long-term profitability and continue surprising the market with steady growth – much of the loss is due to infrastructure investment.
This is contrasted with Apple, whose shares have fallen over 20% during the past year despite consistent profits – the market is more interested in Amazon’s future than Apple’s past.
Investing in newspapers is nothing new among America’s richest. Last year, Warren Buffett announced he would buy up local newspapers around the country, and over the past few years has accumulated shares in the Washington Post Company too.
Last year, Bezos poured $US5 million into Business Insider – media analysts suggest Bezos could transform the news model as he did with books.
“The positive thing is that this is good for the journalists,” says Fadaghi. “It’s good for the industry as a whole to have investment happening in this space.”
In his statement to staff, Bezos mentioned the company would “need to invent, which means we’ll need to experiment”.
But Bezos has been doing some experimenting on his own.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
