Amazon founder and CEO Jeff Bezos agreed to purchase the Washington Post on Monday for $250 million in a deal that is widely viewed as the biggest newspaper transaction to shakeup the industry since Rupert Murdoch’s news empire purchased the Wall St. Journal from the Bancroft family in 2007 for $5 billion.
Bezos purchased the Washington Post from the Graham family using his own private money as an investor and not on behalf of Amazon.
Forbes estimates Bezos net worth at $ 25 billion, making him the 19th richest man in the world.
The $250 million acquisition of the Post in cash represents approximately 1 percent of Bezos’ total net worth.
In early 2013, Bezos invested $5 million of his private money in Business Insider, an online news publication known for its coverage of tech and business.
As the newspaper industry in the United States shrinks and faces monumental challenges retaining subscribers and advertising dollars in a fast evolving digital era, Bezos’ acquisition of the Post marks the unusual forging together with a visionary CEO who was Time magazine’s Person of the Year in 1999 and played a pivotal role transforming the retail and digital industries with the success of Amazon.
The Post was founded in 1887 and remains a respected and leading American daily newspaper, famously known for its Watergate scandal investigation in the 1970’s and winner of over 40 Pulitzer awards.
The Post competes directly against other daily newspapers such as the New York Times, U.S.A. Today, Los Angeles Times, and The Wall St. Journal, the largest newspaper in the United States by circulation.
Unlike the New York Times and the Wall St. Journal, the Post does not print an edition for other regions in the United States besides the East Coast.
The majority of the Post’s subscribers come from the District of Columbia, Maryland, and Northern Virginia.
In late 2009 the Post closed several of its regional bureaus and concentrated more on reporting about political stories on Capitol Hill along with local news stories around Washington D.C.
The Post is an influential newspaper in political circles throughout Washington D.C. and across many regions of the United States.
Over the past seven years, the Post’s sales revenues have been steadily declining.
Print advertising revenue at The Washington Post in the second quarter of 2013 was $54.5 million, down 4 percent from the second quarter of 2012 while print advertising revenue was $103.1 million during the first six months of 2013, down 6 percent from the first six months of 2012.
When the Post’s acquisition was announced on Monday after the closing bell, shares of the Washington Post Co rose over 5 percent during after hours trading.
In a statement posted on the Washingtonpost.com addressed to the Post employees, Bezos highlighted the importance of journalism in a free society while admitting that he has no plans to lead the day to day operations or change the values of the Post.
“Journalism plays a critical role in a free society, and The Washington Post — as the hometown paper of the capital city of the United States — is especially important. The values of The Post do not need changing” Bezos wrote.
“The paper’s duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we’ll work hard not to make mistakes. When we do, we will own up to them quickly and completely” Bezos stated.
“I won’t be leading The Washington Post day-to-day. I am happily living in ‘the other Washington’ where I have a day job that I love. Besides that, The Post already has an excellent leadership team that knows much more about the news business than I do, and I’m extremely grateful to them for agreeing to stay on” Bezos added.
Last week it was announced that the Boston Globe was sold for $70 million by its owner, the New York Times, to investor and Boston Red Sox owner John Henry.
The New York Times purchased the Boston Globe for 1.1 billion in 1993.