The Post’s sale — 7 thoughts on a week that shook the newspaper industry
The week of all-Washington Post, all-the-time has just about wrapped, and I'm reminded of a Mo Udall aphorism about hot issues of the day in the nation's capital: Everything has been said, but not everyone has said it yet.
Weighing in late in the cycle, let me try to highlight a few takeaways going forward for the Post itself and the industry.
1. The era of the public newspaper company is winding down. Before the Post spun off its newspaper holdings, Media General, Belo and Scripps had already. As noted in my first comment on the sale, you cannot justify to shareholders pouring money into a long and uncertain digital transition for newspaper organizations when other businesses (cable, broadcast and for-profit education for the Washington Post Co.) offer better return now and in the next several years.
That logic falls most heavily on Gannett, whose newspaper division is a drag on earnings and share price (though not a money loser like the Post). Gannett is much bigger, booking more than $700 million in revenue annually from freestanding digital businesses and expanding a big local broadcasting division with the recent acquisitions of Belo's stations.
Still, as Jim Hopkins' Gannett blog has been reporting, the company is quietly cutting several hundred newsroom jobs this month as 2013 shapes up as yet another year of significant advertising revenue contraction. The downsizing scenario will likely play out at other public companies (and some private ones too) who are running out of things like buildings and land to sell and don't have the deep pockets of a Jeff Bezos.
2. The New York Times is not in play now but might be later. I was quoted accurately but incompletely in Paul Fahri's Washington Post story speculating the Sulzbergers and the Times could be next in this series.
The New York Times Co. could come under similar pressure from family and public stockholders -- but not right now and only if revenues and earnings take a huge turn for the worse over the next several years. These are early days still for CEO Mark Thompson and the emerging outlines of his strategic plan -- plus the company has $1 billion in the bank for investment in new initiatives,reinvestment in existing ones or weathering a few money-losing quarters.
I would also note that the Times has two huge strengths the Post does not and cannot hope to duplicate. The success of its digital subscriptions and print-digital all access bundles are getting all the attention lately. But don't forget the brilliant 20-year drive to make the Times a national paper with subscribers all over the country paying $800-$900 a year -- and making a very attractive affluent audience base for advertisers.
On the other hand, I am in the show-me camp that the Times's global expansion ambitions will work. Ask veterans of the print era European and Asian editions of Wall Street Journal what a slog those ventures ended up being. And now in the digital era we have the examples of the Financial Times and Guardian -- brilliant journalistic and audience successes but not exactly minting money.
3. Is there a backstory behind the official story of the sale? Maybe. The first account was that CEO Donald Graham and his niece, publisher Katharine Weymouth had talked during budget season last fall, concluded that further revenue losses were inevitable and were led to the logic seeking a suitable buyer.
The Post's more detailed account of how the transaction came to be was different and more detailed on a crucial point. It was Weymouth who proposed the sale, the Post reported, as an alternative to cutbacks in staff and news quality or continued losses.
So if you are Don Graham and the family member groomed for the publisher's job and doing if now for five years comes to you and says the paper's fundamental revenue problem hasn't been solved and won't be for the next several years, whatcha gonna do?
4. It is wonderful that billionaires see an opportunity in the newspaper business but...I also see a downside interpretation of the Post's sale and the Boston Globe's last weekend to Red Sox owner John Henry. Neither the Globe nor the Post were late to digital or slouches at innovation. But neither has yet been able to generate enough new revenue to offset continuing print ad losses.
I would count among the disappointments of seven years of decline at the Post, the stall-out of effectiveness and pricing for online banners, new waves of ad migration to Google and other potent digital giants and the promising start and subsequent fizzle of the Post's Facebook-based Social Reader.
New ownership resets a five-year clock for doing better, and in the case of Bezos, brings a proven digital innovator to the party. But the decisions to sell also underscore that no one has yet cracked the case of inventing a new business model for getting through the print-digital era and then flourishing when print and its ad dollars have become irrelevant.
Put another way, if Jeff Bezos or another benefactor gave a newspaper company $250 million for digital development, I don't think management could spend it with confidence. Lots of bold experiments bear watching -- Salt Lake City, Orange County, Advance and Digital First -- but no high-odds, nearly proven option on which to place a big bet has emerged.
Curiously as the billionaires take their best shot, a new study in the works, provocatively titled Riptide, suggests that the problem may not be solvable by anyone. Produced by former Time Inc editor-in-chief John Huey and collaborators and scheduled for release in about a month, the thesis is Weymouth's conclusion writ large:
Not even the strongest swimmer can handle the worst riptide, and the creative destruction of legacy news economics may end up overwhelming the best effort to find an alternative.
My colleague Tom Rosenstiel points out that Riptide is a curious metaphor for forces that have been emerging in plain sight for 20 years now, but I am eager to see how Huey and company make the case, previewed in an article in Fortune
5. Speculation about how Bezos will run the Post is natural but mostly feckless. Okay, he is a fabulously successful digital entrepreneur. Amazon has a news and publishing presence with the Kindle, a recent success with advertising and a bricks-and-mortar dimension with its warehouses and distribution. Bezos manages for long-term growth not quick profit. He is relentlessly customer-centric and gets data-mining.. So...
That is a great skill set (and don't forget the deep pockets) to bring to the task at hand. But is building Amazon more or less the same as turning around the Post? That remains to be seen -- and a week is way too early (I am guessing for Bezos as well) to figure out which principles transfer.
I do trust that he and his team will turnaround the Post's improving, but notoriously balky digital interface. I would also guess that Marty Baron will remain editor but that Weymouth's role will be transitional.
6. Let's pause to admire masterful public relations in handling this stunning and potentially devastating news. They kept it secret. Bezos's brief memo (and Graham's as well) was concise and hit all the right notes as my colleagues Butch Ward and Jill Geisler wrote earlier this week.
Bezos gave a short interview to the Post and has declined all requests for further comment. Graham and Weymouth made sure to give the best stuff first to the Post (duh) including interviews on the just-launched PostTV video platform I wrote about two weeks ago.
Then Graham talked to important business publications and appeared to PBS's NewsHour, where Weymouth's predecessor, Bo Jones, is president. Wednesday evening he stopped. (I asked for an interview but did not make the cut).
So he was out there, not ducking, but not overextended either.
And some seconding votes for the move came from surrogates like like former editor Len Downie and Woodward and Bernstein as the inquiries poured in.
7. Whose coverage was best? Well, the deluge of ink, pixels and broadcast suggests traditional media is not as dead as some would have you believe. The usual suspects -- New York Timnes, USA Today, Wall Street Journal and the Post itself -- were all over the story quickly with multiple angles. New media chipped in, and a great many Post staffers, past and current, added thoughtful and often touching personal takes.
My own top prizes (let's call them the Ricky's) would go to Reuters in the business division with stories on how much Bezos overpaid, possible personal tax benefits to him and measured speculation on how he might run the company.
In a more general vein, I thought the New Yorker hit three home-runs in five at bats..
Editor David Remnick's first assessment, led with a wonderful A.J. Liebling quote comparing media ownership changes to the plot of Black Beauty -- some generous masters, as one presumes Bezos will be, others brutal (think Sam Zell).
John Cassidy made the case that Bezos may be looking for influence at a time when scrutiny of Amazon's business practices and lobbying positions has been building. I am dubious about that being the heart of the matter, but I guess I don't look for the Post to seize the momentum from the Morning Call of Allentown in exposes of working conditions at Amazon warehouses.
Finally Hendrick Hertzberg eloquently revisited the twice-told tale of of Graham's Harvard Crimson days, followed by his volunteering for ground duty in Vietnam, then serving a stint as a D.C. policeman, before working up the ladder at the paper, all in the service of preparing to succeed his mother. That's where I began 40-plus years of knowing Graham and watching his work with admiration. Privately he can be blunt -- but mostly, he is, as you have read elsewhere, friendly, considerate, encouraging and really smart.
And in the crucible of last week, he showed, to no one's surprise, extraordinary grace under pressure.