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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. Read more

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Following Washington Post sale, some wonder if New York Times will be sold next

The Washington Post | The Huffington Post | PBS NewsHour

“One was just sold to a baron of the Internet age,” Paul Farhi writes about The Washington Post’s parallels with The New York Times. “How long before the other one is?

Farhi reels out reasons the Sulzberger-Ochs family, which controls the Times, might want to sell. Times spokesperson Eileen Murphy “reiterated the company’s intent to remain independent,” he writes.

The Graham family’s decision to sell the Post “gives people inside the [Sulzberger] family who’ve wanted to sell ammunition,” news industry analyst Ken Doctor tells Michael Calderone and Eleazar David Melendez.

“I can tell you that a lot of rich people have plunked down huge amounts of money in front of the Sulzbergers and they’ve not bitten yet,” Sulzberger family biographer Alex S. Jones told them. “I think never is –- you know, you never say never. But I don’t think so now. I think they feel like they’ve got a future.” Read more

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Bezos has what The Washington Post needs: imagination and patience

The front page of today’s Washington Post print edition was dominated by coverage of the paper’s sale to Jeff Bezos. But a small story squeezed onto the bottom of the page, about the world’s first lab-grown hamburger, also gave some insight into what’s ahead for the legendary paper — and perhaps the rest of the news business.

The story recounted the taste test of the first lab-burger, which was described as “surprisingly crunchy.” The story noted who bankrolled the newfangled beef: Google’s Sergey Brin.

The Post — like the hamburger — will now be owned by a rich guy with a spirit of experimentation. Using just a tiny fraction of his tremendous wealth to buy the paper, Bezos made clear that he wants to tinker with the Post and explore the future of journalism.

“We will need to invent, which means we will need to experiment,” he wrote in a letter to Post employees. “Our touchstone will be readers, understanding what they care about — government local leaders, restaurant openings, scout troops, businesses, charities, governors, sports — and working backwards from there. I’m excited and optimistic about the opportunity for invention.”

It has been difficult for newspaper editors to do much inventing in the past few years because they have been too busy cutting. It’s hard to dream up new forms of journalism when you’re not sure you have enough reporters to cover the school board.

Just as Brin is paying to reimagine fast food (the beef-free beef burger holds lots of promise for the environment), Bezos has the resources to help reinvent the news business. He is well-suited for this because he isn’t a product of its ink-and-paper past.

The emergence of wealthy tinkerers such as Bezos is a promising trend because they can give the news business some stability and a fresh perspective. As the Post notes in its profile of Bezos, he has remarkable patience: He launched Amazon in 1994, but it didn’t turn a profit until 2001.

And Bezos has shown he has great imagination. His other investments include a company that will send people into space (the company, Blue Origin, says “accomplishing this mission will take time, and we’re working on it methodically”) and a clock that will tick for 10,000 years. Likewise, he’s grown Amazon into a behemoth by relentlessly trying new products and services.

After getting a foothold in books, clothing, e-books and many other consumer products, he’s venturing into groceries and even streaming video. (Last week, I caught up with the first episodes of “Under the Dome” by watching them on Amazon.)

We need more investors like Bezos. He’ll bring fresh thinking to a company that is still largely dependent on an ink-on-paper business model. (Even better: Maybe Brin will develop the same interest in papers that he has in beef! Consumers can read the news while they munch on their  lab-grown double cheeseburgers!)

Chris Taylor, a former writer for Time magazine who has covered Bezos, wrote in Mashable that he is “the best thing to happen to old-school journalism in a long time. He understands its values. He has no agenda, other than making sure customers are happy with the product. He is used to businesses that operate at razor-thin profit margins. He gets new media in a way the Grahams never could, and opens up new distribution channels they hadn’t even considered.”

A hallmark of our digital era has been the speed of progress. But Bezos has been a successful pioneer because he’s got imagination, deep pockets and is willing to give things a chance to grow.

Bill Adair is the Knight Professor for the Practice of Journalism and Public Policy at Duke University. He also serves an adjunct faculty member at Poynter and is a contributing editor for PolitiFact, which is run by the Poynter-owned Tampa Bay Times. Read more

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How Bezos, in his first memo to Washington Post staff, achieved believable optimism

Imagine this:

You’re a reporter at The Washington Post and you’ve just heard your company has been bought by, of all people, the guy who created Amazon.

Graham. Bradlee. Woodward. Bernstein.

Bezos?

Think you’re nervous?

Now imagine this:

You’re Jeff Bezos and you know that you’re about to own a building filled with thousands of employees as nervous as that reporter. And you also know that the first thing you say to them will be remembered as vividly as their first kiss, first car or, maybe, the first time they bought a CD on Amazon.

If you’re really good, you’ll say something that leaves them as optimistic about the future of their company as you are.

If you’re really good, you’ll say something they really believe.

Well, I don’t work for the Post, and so I won’t speak for the staff there. But I think the memo that Jeff Bezos released shortly after the purchase was announced is one fine piece of work.

It’s conversational. It acknowledges the tough realities of the news business. It points to the need for change.

And it makes promises. Bezos promises to honor the values of the Washington Post, to own up to mistakes, to “slow down” in order to get it right, to be courageous in the pursuit of truth.

He does not say everyone will keep their jobs. But then, no one has promised that at the Post for a long time. What Bezos demonstrates is that an empty promise of continued employment does not create optimism — but a genuine promise to commit to important journalism can.

Yes, this memo communicates optimism. In the face of tough realities, Bezos says to that building filled with apprehensive employees, we can “invent” what we want to be, and we can succeed.

I don’t know what lies in store for The Washington Post. Maybe one day journalists will be quoting this memo for stories about failed strategies. But for today, it stands as an example of what to say when you want a room filled with nervous employees to believe.

***

I was about halfway through this piece on Jeff Bezos’ memo when my colleague, Jill Geisler, rushed into my office and said she also was writing about how much she liked his message to Post employees. So as we have done a whole lot of times over the past decade, we teamed up. Here’s Jill’s take on why Bezos’ memo worked so well. She writes:

When I’m teaching about leadership and change, one of the key change “accelerators” I invoke is communication. It’s a skill that many managers — even those in media — take for granted. At a time when emotions and uncertainty are high, when people are learning new things and letting go of the old, when people on the outside are questioning and the people on the inside want to believe they know the right answers — they turn to their leaders.

Too often, they get management-speak that’s aimed at boardrooms, not boiler rooms, and certainly not to newsrooms filled with people who write for a living and know fluff when they read it.

That’s why I really liked the message Jeff Bezos sent to the staff of the Washington Post.  Here it is, with my comments:

To the employees of The Washington Post:

You’ll have heard the news, and many of you will greet it with a degree of apprehension. When a single family owns a company for many decades, and when that family acts for all those decades in good faith, in a principled manner, in good times and in rough times, as stewards of important values – when that family has done such a good job – it is only natural to worry about change.

Bezos starts by acknowledging their shock and fear. He invokes the best of the past and connects it to their worry about the future.

So, let me start with something critical. The values of The Post do not need changing. 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.

Values matter to journalists, so Bezos makes certain he is speaking their language. He uses language he’s no doubt heard his friend Don Graham use when talking about the role of journalism in a democracy.

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.

It’s now the third paragraph, and only now does he write about himself. He does so with humor and even here, he puts the focus back on the newsroom and its strengths.

There will of course be change at The Post over the coming years. That’s essential and would have happened with or without new ownership. The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs. There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment. Our touchstone will be readers, understanding what they care about – government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports – and working backwards from there. I’m excited and optimistic about the opportunity for invention.

This is the “let’s get real” part of the memo. He acknowledges challenges without flinching, then makes a call to action. It’s forthright and gutsy – and human. He lays out a plan in the simplest terms and invites people to sign on.

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. I would highlight two kinds of courage the Grahams have shown as owners that I hope to channel. The first is the courage to say wait, be sure, slow down, get another source. Real people and their reputations, livelihoods and families are at stake. The second is the courage to say follow the story, no matter the cost. While I hope no one ever threatens to put one of my body parts through a wringer, if they do, thanks to Mrs. Graham’s example, I’ll be ready.

This paragraph hits a home run. It’s got civics, history, values – and humor. It’s written like an insider in the building already.

I want to say one last thing that’s really not about the paper or this change in ownership. I have had the great pleasure of getting to know Don very well over the last ten plus years. I do not know a finer man.

Sincerely,

Jeff Bezos

And in the end, he pays tribute to a person whom he knows must be deeply, personally affected by this business move. After all, it’s not just business to Don Graham, any more than it is for the Post employees. Bezos is wise enough to know that in honoring Graham the leader, he also salutes his team.

  Read more

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Sheryl Gay Stolberg profiles Washington Post publisher Katharine Weymouth:

In the meantime, things have been looking up. In January, Ms. Weymouth replaced Mr. Brauchli with Martin Baron, a no-nonsense newsman from The Boston Globe (and, previously, The New York Times), who has won praise for sharpening coverage and boosting morale. Reporters at The Post who routinely question whether their publisher “gets what we do,” now wonder if maybe, just maybe, she has found her Ben Bradlee after all.

“She made a brilliant choice,” [Post columnist Sally] Quinn said, “and it’s working.”

Not everyone is so effusive. The Post recently began charging for online access, but the climate for newspapers in general, and The Post in particular, remains tough. Mr. Baron called Ms. Weymouth “a realist,” who “still wants us to do really great journalism,” albeit “within the reality of our economic circumstances.” But he could not rule out further cuts.

Sheryl Gay Stolberg, The New York Times

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Washington Post Co.’s newspaper division posts another loss, but online revenue is up

The Washington Post Company | The Washington Post

The Washington Post’s newspaper division posted an operating loss of $49.3 million in the first six months of 2013, the company says in its second-quarter earnings report. In the first six months of 2012, the newspaper division lost $33.2 million.

Those declines were fed by revenue declines but were “largely due to an accounting provision for pensions and early retirement expenses,” Steven Mufson writes. That provision also contributed to a $34.5 million operating loss the newspaper division reported in its first quarter results.

Print advertising revenue was down 4 percent over the second quarter of 2012, but revenue from online publishing was up 15 percent. Revenue from online display advertising was up 25 percent in the second quarter, 21 percent for the first six months of the year. Read more

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Washington Post Guild: ‘The Post would like to fire you’

The Washington-Baltimore Newspaper Guild says a Washington Post proposal for a new agreement with the union “would give managers the power to fire anyone for any reason” and also inserts a “poison pill that would make it even harder for the union to collect dues at the end of the next contract.”

Its proposal says management “reserves the right to terminate an employee for attendance and performance problems” without a written warning and a suspension as is currently required, “in appropriate cases.”

Another proposal, the bulletin says, would “eliminate important layoff provisions.” Read more

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Some Washington Post Co.-owned community papers will get paywalls, too

Southern Maryland Newspapers

The Washington Post Comapny’s Southern Maryland Newspapers — which include the Maryland Independent, The (St. Mary’s County) Enterprise and The Calvert Recorder — will launch a paywall June 17. An article published Friday tells current subscribers they’ll see no change other than a request they register on somdnews.com.

Others will be able to view three stories a month before hitting the gate. Breaking news will still be free, “in keeping with the responsibility we have to inform the communities we serve when something happens,” the article says, as will classified and legal ads.

A one-year subscription to the Independent or The Enterprise costs $44 (plus you get a $20 gas card); 12 months of the Recorder costs $29 (you get a $10 gas card). Post Co. spokesperson Rima Calderon says via email no other Post Co.-owned community papers are installing paywalls at this time, and that digital-only packages will be available. The Washington Post Co. shuttered two of its Maryland papers last month. Read more

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Washington Post Co. shuts 2 Maryland papers

Gazette.Net | The Frederick News-Post

The Washington Post Co. announced Wednesday it would stop publishing the Frederick County, Md., editions of its Gazette newspapers. Post-Newsweek Media CEO Karen Acton said the move “became necessary due to changes in the market conditions in Frederick,” a county about 40 miles northwest of Washington, D.C.

Wednesday’s editions of the Frederick papers were their last, and 18 full-time employees and 12 part-time employees lost their jobs, Post Co. spokesperson Rima Calderon told Cara R. Anthony of the Frederick News-Post. Post-Newsweek Media still prints Gazette papers in Montgomery and Prince George’s Counties in Maryland, as well as the weekly Fairfax County Times in Virginia and newspapers in Southern Maryland. Read more

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Online ad revenue up at The Washington Post, print ad revenue & circulation down

The Washington Post Co. | The Washington Post

The Washington Post’s website and Slate saw gains in revenue from display (16 percent) and classified advertising (8 percent) in the first quarter of 2013. The rises are a rare bright spot in the newspaper publishing section of the Washington Post Co.’s earnings report.

Print ad revenue was down 8 percent. Both daily and Sunday circulation were down, by 7.2 percent and 7.7 percent respectively. Overall the company’s newspaper division lost $34.5 million in the first quarter of 2013, compared with $20.6 million in the first quarter of 2012. The company chalks that decline up to an increase in early retirement and severance expenses. “[O]n a cash flow basis,” Steven Mufson writes, newspaper publishing “lost only $5.4 million.”

Revenue from the company’s cable-television division was up 5 percent. Television broadcasting revenue was up 5 percent.

The Post has said it will likely install a paywall this year. It plans to sell its downtown D.C. office building as well.

Other roundups of first quarter earnings reports: McClatchy reports 22,000 digital-only subscribers | New York Times company announces ‘new strategy for growth’ | Circulation revenue gains offset advertising losses at Gannett in first quarter Read more

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