Thursday, August 8, 2013

Amazon's Bezos Buys The Washington Post

A New Age For The Washington Post
(By David Von Drehle, Time Magazine, August 05, 2013)
The iconic paper's sale to Amazon CEO Jeff Bezos cements the end of our monopoly media era
 
It’s hard to startle the journalism business these days, given the scale and speed of disruption of the media industry. But the Graham family selling The Washington Post to Amazon CEO Jeff Bezos for $250 million is an exception. Few newspapers in the world are as closely identified with a single family.  The story of the Grahams and The Post used to be told in giant pictures on the wall of the newspaper lobby on L Street not far from the White House. One grainy photograph documented the day in 1933 when the brilliant financier Eugene Meyer bought the paper for a song at a bankruptcy sale on the courthouse steps. Another (a favorite of all of us who worked there) showed Meyer’s remarkable daughter, Katharine Graham, beaming as she left another D.C. courthouse in the company of her favorite editor, Benjamin C. Bradlee, after they prevailed over the government in the Pentagon Papers lawsuit.

But the most important photograph, according to Mrs. Graham’s son and successor Donald E. Graham, was the one that showed Meyer in the company of Philip L. Graham, the brilliant and tragic husband of Katharine and father of Don. They were smiling like a pair of Lotto winners, which they were. The year was 1954, and after years of effort and red ink, they had finally bought out their last remaining rival for dominance of the morning newspaper market in Washington. As other families would learn in other cities across the country- the Chandlers in Los Angeles, the Coxes in Atlanta, the Knights in Miami, and so on- dominance of the morning newspaper routes would become a decades-long license to print money.  Owning the morning meant that The Post would thrive as afternoon newspapers fell to the competition of television news. (The last afternoon paper in Washington, the excellent Washington Star, winked out in 1981.) It meant that advertisers hoping to reach a broad Washington audience had no choice but to pay The Post’s steadily increasing rates. That day in 1954 was the key to everything The Post later became, Don told me one day about ten years ago when we bumped into one another in the lobby. Watergate, all the Pulitzer Prizes, the foreign correspondents, the celebrity columnists—all of it was possible because the patriarch and his son-in-law managed to lock up the morning.

And now the family saga has come to an end precisely because the morning doesn’t mean money anymore. People get their news when they want it, and they have an astonishing selection of packages and purveyors. In a sense, the story of The Washington Post has come full circle, with Bezos in the role of Eugene Meyer. Like Meyer, the new buyer is fantastically wealthy from unrelated enterprises. Like Meyer, he is buying a publication hard-hit by a severe economic crash, one title among many in a ferociously competitive media marketplace. True, The Post is a vastly better newspaper today than it was 80 years ago, thanks to Meyer and his descendants. (His great-granddaughter Katharine Weymouth is the current publisher.) But the path to reliable earnings growth is at least as hazy for Bezos as it was for Meyer 80 years ago, and it stands to reason that Bezos, like Meyer, has reasons other than the bottom line to want to own an influential voice in the nation’s capital.  He becomes the most prominent in a growing line of back-to-the-future moguls, like George Hearst and Jock Whitney and Raoul Fleischmann of yore, who used money they made or inherited from non-media ventures to elbow their way into publishing. Over the weekend, billionaire investor John Henry won a competition to buy The Boston Globe from the New York Times Company for a fraction of what the Times paid for it. Last year, Facebook billionaire Chris Hughes bought the New Republic magazine, not long after the late stereo magnate Sidney Harman briefly took over Newsweek from, yes, The Washington Post company.  In retrospect, that sale probably was a harbinger.

The end of the Graham family stewardship of The Post doesn’t have to spell the end of the paper’s greatness. Arguably, private ownership by a mogul like Bezos offers a more promising future. He will be free to experiment and invest more boldly than a publicly traded corporate parent can do. Though hawk-eyed media critics will be reading every word of the paper for signs that coverage is being skewed in favor of other Bezos enterprises, the paper will no longer be under the soulless gaze of Wall Street analysts watching The Washington Post Company’s corporate stock.

And Bezos insists he will not meddle in The Post’s editorial workings for personal gain. “The values of The Post do not need changing,” he wrote in a letter to employees. “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.” He also said he would continue to live in “the other Washington,” where his “day job” will be running Amazon as an entirely separate company.  But this certainly writes the epilogue to the age of monopoly media. Great fortunes were made. Great journalism was produced (not enough, in retrospect, and there was plenty of dreck to go with it). But news was covered and stories were told in the generations before newspapers became cash cows, and the same will be true in the future. The fact that people who are able to buy anything still want to buy into journalism is all the proof you need.
 


 

The Post’s Incoming Owner, Known For Demanding Management Style At Amazon
(By Craig Timberg and Jia Lynn Yang, Washington Post, 07 August 2013)

In the relentlessly efficient world of Jeffrey P. Bezos, Amazon employees quickly learn when they have overtaxed the attention of their chief executive. He quietly pulls out his smartphone and starts replying to e-mails. In extreme cases, Bezos will walk out.  This demanding style is as much a signature of the Amazon.com founder as his famously long-term approach to developing new products or services, say people who have worked with the man who this week agreed to buy The Washington Post for $250 million. Bezos (pronounced “BAY-zohs”) has developed a precise and inventive approach to management that has powered Amazon to the top ranks of U.S. technology companies.  He favors a nimble, loosely organized company in which “two-pizza teams” execute important corporate tasks, because a work group requiring three pizzas over a lunch meeting is inherently too cumbersome. And he often requires employees pitching new ideas to write mock news releases for their product’s imagined launch, a way of focusing their minds on what will most excite customers.

Annual salaries at Amazon are modest by the standards of the technology industry, with compensation weighted toward lucrative stock benefits designed to instill a sense of ownership and long-term purpose among employees. The key is measurable performance. His management team produces what some have called ruthless annual evaluations; top performers get larger stock benefits while laggards sometimes face pointed suggestions that they find new jobs.  “One thing I learned is when you got a meeting with him, you’d better be ready,” said Nadia Shouraboura, who until recently worked on Amazon’s senior executive team reporting directly to Bezos. “He will figure out something you haven’t thought of. . . . If you haven’t thought through exactly how to delight our customer, that’s a bad thing.”

There is an outwardly genial side to Bezos, 49, a father of four who has an outsize laugh and appears to revel in the salesmanship of a product launch as he strides the stage in jeans and a dress shirt. But inside is a drive for perfection, manifested by an unwillingness to waste time or energy.  The recruiting motto: “Work hard, have fun, make history.” Or, as Bezos put it in his first letter to shareholders, in 1997, “It’s not easy to work here (when I interview people I tell them, ‘You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three’).”  Kal Raman, a former top Amazon executive who is now chief operating officer for Groupon, recalled the consuming sense of mission instilled by Bezos. “When you try to rewrite history, it doesn't come without blood, sweat, tears and sacrifice. He doesn’t hold you to any standard he doesn’t hold to himself.”

In describing Bezos, the most common comparison is to Apple co-founder Steve Jobs, who was single-minded in his devotion to every new product. But while Jobs, who died in 2011, is often described as a design visionary, capable of discerning what consumers one day will want, Bezos has focused on delivering whatever they currently desire — as quickly as possible. Delays are not accidents or misfortunes but “defects” to be eradicated, he has said.  The result is a company that has become among the world’s most powerful retailers, a leader in the burgeoning world of cloud computing systems and a player in a range of other businesses — book publishing, television production, electronics manufacturing.  Bezos, who founded Amazon in his Seattle area home in 1995, meanwhile has become one of the country’s wealthiest men, with an estimated $25 billion in assets and plaudits from Time, Harvard Business Review and legendary investor Warren Buffett, who has hailed Bezos as “the ablest CEO in America,” according to Washington Post Co. chief executive Donald E. Graham.

Bezos has no patience for bureaucracy, and employees are encouraged to put a stop to anything that smacks of jumping through hoops. A rule requiring that employees who brought their dogs to work sign in the animals disappeared soon after complaints.  Bezos also disdains the formality of job titles, encouraging employees to work outside the scope of their titles if it helps the company.  One of the most coveted honors at Amazon is the “Just Do It” award, given to an employee every couple of months who strays from his or her job title to do something that will help Amazon. Bezos helps choose the employee himself and then hands the award — an old Nike shoe — to the winner at a company-wide event.  Those who win the award proudly hang the shoes in their cubicles; in the online directory, a small icon is placed next to the names of those who win.  “It was not the title but rather who’s got the best idea,” said John Rossman, who worked at Amazon from 2002 to 2005 as an executive and is now managing director at Alvarez & Marsal, a consulting firm. “Who’s bringing the solution to the table? That’s what was most important.”

What is not clear, even to some of those who have worked for Bezos, is how his management style translates into running a newspaper amid a historic decline in readership and revenue that has afflicted the entire industry.  Bezos has said little about his plans for The Post since the sale was announced Monday, though in a letter to employees he made clear his desire to accelerate the pace of innovation at a company that for years has struggled amid the same digital transition that made online companies such as Amazon rich. The company, which will have no ownership stake in The Post, declined to comment for this story.  “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,” Bezos wrote. “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.”

Bezos encouraged a culture of experimentation at Amazon, where failure is accepted so long as it yields new lessons.  “Most things at Amazon are viewed as an experiment,” said Jason Crawford, who worked at Amazon as a development manager from 2004 to 2007. “And that means a few things: You don’t assume it’s going to work before you try it, but that’s also okay. The goal is try things. We’re going to measure them and find out if they work.”  Amazon was a pioneer of the now common practice at tech companies such as Facebook — testing different versions of the company’s Web site with different audiences to see what works, Crawford said. Half the users might see a new feature, while the others do not. Amazon employees would then measure the results to see if the features encouraged people to buy more or stay longer on the site.  Bezos has said that he intends to keep his focus on Amazon and keep his home in the Seattle area rather than becoming a fixture in Washington, as four generations of The Post’s outgoing owners, the Graham family, have been.

Bezos also has agreed to keep the newspaper’s top executives in place, though they may need to work without a popular corporate management tool: PowerPoint presentations.   Bezos all but banned such presentations at Amazon around the time Edward Tufte, a computer science professor at Yale, wrote an essay saying that their bullet points encouraged lazy thinking. Amazon employees are required to write papers, known as “narratives,” that are no longer than six pages.  The idea for Bezos, former employees say, is that the act of writing forces people to focus their thoughts and think them through. Bezos’s faith in the enduring power of words is evident in his own annual letters to shareholders. His letter in 1997 is regarded as something of a founding document for Amazon, highlighting his obsession over serving customers and developing plans that take years to bring to fruition.  That consistent long-term view- he often talks of seven-year cycles for executing business plans- is the counterpoint to his minute-by-minute quest to avoid wasting time.  “Jeff has always been very efficient,” said Jason Kilar, who worked at Amazon from 1997 to 2006, rising to the level of senior vice president. “There is one very important thing he knows is not in abundant supply on Earth, and that is minutes.”  But he added: “He has the patience to invest if he believes the strategy is the right one.”
 


 

Why The Washington Post Isn’t A Charity Case For Jeff Bezos

(By Lydia DePillis, Washington Post 05 August 5, 2013)s on a Kindle.

If Don Graham were not such a serious person, his announcement this afternoon that Jeff Bezos was purchasing his family’s company might have seemed like a joke. The Post seems so very old media for the phenomenally innovative tech entrepreneur. And it’s true, Jeff Bezos has a very whimsical attitude when it comes to his personal stable of acquisitions–maybe he just wanted a newspaper to even it out a bit.  But Alan Mutter, who knows the media business and the tech world better than most, thinks there are many ways in which buying a legacy newspaper makes all the sense in the world for the Seattle-based billionaire. Bezos hasn’t talked yet about his future plans for the company, but from what we know, it’s fair to speculate a bit.

First of all, don’t be deceived by the fact that Bezos is buying it himself, rather than Amazon–there’s little reason to believe this is a passion project. It just would’ve been tricky to make it a public takeover, because corporations don’t know how to value a newspaper’s future earnings. And besides, though the markets have been remarkably patient with Amazon’s continued losses, a money pit like the Post would’ve been harder to stomach.  “If Jeff Bezos had bought it with Amazon’s money, the shareholders would’ve killed him,” Mutter says. “But if he owns it, he can use all the tools that are available to Amazon. And if he does something with the Washington Post brand that advances the story for Kindle or Amazon Prime, they aren’t going to mind.”

Another clue: $250 million, though less than what a lot of other things cost, is a lot of money for a company with a lot of liabilities (the Boston Globe, which serves a similarly-sized region, sold for $70 million over the weekend).  “The Grahams are probably the last people in the world who’ll make money selling a newspaper,” Mutter says. “He overpaid. And why would he overpay? He sees the value in a brand that far surpasses what he’s looking at today.”  So how’s that going to happen? A few ideas.

1. The Post‘s website–which it’s fair to expect will be overhauled–could be a major new sales and advertising platform. “Newspaper publishing companies being agents of commerce is a major new opportunity in Bezos world,” Mutter says. “He invented e-commerce, you don’t think there’s going to be e-commerce on every page of The Washington Post?”

2. It’s good to know things about your customers. Especially your readers. Most media companies watch where their readers come from, but Amazon has taken audience tracking and predictive analytics to a whole different level in order to figure out what they might want to buy. Integrating a news service, just like a book discussion site, could provide even more data.

3. Content still matters, and so does reputation. Amazon’s biggest foray into content so far isn’t Business Insider. It’s Amazon Publishing, which has put out hundreds of books under several imprints. The problem is, it’s still hard to attract the best authors to an upstart internet banner, when they can still gain the imprimatur of a Farrar Straus & Giroux or a HarperCollins. “The early adopters of a straight-to-digital publishing model are not going to the first-rate producers.  Hillary Clinton is not going to publish her memoir with Amazon,” Mutter says. “There are all kinds of ways in which content will find its way to the digital marketplace, but it’s going to take a lot before the creme de la creme goes digital first. And frankly, that’s something that they have to work on.”

4. The future is video. Amazon Instant is a draw to the company’s Prime service, and The Washington Post could become a credible outlet for more original news content, which it’s already started producing.

5. Amazon owns the modern means of digital distribution. “He can just make The Washington Post the default app on every Kindle,” Mutter says. That would give the paper a visibility advantage few other news outlets can claim.

6. Amazon also owns the modern means of physical distribution. It’s tempting to think that because Bezos created an online juggernaut that has eviscerated legacy industries, he would quickly dispatch with the Post‘s print product. But Amazon is also probably the most efficient physical delivery system the world has seen, and print advertisements still generate a lot of the Post‘s revenue. He could put a print copy in every package, and have a circulation of millions.

For all these reasons, the Post doesn’t need to generate revenue like it’s supposed to have done for its whole life (and largely failed, propped up by a lucrative education business). Instead, it can complement and amplify other regions of Amazonia. “We’re in a post-profit era for newspapers,” Mutter says, noting the not-entirely-economic reasons behind recent rich guy purchases of the Globe and the San Diego Union-Tribune, not to mention the Koch brothers’ interest in the L.A. TimesWe still don’t know what the Post means for Bezos. But it could very well be one piece of a much larger profit puzzle.
 




Bezos Buys The Post
(By Joel Achenbach, Washington Post, 08 August 2013)
 
The news flattened me. I’m still not entirely vertical. We’re gonna need a bigger spatula. My friend Ruth Marcus said everything I want to say about this: There’s the rational reaction, and then there’s the emotional reaction, and they’re entirely different.  Rationally, yes, I understand, and support, and am prepared to applaud the decision by the Grahams to sell The Post. Going private has its rewards. Being owned by a billionaire who can afford to lose a little money may be preferable to remaining a piece of a publicly traded company that is answerable to shareholders.  Another rational thought, voiced by my friend Gene Weingarten: If Don Graham says this is the right thing to do, and Bezos will be a great owner, that’s good enough. Because I trust Don.

And there’s the rub. So many times in recent years, as the industry has contracted, and threatened to collapse entirely, I had my pole star. And he won’t be there anymore. This is why it’s so difficult emotionally.  When people have asked me about the troubled business model of metropolitan newspapers, I’ve always said I’ll be the last guy standing. But I never really believed that. I thought I’d be the second-to-last guy. Don would be the last.  It has been an honor to work at a place where the person at the top is a terrific journalist. I remember years ago – the ’90s – I suggested, in a moment of hubris, that we should get heavily in the business of publishing books. Don said something like this: “Let’s put out a great newspaper.” He’s read the paper every day, religiously, and sent those notes that Ruth talked about. I think it was David Von Drehle who once said that the Graham family’s continued willingness to support an array of foreign bureaus even as revenues plummeted was a supreme act of patriotism.

A newspaper is a special piece of a community. It’s a business, but it’s also a piece of the civic infrastructure. One of the salutary trends of recent years is the way the wall between the producers and consumers of news has been eroded. Every article, blog, video, etc.,  now has reader comments; in some cases the comments are more important and interesting than the professionally rendered product. When a newspaper is truly successful it is not merely something people use, but rather a part of their lives – a part of their day. We come into people’s homes. This is why we don’t use foul language, usually, and why we are careful what we say about the fat guy who comes down the chimney at Christmas. So what I’d say to my new friend Jeff is that prosperity in the future requires a cultivation of relationships – maintaining the relationships with longtime subscribers (in print or online) and developing new relationships with people around the country and the world.

There are aggregators everywhere, and a proliferation of sources of information, but I believe there is an added layer of credibility to something that runs under the Washington Post brand name. Part of this is that we don’t publish everything we hear. We filter, and our filter is finer than those of some of our rivals. If it’s in the Post, it is supposed to have a marginally higher likelihood of being true.  “The Washington Post” will be around for a long time in some fashion. Will that existence include a print edition? I hope so. Print has many virtues, including portability and a kind of tactile bandwidth, and it lends itself to graphic renderings of embedded journalistic judgment (consider, for example, how you can tell from looking at the front page of Tuesday’s Post how huge the news of the Post sale was, according to the assessment of the Post editors and layout folks).

There are, unfortunately, enormous costs associated with print journalism, starting with the newsprint itself, the ink, the cost of transport around the city – like Amazon, we deliver — and of course the salaries of reporters, editors, photographers, graphic artists, layout editors, advertising sales people, printers, press workers, drivers, and so on. One conceivable way this all plays out, over time, is that the print edition disappears. If that happens, that will be the decision by the customers, and although some of us will be weepy, that’ll be the voice of the market speaking. You can’t sell people something they don’t want.

But there are basic principles of journalism that transcend “platform.” Like, get it right. Be fair. Be thoughtful. Be courageous. And an underappreciated virtue of journalism is “be interesting.” I would add, at the risk of being pretentious: Make it beautiful. Dare to put literature in the newspaper. In the encomiums to the greatness of The Post over the decades we always cite Watergate and the Pentagon Papers, and overlook the countless times Henry Allen wrote something utterly brilliant in Style, or Phyllis Richman told the bitter truth about a new restaurant, or Tom Toles (and before him, Herblock) made us laugh about the latest political squabble, or Sally Jenkins aimed a verbal dart at a superstar athlete’s over-inflated ego.

A final thought: This transition is jolting, and hard for us, but it is incorrect and insensible to think that the newspaper business has ever been stable. Ask my friends who worked for years at The Washington Star (or The Miami News). The newspaper business is like life itself, in that you have to accept the simple truth that no one here gets out alive. At some point down the road there will probably not be a Washington Post as we’ve come to know it.  But if there’s an over-under bet, I’ll take the over on that. As soon as I scrape myself off the floor.
 


 

Bezos Buys Washington Post For $250 Million
(By William Launder, Christopher S. Stewart And Joann Lublin, Wall Street Journal, 05 August 2013)

Jeff Bezos, founder and CEO of Amazon.com, is buying the Washington Post and other newspapers for $250 million, sending Washington Post shares up more than 5 percent in after-hours trading.  The sale puts one of the most famous newspapers in the U.S.—the publication credited with breaking the Watergate scandal that led to President Nixon's resignation almost 40 years ago—in the hands of a Web businessman who rose to prominence only in the past 20 years.  It comes as many newspapers are struggling to survive. Print newspaper ad revenues fell 55% between 2007 and 2012, according to the Newspaper Association of America, as advertisers and readers have defected to the Web. Some newspapers have been forced to slash costs and in some cases file for bankruptcy. Just three days ago the New York Times Co. sold the Boston Globe for $70 million, having paid $1.1 billion for it in 1993.

The Internet is "transforming almost every element of the news business," Mr. Bezos said in a letter to Washington Post employees. "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," Mr. Bezos wrote.  He added that he won't be involved in the day-to-day management of the newspaper.  In an interview Monday, Washington Post Co. Chairman Don E. Graham praised Mr. Bezos's track record as a well-connected industry innovator with the patience to make difficult businesses profitable, but he acknowledged challenges.  "Jeff is a business person, not a magician. He is going to have to work as hard as everyone else to figure out the problem of news. But he brings a lot," Mr. Graham said.

Early this year, Mr. Graham brought in investment bank Allen & Co. to begin looking for someone to buy the Washington Post. The decision to sell had come after months of reflection among the company's board members, said one person familiar with the situation. Mr. Graham "couldn't see how to grow [the paper] and began to wonder if there was a better owner," the person said.  Mr. Graham spoke with many prospects directly, drawing on his extensive network in Silicon Valley. Mr. Graham, who has been an adviser to Facebook  chief Mark Zuckerberg, has spent years building relationships with technology titans, including Mr. Bezos, who had helped him make important hires such as Amazon veteran Vijay Ravindran, the head of WaPo Labs.

Several months ago, Mr. Graham's bankers reached out to Mr. Bezos, said a person with direct knowledge of the deal. Initially, Mr. Bezos held back, citing a lack of time to properly deal with a transaction. Then, in July, Mr. Bezos wrote an email to Mr. Graham saying, "If you're interested, I am," said another person familiar with the situation.  Mr. Bezos, who launched Amazon in 1995, is worth about $26 billion, courtesy of his stake in the e-commerce giant. As part of a planned stock sale, Mr. Bezos took in $185 million this month, representing less than 1% of his holdings. Forbes ranked him as the 19th most-wealthy man in the world, just ahead of Google Inc.'s Larry Page.  Mr. Bezos wasn't available for an interview.

In discussing a possible deal, Messrs. Graham and Bezos had two three-hour conversations in person in Sun Valley, Idaho, before Mr. Bezos sent a personal team to Washington, D.C. At the time, the company was talking to other suitors, a small collection of individuals, like Mr. Bezos, and strategic companies, said people familiar with the talks.  The company, which will keep its interests in education and television, will retain its real estate, and a few journalism properties, including the website Slate.com and Foreign Policy magazine. Recently, Post Co. has diversified with small acquisitions in health-care and furnace parts.  Over the past decade, the Post's daily newspaper circulation has shrunk to 472,000 in 2012 from 769,000 in 2002. In the company's newspapers division, revenue fell 31% to $582 million during the same period, according to regulatory filings. Meanwhile, operating income over the decade went from a profit of $109 million in 2002 to a loss of $53.7 million in 2012.

To combat the losses, the Post has gone through rounds of cost cuts. This year, it replaced Marcus Brauchli as editor of the paper with Martin Baron.  The Post has already sold Newsweek in 2010 after a sharp decline at the newsweekly. While the flagship newspaper was only a small part of the company—which also owns cable systems, TV stations and the Kaplan education business—a slump at Kaplan had added to financial stresses on the company.  Mr. Graham, whose grandfather Eugene Meyer acquired the paper in 1933, said in a letter to staff that "as the newspaper business continued to bring up questions to which we have no answers," he and Post publisher Katharine Weymouth, his niece, had begun "to ask ourselves if our small public company was still the best home for the newspaper."  The Post's revenue had "declined seven years in a row," he noted, adding that "our answer had to be cost cuts and we knew there was a limit to that."

Mr. Graham insisted that Mr. Bezos keep Ms. Weymouth on as CEO and publisher, as well as Stephen P. Hills, president and general manager.  In a separate letter, Ms. Weymouth described today as one "my family and I never expected to come."  Mr. Bezos had previously invested in the business news website Business Insider.  For Mr. Graham, Mr. Bezos was a strong candidate because of his apparent genuine interest in journalism, his strength in building technology products, and his willingness to pay an appropriate price for the paper, said a person familiar with the situation. Mr. Graham and the board also appreciated Mr. Bezos's past help in finding strong employees for the Washington Post, such as Mr. Ravindran, seeing it as a sign that he had a good understanding of the type of people the Post needed.

One media executive who knows Mr. Bezos said the Amazon chief likely sees the acquisition as an opportunity to further develop the Washington Post's digital strategy in a bid to show how old and new journalism can intersect.  "He still sees a role for journalism, and it's an extension of his interest in books and writers," said this person. "It also gives him a pulpit in Washington. He might see that as a plus, but it could also prove a minus based on the editorial positions the newspaper takes."  A large part of the negotiation for the sale happened in private conversations between Mr. Graham and Mr. Bezos. However, the Washington Post board also oversaw the price and structure of the deal, said people familiar with the situation.  Directors gave final approval to the sale during a conference call Monday morning.  Mr. Graham, for his part, will continue to invest in other companies, looking at "long-term focused companies with...strong management that we can keep," the person said.  In addition to the Post, Mr. Bezos will get ownership of the Express newspaper, the Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.

 
http://online.wsj.com/article/SB10001424127887324653004578650390383666794.html



Jeffrey Bezos Aims For A New ‘Golden Era’ At The Newspaper
(By Paul Farhi, Washington Post, September 3, 2013)

Jeffrey P. Bezos, the next owner of The Washington Post, says he doesn’t have all the answers for what’s ailing the newspaper industry or for the financially challenged news organization he is preparing to buy. But he says he’s eager to start asking questions and conducting experiments in the quest for a new “golden era” at The Post.  In his first interview since his $250 million purchase of The Post was announced in early August, Bezos said his basic approach to operating the business will be similar to the philosophy that has guided him in building Amazon.com from a start-up in 1995 to an Internet colossus with $61 billion in sales last year.  “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient,” he said. “If you replace ‘customer’ with ‘reader,’ that approach, that point of view, can be successful at The Post, too.”

Bezos, 49, spoke via phone from Seattle on Friday, four days before he was scheduled to visit The Post for the first time since the announcement of its purchase from The Washington Post Co. and the controlling Graham family. The sale, which shocked the news industry, is expected to close in October.  Bezos said his major contribution to the business will be in offering his “point of view” in discussions with the paper’s leadership about how the publication should evolve. He also said he provides “runway” — financial support over a lengthy period in which the management can experiment to find a profitable formula for delivering the news.  “If we figure out a new golden era at The Post . . . that will be due to the ingenuity and inventiveness and experimentation of the team at The Post,” he said. “I’ll be there with advice from a distance. If we solve that problem, I won’t deserve credit for it.”
During his visit Tuesday and Wednesday, Bezos plans to meet with Post publisher Katharine Weymouth and top managers of the paper’s business and editorial operations. He will tour the newsroom in downtown Washington and the production plant in suburban Springfield, Va.  Wednesday’s visit will be bracketed by meetings with Post journalists — first with about 20 reporters and editors in the morning and concluding with a town hall-style meeting with the entire newsroom in the afternoon. The last time Bezos encountered a roomful of the paper’s journalists was in 1999, when he was the guest of Katharine Graham, the company’s late chairman, during a luncheon interview with reporters and editors. 

Based on his comments in the interview Friday, Bezos appears unlikely to make any major decisions or pronouncements during his visit or propose any immediate changes. He said he is eager to meet with and listen to managers and learn about the news organization’s operations.  The Post is the first newspaper that Bezos has owned and will be operated as a stand-alone business, independent of Amazon. Bezos intends to keep his “day job” as chairman and chief executive of Amazon and will continue living in Seattle, where the company is based.  Bezos is one of the world’s richest men, with a net worth of around $24 billion, based on the current value of his Amazon stock holdings. His deep pockets, technological savvy and reputation as a long-term strategic thinker were among the attributes that Post Co. chief executive Donald E. Graham cited in selling him The Post after 80 years under the Graham family’s control. Graham said he saw no alternative to continued investment, which would be difficult for a publicly traded company.

Graham and Weymouth, his niece, quietly put the business up for sale earlier this year after concluding that The Post required an owner capable of making sustained investment in it.  Bezos agreed: “It’s important for The Post not just to survive, but to grow,” he said. “The product of The Post is still great. The piece that’s missing is that it’s a challenged business. No business can continue to shrink. That can only go on for so long before irrelevancy sets in.”  In the interview, Bezos stressed that he has no immediate fixes for newspapers in general or for The Post, which is beset by Web-based competition that has weakened its advertising base and steadily sapped its print readership.  “Don was helpful in interviews [following the purchase] when he said, ‘Mr. Bezos is a businessman, not a magician,’ ” Bezos said. “I thanked him for that afterwards. In my experience, the way invention, innovation and change happen is [through] team effort. There’s no lone genius who figures it all out and sends down the magic formula. You study, you debate, you brainstorm and the answers start to emerge. It takes time. Nothing happens quickly in this mode. You develop theories and hypotheses, but you don’t know if readers will respond. You do as many experiments as rapidly as possible. ‘Quickly’ in my mind would be years.”
But Bezos suggested that the current model for newspapers in the Internet era is deeply flawed: “The Post is famous for its investigative journalism,” he said. “It pours energy and investment and sweat and dollars into uncovering important stories. And then a bunch of Web sites summarize that [work] in about four minutes and readers can access that news for free. One question is, how do you make a living in that kind of environment? If you can’t, it’s difficult to put the right resources behind it. . . . Even behind a paywall [digital subscription], Web sites can summarize your work and make it available for free. From a reader point of view, the reader has to ask, ‘Why should I pay you for all that journalistic effort when I can get it for free’ from another site?”

Although he said he reads The Post, New York Times and Wall Street Journal regularly, Bezos didn’t grow up immersed in newspapers or dreaming of being involved with one. His “love affair,” he said, has always been with “the printed word in all its forms.” Amazon started as an online book retailer; it now publishes its own books. It has also moved into video production, competing with Netflix and others in streaming original programs. Bezos’s wife, MacKenzie, is a published novelist.  The Internet and Amazon’s launch of the Kindle e-reader convinced him that the printed word doesn’t have to be on paper. “The key thing about a book is that you lose yourself in the author’s world,” Bezos said. “Great writers create an alternative world. It doesn’t matter if you enter that world” via a digital or printed source.
After Graham broached the idea of Bezos buying the paper earlier this year, Bezos said he spent two months contemplating what he could bring to the business. He was convinced that The Post was “an important institution,” and he said he was optimistic about its future. But he needed time to think over a third issue.  “I had to convince myself that I could bring something to the table,” he said. “I discussed this at great length with Don. I thought I could, because I could offer runway and some skill in technology and the Internet and a point of view about long-term thinking, reader focus and the willingness to experiment.”  Added Bezos: “I’m a genetic optimist. I’ve been told, ‘Jeff, you’re fooling yourself; the problem is unsolvable.’ But I don’t think so. It just takes a lot of time, patience and experimentation.”  Asked how he saw The Post — as a local, national or international news organization — Bezos demurred. “That’s a question that needs to be answered in concert with the leadership team of The Post. Is it local? Or national? Is it something new?” Whatever the mission, he said, The Post will have “readers at its centerpiece. I’m skeptical of any mission that has advertisers at its centerpiece. Whatever the mission is, it has news at its heart.”





Jeffrey P. Bezos Visits The Post To Meet With Editors And Others
(By Craig Timberg and Paul Farhi, Washington Post, 03 September 2013)

The Jeffrey P. Bezos era at The Washington Post had its symbolic beginning at 4:30 p.m. Tuesday, when the high-tech magnate indulged in a decidedly low-tech ritual: striking a triangle to summon editors for their afternoon meeting.  The chimes, amplified electronically across The Post’s historic newsroom, is a decades-old tradition. Bezos’s gesture prompted a ripple of applause as he smiled for a photographer before walking into the news meeting, part of a two-day tour of the news organization he agreed to buy for $250 million last month.  Bezos, the founder and chief executive of Amazon, has vowed to protect the paper’s journalistic independence while investing time and resources to create a new “golden era” for The Post. The Graham family, which has owned the paper for 80 years, decided to sell amid flagging revenue and circulation.

Dressed in tan pants and a white shirt open at the collar, Bezos offered few clues about his plans for The Post as he met with editors and company executives, they said. Bezos, who is expected to close the deal for The Post in about a month, maintained a genial, inquisitive manner punctuated by occasional outbursts of laughter.  Among others, Bezos met with members of The Post’s editorial board on Tuesday, including Fred Hiatt, the editorial page editor. Hiatt said it is too early to know how active Bezos will be in shaping the newspaper’s editorial policies. But Hiatt observed, “It’s entirely legitimate for an owner to have an editorial page that reflects his world view. Some owners don’t want to get involved, some work through the publisher, and some are very [directly] involved. I got the sense that he’s still in exploring mode.”

On Wednesday, Bezos plans to have breakfast with investigative journalist Bob Woodward, lunch with senior editors and a meeting with about 20 other Post journalists. After a tour of the newspaper’s production plant in Springfield, he will hold a town hall meeting with the entire newsroom.  During Tuesday’s visit, Bezos attended the 4:30 meeting as more of an observer than a participant, as is common with visitors to the newsroom. Bezos sat to the left of Executive Editor Martin Baron, near the head of the large table around which editors gather each day to discuss upcoming stories.  He listened attentively as editors discussed the stories slated for Wednesday’s front page and on the front pages of other sections.

Anne Kornblut, deputy national editor, noted that two stories on Syria weren’t as conflicting as they might initially appear — even though one argued that members of Congress support military strikes while the other said many are opposed. With both stories in the paper, Bezos quipped, “You know you can’t be wrong!” to laughter around the room.  After editors offered their views on upcoming stories, he was offered a chance to voice his opinion.  “Do you want to weigh in, Jeff?” asked Managing Editor Kevin Merida.  Bezos replied, “No, I don’t, except that I’m impressed with the process.”
 


 
 

Jeff Bezos To His Future Washington Post Journalists: Put The Readers First
(By Paul Farhi and Craig Timberg, Washington Post, 04 September 2013)

Jeffrey P. Bezos had a simple bit of advice for the staff of the newspaper he’ll soon own: Put readers, not advertisers, first. Don’t write to impress each other. And above all, “Don’t be boring.”  In a whirlwind series of meetings over two days, the Amazon.com billionaire charmed and disarmed rooms full of skeptical journalists with a relentlessly upbeat vision that evoked The Washington Post’s best traditions while promising to update them for a technologically advanced new era.  The Bezos plan for the news organization he has agreed to buy for $250 million centers on recreating the “daily ritual” of reading The Post as a bundle, not merely a series of individual stories. He was bullish about creating that experience on tablet computers, lukewarm about the prospects of doing so on the Web, and reassuring about the future of the old-fashioned newspaper itself — at least for the foreseeable future.  “People will buy a package,” Bezos said at one meeting of reporters and editors. “They will not pay for a story.”

Bezos seemed relaxed throughout two days of meetings, including a town-hall-style session in The Post’s community room before hundreds of journalists. He spoke without notes and joked often, punctuating some of his witticisms and self-deprecating comments with explosive laughter. He remained poised and good-humored from his perch on stage at the town-hall meeting despite fighting a balky sound system.  Bezos also repeatedly emphasized the importance of investigative journalism and said he was prepared to stand up to pressure in reporting stories that government officials might seek to suppress. He also said his political views were already in line with those of The Post’s editorial page and would defer to its editor, Fred Hiatt, on many matters.  “I don’t feel the need to have an opinion on every issue,” Bezos said. “I’m sure I don’t know much about things like Syria and foreign entanglements. I’m happy to let the experts opine on that.”

Among those in attendance at the newsroom-wide meeting were former executive editors Ben Bradlee and Leonard Downie Jr., former managing editor Robert Kaiser and star investigative reporter Bob Woodward, lending the event an intergenerational bridge to the newspaper’s storied past. (Donald E. Graham, whose family controlled the newspaper for 80 years, was not there, but his niece, Post publisher Katharine Weymouth, was in attendance).  After 90 minutes of hearing Bezos lay out his thoughts, Bradlee, 92, counted himself among those who came away with a positive first impression. “I thought he was original,” he said. “That’s what impressed me the most.”

Throughout the day, Bezos returned to his idea of using tablets as a key vehicle for reaching a new generation of readers. While saying The Post’s print editions will remain for many years, he said tablet computers could offer readers a look and feel similar to a traditional printed paper.  “You have to figure out: How can we make the new thing? Because you have to acknowledge that the physical print business is in structural decline,” he said. “You can’t pretend that that’s not the case. You have to accept it and move forward. . . . The death knell for any enterprise is to glorify the past, no matter how good it was, especially for an institution like The Washington Post, which has such a hallowed past.”

In comments that cheered the newsroom, Bezos said The Post needed to grow in both revenue and readers, though he declined to say whether The Post newsroom would grow. “What has been happening over the last several years can’t continue to happen,” he said. “If every year we cut the newsroom a little more and a little more and a little more, we know where that ends.”  Or as he put it repeatedly in meetings: “All businesses need to be forever young. . . . If your customer base ages with you as a company, you’re Woolworth’s.”  Asked about the irony of his interest in buying a newspaper and Amazon’s practice of not commenting for many news stories, Bezos laughed and responded, “The most powerful minds can hold powerful inconsistencies.” He said one reason he often declines to comment is because he does not want his competition to know about his plans. “We’re not as silent or secretive as we’re sometimes portrayed,” he said of Amazon, conceding that “we are on the quiet side.”

Bezos, who will remain in Seattle after his purchase of The Post closes in October, sidestepped a question about his future involvement in the Washington area. “I would never out-Don Don. Impossible,” he said, referring to Graham. “I will have to do this as Jeff. And it’s going to be different for so many reasons, and one of them is that I’m going to be in Seattle.”  When asked to discuss Amazon’s motives in cutting off Web services for WikiLeaks in 2010, a time of intense government scrutiny of the anti-secrecy site’s disclosure of confidential military and diplomatic documents, Bezos said that the decision was made by unit managers and was not the result of government pressure. The company has previously said that WikiLeaks violated Amazon’s terms of service.

Yet Bezos made clear that though he believes in “American exceptionalism,” he sees The Post’s traditional watchdog roles as essential.  “We’re not perfect and our elected officials are not perfect and our regulators are not perfect,” he said in the newsroom question-and-answer session. “The credibility that an organization like The Washington Post brings is incredibly important.”  The reaction to the new boss from around The Post’s newsroom was widely favorable.  “What was most impressive was the combination of humility — that he doesn’t have all the answers yet — and the confidence that he will somehow figure it out,” said Marc Fisher, a veteran reporter and former Metro columnist.  Added Valerie Strauss, another Post veteran, who writes an education blog: “There was a lot he didn’t say, but what he did was well received. It’s going to be a very different place.”  Post reporters have already begun to refer to Bezos as “El Jeffe,” a play on the Spanish word for “chief” or “boss.”  He ended what amounted to a two-day charm offensive by recalling for the newsroom his own encounter, as a young boy in the 1970s, with the impact of Post journalism.  After apologizing for potentially embarrassing Woodward, Bezos said: “I watched the Watergate hearings on my elbow on the living-room floor next to my grandfather, who didn’t turn them off. And so these things make an impression.”




The Future Of The Washington Post Co. Without Its Flagship Newspaper
(By Jia Lynn Yang, Washington Post, 01 October 2013)
 
The sale of the Washington Post newspaper Tuesday marked an emotional milestone for its former parent company, but the firm’s future long ago stopped revolving around its flagship publication.  What comes next is as much a mystery as the company’s new name, which has yet to be unveiled. Chief executive and chairman Donald E. Graham is 68, with no obvious successor. And Kaplan, the education business that could constitute about two-thirds of the company’s revenue, is in the middle of a massive turnaround.  Without the newspaper, the firm’s focus on Kaplan will be starker than ever, even as it maintains an odd assortment of other subsidiaries — including a Phoenix-based cable business and a recently acquired supplier to boiler manufacturers — and hunts for ways to redeploy a small mountain of cash from the $250 million sale of the newspaper division to billionaire Jeffrey P. Bezos.

A few surprising acquisitions this year have led to speculation that Graham will turn his company into a mini-Berkshire Hathaway, the legendary holding company run by longtime Graham family adviser and former company board member Warren Buffett. As of June 30, before the sale to Bezos, the company was sitting on nearly $387 million in cash.  Graham bats down the idea of replicating Buffett’s success. “No other company can be compared to Berkshire. There’s nothing comparable and never will be,” he said in an e-mail. “We’ll do acquisitions in different business lines, but not in the expectation we can do anything remotely like Berkshire.”  The Post Co. has long had a history of making modest investments in seemingly random industries, building those businesses patiently over time. While some have gone sour, others have become major parts of the company. Executives and longtime shareholders say that approach is unlikely to change.  “I don’t think there’s necessarily a playbook,” said Mark Hughes, director of research at Lafayette Investments in Ashton, which owns Post Co. shares. “I don’t think they wake up in the morning and say, ‘We want to get into health care.’ I think they’ll look at everything coming down the road, and if it makes sense they’ll make sensible offers.”
The Post Co. branched into education, cable and television stations through these kinds of deals, allowing it to diversify far beyond newspapers and become a $4 billion company of many different units, each run very independently.  Kaplan’s higher-education business was turbocharged by a $165 million acquisition in 2000, when The Post Co. acquired Quest Education, an Atlanta-based chain of vocational schools.  This year, the company bought a majority stake of Celtic Healthcare, a small hospice company, and purchased Forney, a global supplier of products for power and industrial boilers.  Beyond Kaplan, which is based in New York, 20 percent of the company’s revenue last year came from Phoenix-based Cable One, which provides cable services largely in the country’s Western region. Ten percent was from Post-Newsweek Stations, which owns six television stations in Texas, Florida and Michigan. That means that without the newspaper, none of the company’s major divisions will be based in the Washington region.

The company is also putting up for sale its long-held downtown Washington headquarters, which is assessed by the D.C. government at nearly $80 million.  Even without further acquisitions, there are plenty of other areas for the company to tinker with in its existing business: publications such as Slate, The Root and Foreign Policy; the WaPo Labs team, which is working on technology that curates news for readers; and the social-media marketing firm SocialCode.  The company also retains its 16.5 percent share of Classified Ventures, which runs Cars.com and Apartments.com. The Post Co.’s share is worth about $300 million before taxes, according to Craig Huber, an independent media analyst.
The company’s stock has been on a tear all year, rising nearly 70 percent in 2013. The day the sale of the newspaper was announced in August, the company’s stock rose to a five-year high — an indication of how big a drag the newspaper had become to the company in the eyes of Wall Street. Another contributing factor to the stock’s rise: The company’s TV stations have become more highly valued as the sector profits from fees charged to cable and satellite operators for the right to air local TV signals.  It is not clear what the new company will be named. Graham has even asked one of his daughters, an opera singer, to help him come up with ideas, people familiar with the matter said, speaking on the condition of anonymity to talk openly about internal discussions.

But there is an even bigger question looming than the name, and that’s who will succeed Graham. In five years, he will be the age of his mother, Katharine Graham, when she stepped down from the chief executive post in 1991 and handed the reins to her son.  There are no obvious choices to outside observers. Katharine Weymouth — The Post’s publisher and Graham’s niece — is leaving the company to continue running the paper for Bezos, though she remains a member of the board. Graham’s daughter Laura Graham O’Shaughnessy runs SocialCode, which nearly doubled its revenue last year but remains a small part of the company. Then there is Andy Rosen, who has run Kaplan since 2008. He is not a member of the family but is deeply respected by Graham.

In the meantime, executives are hoping the sale of the newspaper, however painful, means that the company’s top management will have more time to attend to the less visible businesses.  “Without Newsweek and The Post to distract them, they’ll have a little more time to perhaps give us a little more attention,” said Tom Might, head of Cable One. “We get such little attention. A little more would probably be good.”  But the majority of Graham’s attention may well be focused on Kaplan, which says it is trying to differentiate itself from competitors by emphasizing quality and offering refunds to students who do not like what they see.  “Most value investors who own [Washington Post Co. stock], we don’t invest for WaPo Labs,” said James Pan, a shareholder since 2005. “We just hope that frankly . . . Kaplan gets back to something resembling normal.”
As Graham wrote in his annual letter to shareholders in February, “the future of The Washington Post Company is the future of Kaplan.” He added that even if Kaplan saw modest improvement in 2013, “we have a long way to go.”  Since its acquisition, no single division has ever accounted for a bigger share of the company’s revenue than Kaplan. But after years of being the company’s cash cow, the education division’s profits have been clobbered by tougher government regulations and scandals over predatory marketing techniques that damaged the reputation of for-profit schools.  Kaplan lost more than $105 million in operating income last year, compared with a profit of $206 million in 2008. The most recent quarters have shown some improvement. Operating income in the second quarter was $23.7 million, compared with $3.7 million a year before.

There is also more competition from nonprofit and state schools, which are increasingly offering online courses, an area where Kaplan has been active for more than a decade.  “We see the increasing acceptance of online instruction as good for us, as we have superior expertise in this arena,” Melissa Mack, Kaplan’s spokeswoman, said in an e-mail.  Kaplan University also has offered a trial period to students, one of several ways it is trying to rehabilitate its image.  Graham says demand will remain high for the education Kaplan offers.  “People around the world will be hungry for a quality education (of many types) for a long, long time to come,” Graham said in his e-mail. “Kaplan can help serve those students.”  Kaplan’s test prep business lost money last year, as it has for a while now, though its numbers are improving. And the company’s international business — now more than twice the size of the test prep division— is growing in places such as Singapore.  “There’s still no resurgence, but at least it’s starting to show signs of a bottom the last four quarters,” said Huber, the media analyst.  “I think the world of Don Graham as a manager,” said Hughes, of Lafayette Investments. “They’re playing a tough hand there, between the difficulties with the newspaper and Kaplan.”
 


 

As Bezos Prepares To Take Over, A Look At Forces That Shaped The Post Sale
(By Steven Mufson, Washington Post, 27 September 2013)
 
On April 4, Donald E. Graham sat for a videotaped interview about how the Internet and digital technology had hammered and transformed the news business. Cradling a coffee cup emblazoned with the word “Washington,” Graham sat next to his desk, with three Herblock cartoons on the wall behind him and a photo of a young Warren Buffett on the table next to him.  Graham gave a classic performance, telling stories of bygone times in his disarming aw-shucks manner, dispensing compliments to colleagues and rivals while mixing in his sober, analytical view about the reporting-intensive newspaper business — and his failure to come up with a way to sustain it.  “One of the questions that faces places like the [New York] Times and The Post is: Is there any kind of a plus to a news organization in having really high-quality reporting and editing?” he said at one point. “I’m pretty sure the answer to that is yes, but we have not figured it out.”  He added, “If somebody said to me there’s a way out for newspapers, but you’re going to have to lose $100 million a year to get there four to five years from now, I would sign up for it in a minute.”

But no one said that to him and unbeknownst to the three veteran journalists interviewing him that day for Riptide, a journalism history project at Harvard University’s Shorenstein center, Graham was trying to figure his own way out — of the daily newspaper business. Quietly, he was shopping around for a buyer, one without a political agenda but also one with a sense of stewardship about the paper — and pockets deep enough to buy the franchise and cover losses if necessary.   Amazon founder and chief executive Jeffrey P. Bezos ultimately agreed to buy the paper himself for $250 million, also acquiring El Tiempo, Express, the local Gazettes, and Robinson Terminal, including Robinson’s 23 acres of undeveloped land in Charles County, Md.

He wasn’t the only billionaire wooed, however, and that hadn’t been the only price discussed. Among others, Graham and the advisory firm of Allen & Co. also approached Robert Allbritton, owner of Politico and whose family once owned the Washington Star; Michael R. Bloomberg, who some people believed would want a daily print outlet in addition to his economic-driven subscriber news and data service; David Rubenstein, co-founder of the Carlyle Group and a major Washington philanthropist; and Eric Schmidt, who was chief executive of Google for 10 years.  The asking price in other negotiations reached $600 million, according to people familiar with the talks; for one prospective buyer, the price was significantly higher, according to a person whose advice was solicited by that person.  How Graham, who declined to be interviewed for this piece, arrived at this point is both a financial and personal story. For more than 20 years, there has been a growing sense of alarm among The Post’s business executives about trends in the industry that could destroy the franchise. Along the way, hard decisions have been made, some underappreciated or forgotten, some of them recent and raw.
Through much of the turmoil the paper continued to undertake noteworthy journalism and dramatically increase its online audience, but inside the company, there have been long-standing questions: Who is the target audience — and is it local or national? Or both? Should The Post have cultivated more of a national identity online? Should the paper have started Politico in-house? Should it have asked online readers to pay earlier? Should it have devoted more effort to becoming a technology as well as media company? And how big a newsroom does The Post need?  But few people have any confidence that different choices would have led to a different outcome. “I think it was inevitable,” Jack Shafer, the media critic for Reuters, said of the financial crisis at big-city dailies, noting the big write-off Rupert Murdoch’s News Corp. declared not long after buying the Wall Street Journal publisher Dow Jones and Co. and that the New York Times’s stock lost three-quarters of its value over the past decade. “They all did different things, and they’re all in the same boat today. I don’t think Don or anyone else should beat themselves up. Show me the paper that got it right.”

Now Bezos inherits not only the storied journalistic legacy of the paper, but the strategic questions that go to the heart of the business and the paper’s identity and its future. How can you take over a still formidable newsroom and make money? Bezos’s combination of technology and marketing savvy could help find the answer, and he has said he is “optimistic about its future.” His decision to invest in the paper has other publications suddenly paying close attention.   Before the sale was announced, few people thought that Graham, whose entire life was entwined with the newspaper, could bring himself to sell it.  “This was something no one thought Don could ever contemplate,” his niece Katharine Weymouth, publisher of The Post, said in an interview. She said selling it was one of three scenarios she described to Graham over a meal late last year at the Bombay Club on Connecticut Avenue, but one she deemed “unthinkable.” Afterward, they went for a walk and talked it over on a bench near the White House.  “He asked whether I was recommending that we sell The Post,” she said. “I said, ‘Not recommending; I don’t want to do it. But maybe there is somebody out there who could invest more than we can . . . and shepherd The Post to a new generation.’ ”
A couple of months later, Graham called former Post president and venture capital executive Alan G. Spoon, who is still a trusted adviser. “Are you sitting down?” Graham said, before telling him he was thinking the unthinkable.  “Up until the day it was announced, I had not thought that the Graham family would ever unload The Post,” said veteran newspaper industry analyst John Morton, “though I have come to sympathize about why it’s better for the newspaper that they did.”

A life in newspapers
The paper was Donald Graham’s destiny. When his grandfather Eugene Meyer bought a competing paper and merged it with The Post, he told a friend that “the real significance of this event is that it makes the paper safe for Donnie.” Graham was then 8 years old.  He had an aptitude for it as well. He worked on the high school paper at St. Albans. At Harvard, he sailed into the top job at the student daily, the Harvard Crimson. After stints in Vietnam and on the D.C. police force, he joined the reporting staff at The Post, became sports editor, and worked his way up so that when he became publisher in 1979 people felt he had earned the job, not just inherited it.  His arrival at the paper coincided with the newspaper’s fat years, with large and growing profits and a large and growing newsroom.  But in recent years, the financial pillars of the newspaper industry have crumbled. Major newspapers, including The Post, have lost lucrative classified advertising to Craigslist and other Web sites. Print advertising has fallen at alarming rates, a slide accelerated by the economic crisis; many local retailers have also given way to national chains. Even online advertising has been crimped because of massive competition and programmatic buying that automatically sends ads to leverage unfilled Web inventory, which Web sites make available at cheap rates.

Print circulation, too, has tumbled across the industry. At The Post, average weekday circulation in the first half of this year hit 447,000, down 7 percent from the same period the year before and far below the 1993 peak of 832,332. Newspaper industry revenue slid from a record $49.4 billion in 2005 to $22.3 billion at end of last year, and the pattern at The Post was the same. More problems are looming: Weymouth said one danger is that some of the coupons now in print editions could migrate to mobile devices.  Many Post executives and advisers have become pessimistic. Spoon compared the business outlook to looking down a staircase at a landing and trying to decide what condition the paper should be in to arrive there in good shape. But what if the staircase is a spiral one without any landing?
For more than a decade, the paper has been trimming the newsroom while scrambling to establish a stronghold on the Web that could lead to a more stable future. Graham has said recently that he no longer knows how to make a quality newspaper viable nor does he have the stomach for cutting the staff further. He said it was time for someone else with new skills – and more money than could be spent by what Graham called “our small public company. Last year, Graham gave no sign of thinking that way. In July 2012 when Reuters columnist Shafer gave Graham advance word about a piece proposing the sale of the paper to Bloomberg, Graham wrote back and said: “Thank you. I will ignore your advice as usual.”

Less than a year later, his view changed. “Our revenues had declined seven years in a row,” Graham told the staff when he announced the Bezos acquisition. “We had innovated and, to my critical eye, our innovations had been quite successful in audience and in quality, but they hadn’t made up for the revenue decline. Our answer had to be cost cuts, and we knew there was a limit to that.”  Bezos could resemble Graham’s grandfather, who made a fortune in finance, bought The Post at a bankruptcy auction and sustained losses for 21 years while building the paper’s reputation and readership.  “I think it was wrenching” for the Graham family to sell, Weymouth said. “But everyone wanted to do what was best for The Post ultimately. It’s not about what’s best for the Grahams.”
Although the sale of the newspaper might be in the best interest of its journalism, it was, in fact, also in the best interest of the family fortune and shareholders. Current trends were eroding the value of The Post franchise. It was only in 2010 that The Post had sold Newsweek to 91-year-old audio equipment pioneer Sidney Harman for $1 — and later the publication folded. No one at the company wanted to repeat that.  “This also had major ramifications for preserving the wealth of the Graham family in addition to other shareholders,” said Morton, the newspaper analyst.  There is a personal dimension as well. Graham has had differences over style and strategy with his niece, who was groomed to take over the paper and will remain publisher. Unlike Graham, she declined an offer from then-executive editor Leonard Downie Jr. to work as a suburban reporter. Instead, over 17 years, she rose through the ranks of the general counsel’s office and advertising department before becoming publisher. And unlike Graham, she took charge of the paper in 2008 just as the bottom fell out of the industry and the entire economy.

Some critics have faulted Graham for not casting a wider net to find leadership to manage the crisis.  “Where I do fault the family is, at this pivotal time for the business, the industry, for our democracy . . . they went and got another member of the family,” said Alan Mutter, a veteran media executive and author of the blog Reflections of a Newsosaur. “I don’t disrespect Katharine, but is it possible that of all the people in newspapers or digital media that she was the one?”  “There’s a lot to be proud of,” Weymouth said. “Do I wish we had been more successful? Sure.”  Graham, who votes 86.6 percent of the controlling A-class shares through his own stock and that in family trusts he oversees, has a strong sense of family and an aversion to conflict and publicity. He does not criticize Weymouth. He has said she needed to make her own choices, even mistakes, without second-guessing from him. Moreover, Weymouth, daughter of Graham’s sister, Lally, had been a favorite of his mother, Katharine Graham.
One key deliberation was the imposition of fees for frequent online readers, a step taken earlier by the Wall Street Journal, the New York Times and the Financial Times. As others adopted such fees, The Post was criticized as being late.  People who have spoken to Graham and Weymouth privately say he remains skeptical about the benefits of the model, fearing that the income from digital subscriptions won’t be enough to make up for a loss in advertising if online readership falls precipitously. Weymouth and her top business executive, Stephen P. Hills, pushed for it for some time, arguing that it could generate a new, stable revenue and slow the ebb of print subscribers to the otherwise free online version of the paper. Graham was incensed when word of the plan was leaked to the Wall Street Journal in early December 2012. At that point, a news release had already been drafted; it was shelved for weeks until Graham gave final approval.  “It should be a plus for The Post if we execute it right,” Graham said later, in the April interview. “Steve Hills and Katharine Weymouth have really thought this through. . . . They’re doing it in a way that’s well suited to us. It will be successful, but I don’t think it will be a huge difference maker.”

Graham, unlike Weymouth, is absorbed by the technology-oriented work of the company’s WaPo Labs unit, which is run by a former Amazon executive Vijay Ravindran and is not being sold to Bezos. The unit is developing digital technologies that might “enhance and support” the newspaper division, luring more readers and ad dollars. Roughly 25 million people on Facebook downloaded its Social Reader, but use of the service dwindled as fast as it had caught on.  Graham also was unhappy about the open friction between Weymouth and former executive editor Marcus W. Brauchli, though he welcomed the eventual appointment of Martin Baron to the job.
Graham, by comparison, is nothing if not discreet. He even kept his efforts to sell the paper a secret from his sister Lally Weymouth, a longtime Newsweek and Washington Post contributor, until shortly before the deal was announced. His sister was very upset, acquaintances say, but her work will continue to appear in Slate and The Post’s Outlook section, though the paper will no longer pay her $300,000 salary.  Above all, however, the decision to sell The Post wasn’t just a matter of family relations, but rather the final step in a financial decline whose roots date back more than 20 years, according to interviews with current and former Post business and editorial executives, executives at other companies who have discussed strategy with Graham, and outside analysts.

Asked when he first became alarmed about the viability of the newspaper, Hills says: 1992. That’s when the realization set in “that big circulation declines were likely coming, regardless of what we did,” he says.  “Before there was an Internet, before there was an AOL, the circulation of newspapers was going down,” Graham said in the April interview, which was part of the “Riptide” project carried out by former Time Inc. editor in chief John Huey, New York Times veteran Martin Nisenhotlz, and Paul Sagan, a former new media director at Time Inc. and former CEO and now executive vice chairman of Akamai Technologies, which provides technology advice to businesses. Graham’s interview and others are posted on the Web site.
In 1992, Robert G. Kaiser, then managing editor, attended conferences in Silicon Valley and Japan about the future of digital media. It was before the explosion of the Web or laptops, and on the flight home, Kaiser wrote — longhand — a memo to Graham and other top executives.  “The world is changing with amazing speed, and we need to pay close attention to what is happening. . . . No one in our business has yet launched a really impressive or successful electronic product, but someone surely will,” Kaiser wrote. “The Post ought to be in the forefront of this — not for the adventure, but for important defensive purposes. We’ll only defeat electronic competitors by playing their game better than they can play it. And we can.”

The Post did try to act on some of Kaiser’s insights. Among other technology ventures, the paper drew up prototypes and in 1993 even launched an online product, Digital Ink, which charged for access on a proprietary AT&T platform and had about 30,000 subscribers. By late 1995 as the potential for the Web became apparent and readers turned to faster, easier-to-use Web browsers, Graham and Spoon changed gears and turned to an ad-supported Web model. As Spoon put it later, The Post was “winning the county track meet, but the Olympics lay ahead.”  Spoon, a lawyer who did his undergraduate work at the Massachusetts Institute of Technology, was anxious to keep The Post ahead. “As AOL was coming on, I’d go to the movies, there was ‘Sleepless in Seattle.’ There was the e-mail going back and forth. Everybody’s laughing. And I’m suffering,” he said in a March interview for the Riptide project.  In an interview for this article, Spoon said: “The Post was early. The board gave me and Don license to build for the Internet. We lost a lot of money on the way and thank God we did. We built a platform early.”
The Web venture brought tension with the newsroom. Graham put the Web operation in Arlington, in part to sidestep the union but mostly to let it develop outside a newsroom he felt was stuck in a different era and was antagonistic to the Web. Critics say the separation of the newsroom and Web operation impeded coordination and duplicated tasks.  One example of the difference between the immediacy of the Web and the traditions of the newsroom: During the 1998 Microsoft antitrust trial, Post reporter Rajiv Chandrasekaran was sending reports at midday and Spoon thought they should be put on the Web immediately, while Downie, then the executive editor, thought the story was incomplete and publication should wait until it was ready for the newspaper’s print edition.

The Post was also slow to hire its own technology experts and engineers. “To me, that is one of our central failures,” Graham said in the Riptide interview. As a result, much of The Post’s software was clunky or slow, frustrating people inside the company who were trying to compete in the minute-to-minute race of the Web as well as readers who, armed with high-speed broadband, wanted faster page loading times or had trouble finding articles. Each wave of new technology — most recently mobile and video — brought new challenges.
Tangled Web strategy

Nonetheless, in 2000 The Post’s Web site was up and running and the cliffhanger election between Al Gore and George W. Bush drew a surge of traffic. “After the 2000 election, a large Web audience came to The Post without a dime spent on marketing,” said then-managing editor Steve Coll, who is now dean of Columbia University’s school of journalism. “It was like a giant crowd was standing out in the street, and we were looking down on them without knowing whether we should just throw them our chicken bones or try to give them more.”
One of the defining moments in the story of The Post was the 2003 managers’ meeting at the Inn at Perry Cabin on Maryland’s Eastern Shore. Coll proposed tapping the paper’s national and international reputation and putting more resources into making The Post’s Web site into the digital world’s top news site. He believed that big-city dailies were marching like lemmings off a cliff, with the weakest going first and The Post, among the strongest, going last but still going.  “There were measurable and fairly certain risks in staying the course that would lead to the cliff’s edge and the only question was how quickly,” he said in a interview for this story. “The other course was to turn around and take a substantial risk using debt to buy things and reposition the paper and its journalism. It might fail spectacularly, but it would be noble.”

In response, Graham “dumped all over it,” said another editor who attended the session. Graham reiterated his mantra that the paper was and would remain a local business, with a still enviable local market penetration and local ads. Remember the Loudoun County fireman, he said, he’s our customer. Even if the local ads were vanishing, they were, and still are, a key revenue source for the paper. They also make up a sizable chunk of the online ads.  For a variety of reasons, Coll left the paper about a year later.   Although supporting the continued expansion of the Web site, Graham has remained committed to that local business model. While the New York Times expanded international and national bureaus, and widened its lead in online readership, The Post trimmed its foreign staff and shut down all of its domestic bureaus outside Washington. When it came to building a large national audience, the paper increasingly relied on its expertise about Washington.
To a degree, Graham associated the national ambitions of the staff with an elitism he disliked. True, his own pedigree was privileged, but he had balanced it with his stints in Vietnam and as a police officer, and a passion for improving the education of the District’s least fortunate.  “We got better and better educated, our staffs. Washington, which is a fabulously educated market, has 40 percent college graduates, but The Post newsroom is 100 percent college graduates,” he said to Huey. “We stopped being as interested, all of us, including me, in the comics, the horse racing, which used to be a big deal.”  Weymouth said, “The Times serves the 1 percent, the elite,” albeit on a national scale. By comparison, she said, Graham had decided that The Post would be “for teachers, taxi drivers, and police officers as well as the Hill.” She said, “We want to serve the real people.”

‘Don’t lose money’
At the time of the Coll debate, it looked as though cutbacks would be inevitable, but Graham and others underestimated the magnitude of the pressure to come. Coll recalls that Graham “would say in this ‘someday, my son, this will all be yours’ sort of way, that I would have to cut 2 percent a year out of newsroom for next 10 years. I thought that’s not so bad. The first five are a gimme.” So, Coll recalls: “I would say to people we have 10 or 15 years to figure this out. And I think Don thought we had 20 years. It turned out we had five years.”  In mid-2008, just after the paper won six Pulitzers for work done the year before, 231 people in the newspaper division took buyouts, creating $79.8 million in charges and contributing to the first overall operating loss since the company went public 37 years earlier.  In 2009, The Post closed a costly printing plant that had been opened only 11 years earlier.

As buyout followed buyout in the newsroom, tension rose. Hills and Weymouth absorbed a great deal of the newsroom criticism, and it didn’t help that Weymouth — and other company executives — received hefty performance bonuses that people in the newsroom felt were a reward for cutting staff. “Cutting can enforce a certain discipline. It forces you to look at what readers value,” Weymouth said. But, she added in an interview: “The mission was to cut as little as possible. The marching orders from Don and the board were ‘don’t lose money.’ ” Asked whether that was the right strategy, she deferred to her uncle.  “Don was the one pushing the budget cuts,” a onetime senior Post newsroom executive said on the condition of anonymity to protect relationships. “He always gets off easy as the avuncular figure up on the ninth floor.”  “It’s a very reasonable objective set by a very reasonable guy who just wanted to make a little money,” one senior business executive said.
Tighter budgets inflamed friction over visions of what The Post should be. How much should it generate with its own original reporting vs. piggybacking on work generated elsewhere as is done at Gawker and many other online publications? Should it aspire to be very good, or, in the words of one Post business executive, just good enough? Should it compare itself with the New York Times, a national publication, or crumbling big-city dailies whose business models were historically closer to The Post’s?  This played out in battles over newsroom budgets and control over areas such as who should control the design of applications for mobile phones. Hills tangled not only with then-executive editor Brauchli, but other senior company people, too. Hills compared The Post to the Huffington Post and the newspaper in Dayton, Ohio. He had what was supposed to be an off-the-record conversation in spring 2012 with a small group of reporters at the home of former staffer Bradley Graham, where he described a more limited vision of the paper’s ambitions and resources. The most inflammatory comments were all leaked to the publication AdWeek.

Hills believed his comments were misinterpreted, and that the newsroom needed to face the financial reality.  True, no one in the newsroom wanted to be Dayton, but even the Times offered limited comfort as a business model. It, too, has bought out some reporters as it struggles with declining revenue and a heavy debt load.  A year later, Graham was staring down The Post’s financial realities. “Don gave me numbers for the next several years’ finances,” Spoon said. “He wasn’t forecasting profits.”
The Buffett effect

Another factor in Graham’s decision: Warren Buffett. Graham repeatedly talks about his responsibility to shareholders, and there is no bigger outside shareholder than Buffett’s Berkshire Hathaway, with 27.68 percent of stock. Buffett was a director of The Post Co. for 26 years and an adviser and confidant of Don’s mother, Katharine, for even longer.  He also guided investments related to the pension fund, finding two talented managers who made it vastly overfunded — an anomaly in American business. A sizable chunk of Berkshire Hathaway stock helped. That cushion helped finance the buyouts in recent years. At the end of 2012, the fund had an excess of $605 million, more than 40 percent beyond its obligations.
Even as Graham is getting out of the business, Buffett is jumping in. Buffett continues to predict declines in ad, circulation and profits of newspapers. But over a 15-month period through March 1, he spent $344 million to buy 28 newspapers — including his hometown paper, the Omaha World-Herald. In his annual letter to shareholders, he noted that the papers were very cheap and added that while they weren’t growing they still “should be profitable for a long time to come.”  Yet Buffett’s vision of newspaper success doesn’t reflect The Post’s model. He bought mostly small newspapers from Media General, leaving behind the chain’s Tampa newspaper. He has also shut down one of the papers he did buy. In his annual report, he said that big newspapers have lost their primacy in many areas, but that they can keep that primacy in local news where people read about the mayor, taxes or high school football.  “A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will be read to the end,” Buffett wrote.

But The Washington Post Co. isn’t Berkshire Hathaway. If the Graham family wanted to, it could sink more money into the newspaper instead of diversifying, as it has recently, with small acquisitions in the hospice and boiler ignition businesses. After all, with two classes of stock, A and B shares, the family holds the only votes that counted.  “The whole idea of the dual stock structure was to preserve the family’s interest,” Morton said. “The only thing that would happen to the newspaper would be what the family would have wanted to happen. The theory was that if it came to it they could thumb their nose at Wall Street. And the company in early days did.”  Over the years the company had branched out into a cable provider and half a dozen broadcast television stations. Morton believes the acquisition and growth of the Kaplan education division altered that attitude even more. “The company changed when they got hold of Kaplan. As Don acknowledged, ‘We’re no longer a newspaper company but a company that happens to own a newspaper.’ ”
The erosion of the newspaper franchise has made it less important to shareholders. In 1991, the newspaper division — then as now mostly The Post itself — was 47 percent of total company revenue; now it has shriveled to about 15 percent.  “Previous management of the newspaper (that would be me) did not see clearly the drastic changes that were coming to this business,” Graham wrote in the annual report for 2009. Wall Street and investors seem buoyant about its sale. The Friday before the sale announcement the stock, which had risen sharply earlier in the year, was selling for $559.95 a share. On Friday the stock closed at $610.99 a share.  “There’s really only one loser in this,” said a longtime Post company executive, “and that’s Don.”

Trying to fill the gaps
In his 2012 annual report, Buffett noted that for decades newspapers made money with little effort. “As long as a newspaper was the only one in its community, its profits were certain to be extraordinary; whether it was managed well or poorly made little difference,” he wrote. “As one Southern publisher famously confessed, ‘I owe my exalted position in life to two great American institutions — nepotism and monopoly.’ ”  The Post also suffered because for years ad sales people could essentially wait for the phone to ring; sales now require a more aggressive and creative strategy. A senior Post business executive acknowledged as much, albeit with a jab at the news department. “We were monopolists in the ad department,” the executive said, “and we were monopolists as journalists.”

In the 1990s, Spoon and many others thought digital ad revenue would not only fill in the gap left by declining print ads but exceed them. That didn’t turn out to be the case because advertisers could count clicks and sought to drive down the price they paid for each one. And even though The Post tried a variety of online methods to hang on to classified ads leaving the paper, the competition for such ads remained fierce.  “The problem was the newspaper was a package and you could sell that package. People would pay a quarter and while they were at it would see a tire ad or movie review,” said another former Post executive. “And you got a tremendous return on that investment. . . . The Web means you have to compete for every click.”
“I think it’s going to be challenging for broad-based, general interest news to bring together in one place, electronic or print, what used to be the bundle that was offered because of fragmentation,” Spoon said in his March interview with Huey, before he learned that Graham was going to sell the paper. What lies ahead, he says is “personalization, user-generated content, professional- and user-sourced curation.  When the tiles come back together, it’s not going to look like the painting with just three colors inside a given frame. It’s going to be different for every person,” he said.

Missed opportunities
Many people at The Post mourn missed opportunities, and with the benefit of hindsight there have been many. The Post sought to invest in Facebook at an early stage, an investment that would now be worth several billion dollars. The late Christopher Ma, a Post executive whose daughter knew Facebook founder Mark Zuckerberg at Harvard, helped bring together Zuckerberg and Graham, who agreed on an investment. But Zuckerberg later opted to go with a venture capital firm with more tech experience and Graham politely bowed out.  Some critics have said that The Post erred by failing to hang on to staffers John Harris and Jim VandeHei instead of letting them go to Allbritton and start Politico, which has its own ambitions to become a Washington player and stake a claim in the political reporting niche. Graham says, however, that while reporters at The Post compete with Politico, from a business point of view Politico is not a significant competitor.  Spoon has said The Post lost out by not buying more cable networks or television stations when they were far cheaper than they are now. It looked at investing in eBay, but didn’t. 

One miss that isn’t mourned: The Post’s bid for the Boston Globe. It lost to the New York Times, which paid $1.1 billion in 1993. In August, the Times sold the Globe for just $70 million.  To some analysts, greater investment success — or continued big profits at the now-struggling Kaplan education unit — would have given Graham a greater ability to subsidize losses at the newspaper.  But people who know Graham say he doesn’t think that way. “It’s each business on its own bottom,” Spoon said. “That’s the way it’s always been run.”  One senior Post Co. executive says that greater investment success wouldn’t have changed Graham’s mind. “Having a lot of money in the bank is hardly a guarantee that you will solve all these problems,” he said. “The company always had enormous borrowing capacity. But Don felt what it was going to take was not something that could be easily envisioned within the confines of a public company.”
Some longtime Post business people respect Graham’s decision but don’t necessarily agree with it. As the senior executive put it, if you had called an ad company and asked what it would cost to build the kind of reputation the paper had, the answer would have been: untold millions.  That might be one reason Bezos is investing in the paper. “I knew the quality of the people would be very high,” he said on ABC’s “Good Morning America” on Wednesday. “The business challenges in the newspaper industry have nothing to do with the quality of the people. These are big industry-wide trends.”

A sense of loss
Even people who have differed with Graham tend to feel loyalty toward him. “I love Don and would step in front of a bus for him,” Coll said. Even though Graham didn’t adopt his strategy, Coll said, “I don’t feel aggrieved about any of this.”  Meanwhile, Graham isn’t completely done with the news business. Slate and Foreign Policy were not part of the Bezos purchase. Neither was WaPo Labs, whose head, Ravindran, Graham has called “the most valuable player at The Washington Post.” Graham is also a fan of a WaPo Labs software called Trove, which gave rise to Social Reader. After the sale of the paper, the company will launch a new version of Trove, a tool for creating personalized newspapers. Although Trove failed to get traction upon its first release, Social Reader has been downloaded by nearly 25 million Facebook users, whose contacts could help jump start a new marketing drive.

The remaining company will also include Social Code, a social media marketing agency, which Graham said in the most recent annual report was the fastest-growing part of the entire company, albeit from a small base. Graham wrote that its revenue “almost doubled” and that it had “set ambitious plans for 2013 and beyond.” He also noted it is run by Laura Graham O’Shaughnessy, his daughter.  But there is still a sense of loss among some on the business side who were attracted to work for the company because of the mission and prestige of working for the paper. And unlike some families, said one business executive, there was never any question among the corporate children about which child was loved most.
In the April video, the family legacy literally hangs over Graham in the set of cartoons drawn by the late Herbert Block, who went by Herblock.  “A newspaper should serve as the conscience of its community,” said Graham’s grandfather Eugene Meyer, who bought The Post out of bankruptcy in 1933. Those words were written across a flag that towered over the Capitol and Washington Monument in the first of the Herblock cartoons hanging behind Graham in his office.  The second cartoon, inscribed to Katharine Graham, shows the desk of her late husband, Phil, with a note reading: “The Post is an independent newspaper . . . fixed with a love of liberty, capable of indignation over injustice, and aware of the destiny and responsibility of America as a world leader . . . ”

In the third, done after Katharine Graham’s death, an angel with a bugle hovers above a cloud next to a figure inscribing Kay’s name in a book. Above the caption reads: “Call Horace Greeley and Joe Pulitzer and the rest, and tell them she’s here.”  What this very public figure and very private person is feeling on the eve of the sale isn’t completely clear. Graham says he’s tired of talking about it and wants to leave the talking to Bezos, Weymouth and Baron. But it’s clear he’s leaving with a mixed sense of accomplishment and regret.  At one point in the April interview, there was this exchange: 

Huey: “The truth is, we haven’t found very many stupid people going around interviewing for these things.”

Graham: “Yes you have. You’ve found plenty of people who weren’t smart enough, including me.”
 




 
Katharine Weymouth Defends Decision Not To Fund Ezra Klein’s New Venture
(By Harry Jaffe, Washington Post, 29 January 2014)

Washington Post owner Jeff Bezos has absorbed the responsibility—much of it critical—for not keeping Ezra Klein and his proposed new digital-media venture at the Post.  How could Bezos, the digital entrepreneur who created Amazon.com, not buy into Klein’s vision of a website devoted to delivering news and opinion at the digital edge of journalism? How could he allow the phenomenally prolific creator of the Post’s Wonkblog to take his talents elsewhere?  Actually, Post publisher Katharine Weymouth was the decider.  “It just didn’t make sense for us,” Weymouth tells
Washingtonian. “Ezra didn’t want it to be part of the Post. It would be completely separate and quite resource-intensive.”

Klein first brought his proposal to Post executive editor Martin Baron in December. Baron recommended Klein go directly to Weymouth, who runs the Post’s business side. Klein met with Weymouth and described his new venture in a memo with a full business plan, including projected expenses and revenues.  Weymouth says she examined the business plan for what she termed “a kind of authoritative wiki,” and decided the investment didn’t make sense. Klein reportedly projected the cost of building his new venture to be upward of $10 million, with up to 30 employees.  “It seemed to be potentially a bigger distraction that would take resources without building the Post,” Weymouth says. “Had he wanted to keep Wonkblog within the Post, that would have been a different story.”

Weymouth sent Klein’s proposal with her decision against funding it to Bezos. She did not hear back from him. In other words, Bezos accepted her decision to go thumbs down on Klein’s proposition.  Weymouth said she was “not shocked” that Klein would present her with a bold plan to create his own digital news operation. She described Klein, 29, as “young, smart, and entrepreneurial.” She explained her decision to spike Klein’s proposal face to face.  “I admire him and emphasized that we wanted very much to leave the door open to working with us in the future,” Weymouth says.  Neither Bezos nor Klein responded to questions of whether they had had any contact after Weymouth declined the offer.

The heart of Weymouth’s case was that there’s no guarantee Klein’s publication will be profitable.  Wonkblog has reportedly attracted 4 million visitors a month while Klein ran it at the Post, but income from that number of eyeballs will not support a new, independent newsroom of the scope and size Klein envisions. And according to the Post, Wonkblog averaged 2.7 million visitors a month in 2013, rather than 4 million. Klein announced this week he will establish his new publication with Vox Media. It’s scheduled to debut this spring as “a site that’s as good at explaining the world as it is at reporting on it,” Klein wrote on Vox’s technology site, the Verge. 

More than a few news commentators and analysts panned the Post for allowing another talented writer take his energies elsewhere. “You idiots!” wrote New York Times columnist Paul Krugman on his blog earlier this month. Klein’s exit invited comparisons to Post writers John Harris and Jim VandeHei, who left the Post to start Politico.  Weymouth, the granddaughter of legendary publisher Katharine Graham and the last family member at the Post’s helm, is bullish on the enterprise Klein is leaving behind.  “Wonkblog is staying at the Post,” she says, “and we are going to invest heavily in building on what it is today. We had hoped that Ezra would want to lead that, but he wants to build something very different.”
 


  

Marty Baron: What’s To Come In 2014
By Marty Baron, Washington Post, 29 January 2014)

Memo to newsroom staff from Marty Baron, Executive Editor:

As we put the final touches on the budget for 2014, I want to share our plans for a set of exciting initiatives. This will be a year of impressive investment in The Washington Post, with the primary goals of growth and digital transformation.  Recent announcements have offered a hint of what’s in the works.  We just announced that Adam Kushner, executive editor of the National Journal, will head a new digital initiative for online commentary and analysis. We now begin hiring for his team.  Before that, we announced that Fred Barbash would return to The Post from Reuters, where he has been running White House and congressional coverage. He’ll head up an overnight staff to assure that readers have the most comprehensive, engaging reading experience when they wake up every morning.

We announced that Jim Tankersley, one of the best economics writers around, would lead a digital initiative, driven by data and narrative storytelling, that explains complex public policies and illuminates their human impact. We are hiring for that team while continuing our years of robust and enthusiastic investment in Wonkblog (and its most recent spinoff, KnowMore).  We also have announced some staff additions to The Fix blog and our politics strike force, key elements of our online political coverage. We have some more hiring to do. Altogether, our staff of politics reporters will grow by five early this year.  Along with the new writers we’ve introduced for Reliable Source, Helena Andrews and Emily Heil, we’re giving it a strong digital presence. That includes adding a staffer to produce Reliable Source video. 

That is just a start.  We are hiring writers to author “verticals” on a wide array of subjects. These blogs will both deepen our reporting in The Post’s traditional areas of concentration and broaden the range of subjects we cover. Last year, we added highly popular blogs such as The Switch and GovBeat, complementing other policy-oriented blogs like WorldViews and Wonkblog. Some of our current blogs will get additional writers, enhancing our national and world report, and all of them will work with an expanded staff of photo editors and data visualization specialists. We’re hiring now for the additional graphics and photo staffers.

We also will embark on a long-planned site redesign that should improve load speeds and navigation while enhancing the overall reader experience. That will involve new hires. The Universal News Desk also will add to its staff to make sure that we are doing everything possible to engage readers when they come to the site.  Beyond the new overnight crew, we will create a breaking-news desk that will operate from 8 a.m. until midnight. Reporting to Justin Bank, it will position us to jump on the most captivating stories of the day at lightning speed.

Print is in the picture, too.  This spring, we will introduce an expanded Sunday magazine, bigger in dimension and in the number of pages, with a new design and a range of new features. This spring also will see us introduce a Sunday Style & Arts section that makes a forceful and elegant statement about our strengths in those areas.  You can tell that there is a lot going on. And there’s more than I mentioned. We can’t talk about everything just yet.  This is a news organization of extraordinary achievement. It is home to journalists of immense talent and dedication. With these initiatives, we can all look forward to a future of great promise.

 

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