Within the few week, 2 of the biggest newspapers in the country were acquired by billionaires for pennies a serving.
Jeff Bezos bought the Washington Post for $250 million, and he did it with his personal money. Bezos is quite a guy—in addition to founding Amazon, he was one of the first investors in Google. The author of Bezos’ upcoming biography claims that Bezos told him to wait several years before writing it because: “It [was] too soon.” Bezos thinks big.
But Bezos isn’t the only one joining in on the newspaper party. John Henry bought the Boston Globe for an even cheaper $70 million—for an entire empire, that’s a low price—and it’s presumed that he’ll be able to bring more focus to the business than even the New York Times could.
There are a few takeaways from these 2 acquisitions:
- The culture has changed. We love saying it, and it’s never been more true. Value has fallen off of the edge of the table. 20 years ago, the Globe was acquired by the New York Times for $1.1 billion. And yes, at that time people still read newspapers, but it’s now worth 6.4% of what it was purchased for then. Let me repeat that. One of the top U.S. newspapers has lost 93% of its value in the last 20 years. During those 20 years, the Globe didn’t stand still, either—it launched new digital products, added a paywall and positioned itself as a modern multiplatform media company. And yet, it still lost more than 90% of its value. I’d call that a sign.
As Boston University journalism professor Lou Ureneck said, “the first thing to note is that he paid more for his second baseman than for the Globe.” Dustin Pedroia just signed a $100 million contract extension. And I think we all can agree that Dustin is a better investment than the Globe.
Some believe that Bezos overpaid by a lot, calling a “friendship premium” of $200 million on a $250 million purchase (though at any rate, Bezos can afford it). Interestingly enough, most people assumed that the next owner of the Post would be Warren Buffet, but the price was presumably too rich for Warren’s blood. Buffett does own newspapers, but he’s not known for overpaying for anything.
- We’re witnessing a society-wide tearing down of old pillars. A newspaper means something very different today than it ever used to, and the value of owning one is different than it used to be. Newspapers now are trophies much more than thriving enterprises.
Specifically in Bezos’ case, his acquisition was one of influence over others in politics. At a time when Congress’ treatment of internet sales tax is of material importance to Amazon’s business, Bezos, Amazon’s founder, has bought the most politically influential newspaper in the country. For 1% of his net worth, he bought a property that has the potential to create a lot of value for Amazon politically.
In Henry’s case, Henry owns the Boston Red Sox and NESN, the TV network that broadcasts the Red Sox’ games. He now owns the largest media company in New England and the most important company that covers the Red Sox. So don’t kid yourself for a second that either of these buyers is acquiring flagship assets—they’re acquiring side dishes. Sobering, but true.
- You don’t need a newspaper to be your own media company. With the tools available today, everybody can be their own media company, so the benefits of owning a 100-year-old media company are somewhat hard to locate. Organizations used to rent audiences (via ad buys) to attract customers, but now, most organizations are better off putting that investment into building their own audience.
So why bother dealing with the arrogance and creakiness of legacy media companies? And I say this as someone who has spent the majority of his career in the media business. These 2 newspapers are good symbols, for certain, but it’s possible to be very, very effective at media even without owning your own newspaper. You may not have the clout of a big name like the Post, but those names are fading quickly, and the ability to build an audience online is growing rapidly.
We wish good luck to the employees and readers of the Globe and the Post. There are good people at both companies, but they can’t fight the law of gravity. The mass media era had a good run, but its run will soon be over. The legacy institutions will still hang on in some shape (and some may even improve—check out what Justin Smith did at The Atlantic), but their value is quickly fading.
With the fall of these media giants, you’d be wise to start thinking about being your own media company.
Image credit: CC by Pedro Gómez Fernández