That’s the question everyone’s asking today. Why did Jeff Bezos, the CEO of Amazon, purchase the Washington Post for $250 million yesterday? Sure, the Washington Post has been a reputable American daily newspaper since the late 1800’s. But the print newspaper industry is a dying breed, and the Washington Post is slowly dying with it.
Jeff bought the Washington Post at just around its book value ($256 million). The book value is literally what the Washington Post’s financial books say they own. It’s the perceived value of their assets. Paying that price means that he believes those assets aren’t necessarily going down in value. Does Jeff Bezos see something that perhaps the rest of us are missing?
Warren Buffett, famed investor and long time holder of Washington Post (WPO) stock, has claimed Jeff Bezos is the “best CEO in the United States“. And let us be clear: it is not Amazon that purchased Washington Post, but Jeff Bezos himself. Although, $250 million is pocket change to the 19th richest man in the world..
So what’s the plan? Does Bezos have something up his sleeve?
Let us speculate:
1) Maybe he’s just being Jeff Bezos: This isn’t a very uncharacteristic move of his. Bezos is known for his rather risky personal investments. He’s invested in startups like Airbnb, Uber, Behance and Everfi. He’s also founded Blue Origin, a private aerospace company with the goal of lowering the cost of spaceflight.
2) Maybe he’s a believer in Warren Buffett’s theory on newspapers. In Warren Buffet’s 2012 Letter to Berkshire Hathaway shareholders, he talks a lot about his investments in local, small-town USA newspapers. He believes that the print newspaper will live on as a means for local news. The Washington Post not only serves a wide audience nationally, but also owns several smaller newspapers throughout the country. There’s also the idea of the abundance of news reporting the internet has spawned. On Twitter and Facebook, everyone’s a journalist. But with that quantity comes a decrease in quality. Perhaps Buffett and Bezos envision a newspaper renaissance, where quality reporting becomes important again. There’s an undertone of those thoughts in Bezos’ letter to Washington Post employees.
3) Maybe he saw an opportunity to snag a huge content creating machine. The Washington Post has been around since 1877, and therefore has a massive archive of content. Their still running strong, churning out tons of content in both print and web-based form. These days, content is king. Everyone, including Amazon, is fighting for the rights to media content. The Washington Post has a lot of that, and for a relatively cheap price tag.
4) Maybe he just wants to see what happens: As we’ve already covered, Jeff Bezos is very rich. He’s also very patient. Amazon has spent many years working at a loss in order to build an infrastructure where they can lead the world in selling things. It’s not so easy to set up distribution channels where you can ship items in 1 day to anyone…anywhere. But Jeff had the patience to set that up. Perhaps he doesn’t have a plan yet. But clearly, the world is changing in how it consumes its media content. Perhaps during this shift, a plan of what to do with the Washington Post will forge itself. If and when that happens, the 19th richest man in the world just might move even further up the list.