Why would anyone invest in print media?
The only thing in common among the crowd of people buying media properties – among them a baseball team owner, a young tech entrepreneur, a middle aged tech entrepreneur, a grocery distribution mogul and the most famous investor in the country – is that they made a lot of money in other industries.
Jeff Bezos, who said Monday he would buy the Washington Post for $ 250 million, is also CEO of Amazon and is worth $ 25 billion. John Henry, who buys the Boston Globe for $ 70 million, owns the Boston Red Sox and the Liverpool Football Club. John Georges, who bought out the Baton Rouge-based company Lawyer this year is at the head of a company that includes a grocery distribution company and several other businesses. Philip Anschutz, who started the Washington Examiner (until recently, a daily) in 2005 and bought the print magazine Weekly Standard in 2009, started in the oil and rail industry and now owns a wide variety of businesses. Chris Hughes, who bought The New Republic earlier this year, is a Facebook co-founder. And Warren Buffett, who continues to quickly add to his long list of newspapers and websites, is Warren Buffett.
These rich men, along with many other buyers of media companies, are also similar in that they have entered a very difficult industry. Bezos will get a newspaper that has seen a 44% drop in operating revenue over the past six years. Henry buys the Globe for $ 70 million, a small fraction of the $ 1.1 billion the New York Times Company paid 20 years ago.
Financial problems are an industry-wide problem as the internet eats away at the revenue from print publications. According to the Pew Research Center, newspapers lost $ 15 advertising on the print side for every digital advertising dollar earned in 2012.
These businessmen may all believe they have the coveted secret to making information profitable again. But the answer seems much more complicated. Already financially stable and holding various business portfolios, these individuals arguably have the stability necessary to buy and transform businesses with fragile books. Or, to be more succinct, they’re there for something more fleeting than dollars and cents.
“I don’t think they are laughing at that. Because people who are rich, they don’t look back on the decisions they make. I think they do it for the power of the press.” , says Lou Ann Sabatier, former media consultant and current CEO of MediaDC, which publishes the Washington Examiner, Weekly Standard and Red Alert Politics.
That power can come in the form of writing occasional, strong-worded editorials or getting spots on CNN, but more importantly, it is in the form of being associated with America’s most trusted brands.
“They are just proud to have this in their wallet because of what it represents,” Sabatier said. “It’s the one thing you can’t manufacture.… It took many years to gain the reputation, stature or heritage of the Globe or the LA Times or the Wall Street Journal or the Washington Post.”
“I guess Bezos understands an old truism: Brands matter. The wonder and magic of institutions like The Post or The New Republic is their story – their stories follow American history,” he wrote.
Likewise, Berkshire CEO Hathaway Buffett explained that he and his vice president, Charlie Munger, maintain lower standards for their newspaper purchases than for other companies.
“Charlie and I love newspapers and, if their economy makes sense, we’ll buy them even when they’re way below the size threshold we would need to buy, say, a gadget business,” Buffett wrote in a letter to investors this year. With the Washington Post sale, Berkshire Hathaway’s 28% stake in the newspaper will end and Buffett’s company will earn more than $ 50 million.
For some, the desire to acquire an information brand also includes a certain local pride.
“I’m someone who buys Louisiana legacy businesses.” said Georges. He bought the Advocate and is helping the daily grow in New Orleans, where The Times-Picayune cut printing to three days a week last year.
Georges, who bought the Advocate from the family who had newspaper owner since the early 1900s, believes his entrepreneurial status sets him apart from descendants of older newspaper families.
“It’s a different perspective. They’re trying to keep a family empire and I’m trying to grow a business,” he says.
From a media business perspective, the need to abandon old business models and even family heirlooms has helped lead to a new rush for entrepreneurs, says one expert.
“I think there is real research now on the part of the owners of the Legacy to find people with different skill sets that might be needed to save these publications and the industry in general,” said Mark Jurkowitz. , former Boston Globe reporter and associate director of the Pew Research Center. Excellence in journalism project.
He mentions the Washington Post, where the Graham family recognized the need for new leadership.
“We were sure the newspaper would survive under our ownership, but we wanted it to do more than that. We wanted it to be successful,” wrote CEO Don Graham in a letter to post employees this week.
This success is anything but assured for foreign investors. Philanthropist and founder of electronics company Sidney Harman bought Newsweek in 2010 and quickly merged it with The Daily Beast, leaving him and Daily Beast owner Barry Diller’s IAC each a 50% stake. After Harman’s death in 2011, his family resumed participation but soon after said he would no longer invest in the release. IAC recently sold Newsweek to IBT Media, which publishes the International Business Times. While Buffett, Henry, and Bezos may not have a roadmap for this success, another key trait they share is the belief that they can at least do something to boost the losing papers. . to better health, says Sabatier.
“They are all brilliant business people in their own ways,” she says. “Someone might give you something, but if you can’t do it, you haven’t got a good deal.”