What Jeff Bezos Could Have Bought Instead of The Washington Post

PHOTO: jeff Bezos

Why would a billionaire buy a newspaper? Amazon.com founder and CEO Jeff Bezos now joins the ranks of Rupert Murdoch, Red Sox owner John Henry and Berkshire Hathaway CEO Warren Buffett.

About Bezos' $250 million purchase of The Washington Post newspaper and affiliated publications, Morningstar equity analyst Liang Feng said non-financial motivation is probably a "major component" of his purchase.

In a letter to employees of the Washington Post, Bezos wrote, "There will of course be change at The Post over the coming years. That's essential and would have happened with or without new ownership. The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs."

Though the Washington Post Company has a market capitalization of over $4 billion, the firm's newspaper business has either generated minimum profitability or lost money in recent years, in part due to pension buyout charges.

In addition to the flagship newspaper, the sale includes the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.

Read More: Amazon CEO, Founder Buys The Washington Post Newspaper for $250 Million

Though Amazon.com Inc., based in Seattle, is not involved in Bezos' transaction, the e-commerce site has its own extensive lists of acquisitions, including:

- Over $1 billionZappos.com, announced July 2009

- $775 million for Kiva Systems Inc., announced March 2012

- $545 million for Quidsi Inc., announced Nov. 2010

Unlike Amazon, Liang said the newspapers are not likely to "make a dent" in Bezos' net worth, which is about $25.2 billion, according to Forbes.

Last month, Amazon reported a surprise loss of $7 million, despite growing sales, due to the company's investments in its Kindle e-reader device and digital content.

In his letter to employees, Bezos wrote, "The values of The Post do not need changing. The paper's duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we'll work hard not to make mistakes. When we do, we will own up to them quickly and completely."

Before the announcement that Amazon founder Jeff Bezos purchased the Washington Post newspaper for $250 million in cash, news broke over the weekend that Boston Red Sox owner John Henry bought the Boston Globe for less than one-tenth of the $1.1 billion the New York Times Co. paid for the paper in 1993.

The sale of The Boston Globe newspaper has raised the ire of a number of groups, including one that bid higher than the winning $70 million purchase price, and analysts in the journalism and sports fields.

John Lynch, chief executive of U-T San Diego newspaper, said his group was misled by the New York Times Co. and will seek repayment for the money it spent preparing its bid, the Boston Globe reported.

U-T San Diego didn't immediately respond to a request for comment.

Henry could not be reached for comment.

A Times spokeswoman explained, "The sale to John W. Henry is the result of a very full and active sales process."

"In reviewing bids, we took many factors into consideration and at the end of the process concluded, along with our Board of Directors, that this agreement to sell the New England Media Group to Mr. Henry was in the best interest of our shareholders as well as of The Boston Globe, the Worcester Telegram & Gazette and the Boston community," the Times Company's statement to ABC News said.

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