Amazon CEO Jeffrey Bezos is buying The Washington Post newspaper, which broke the Watergate scandal and drove a president out of office, and its affiliated publications for $250 million.
The sale ends the Graham family's ownership of the flagship newspaper of The Washington Post Company (NYSE: WPO), which will change to a new name and continue as a publicly traded company.
"Everyone at the Post Company and everyone in our family has always been proud of The Washington Post — of the newspaper we publish and of the people who write and produce it," Donald E. Graham, chairman and CEO of The Washington Post Company, said in a statement. "I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post (after a transaction that would be in the best interest of our shareholders). Jeff Bezos' proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post."
The sale is expected to be completed within 60 days.
"I won't be leading The Washington Post day-to-day," Bezos wrote in a letter to the newspaper's employees. "I am happily living in 'the other Washington' where I have a day job that I love. Besides that, The Post already has an excellent leadership team that knows much more about the news business than I do, and I'm extremely grateful to them for agreeing to stay on."
Bezos asked the newspapers' top executives to stay in their roles, including Katharine Weymouth, CEO and Publisher of The Washington Post; Stephen P. Hills, President and General Manager; Martin Baron, Executive Editor; and Fred Hiatt, Editor of the Editorial Page.
"I understand the critical role the Post plays in Washington, D.C .and our nation, and the Post's values will not change," Bezos said in a statement. "Our duty to readers will continue to be the heart of the Post, and I am very optimistic about the future."
Amazon, which has no role in the purchase, did not immediately respond to a request for comment. Bezos said he will personally own the company and the current management at the Post will stay.
Liang Feng, equity analyst with Morningstar said he was surprised by the announcement due to the Graham family's sentimental attachment to the newspaper.
Feng said he and other analysts said divesting the newspaper assets "makes perfect sense", given that the firm's newspaper business has either generated minimum profitability or lost money in recent years, in part due to pension buyout charges. The Washington Post Company's market capitalization is valued at about $4 billion.
The news of the sale follows Red Sox owner John Henry's purchase of The Boston Globe for $70 million from The New York Times Company, a fraction of the $1.1 billion purchase price the Times Company paid in 1993.
Feng estimates that the main component of the company's valuation comes from its cable and television broadcasting assets.
In addition to its flagship newspaper, the sale includes the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.
The Washington Post Company's other businesses will remain with the company, including Kaplan Inc., Slate magazine, TheRoot.com, Foreign Policy, and WapoLabs. The Washington Post Company also owns six television stations, including two affiliates of ABC News: WPLG in Miami, and KSAT in San Antonio.
Despite the newspaper's heralded past and list of Pulitzer prizes, it has had more difficulty than some of its peers in adjusting to a digital news environment, such as instituting a pay wall for subscribing readers, Feng said.
Almost forty years ago, the Post's reporters Bob Woodward and Carl Bernstein reported that Richard Nixon's administration attempted to cover-up a break-in at the Democratic National Committee headquarters at the Watergate office complex, leading eventually to Nixon's resignation in Aug. 1974.
"We think there's room for only a few papers to generate national subscriber revenue. Among The New York Times and the Wall Street Journal, the Washington Post was having trouble putting themselves on that level," Feng said.