The Dusty Digital Trail

Michael Hedges August 6, 2013 Follow on Twitter

All along this trail to digital transformation are the analogue discards. Like the great migrations of history forward motion symbolizes progress. What remains is refuse, once prized possessions cast aside, too heavy to carry.

It’s a well-turned narrative, spoken again as another media enterprise jettisons a newspaper. Owners and directors of The Washington Post Company reached agreement (August 5) to sell its namesake newspaper, several smaller titles and related printing plants to Amazon founder Jeff Bezos for US$250 million. The Washington Post Company, which will change its name, carries on with digital portals Slate.com and Roots.com, Foreign Policy, the Kaplan online education business, a cable TV business, the six Post-Newsweek television stations and other non-media investments.

“I…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,” said Washington Post Company CEO Donald Graham in a statement. “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 Graham family has owned the newspaper since the Great Depression, when his maternal grandfather bought it in bankruptcy, and built it and the company into formidable institutions.

Institutions are, however, quite vulnerable in times of change. Within the past week The New York Times Company sold the Boston Globe newspaper to another billionaire for US$70 million, new CEO Mark Thompson moving forward with a digital strategy unhindered by non-brand distractions. Axel Springer CEO Mathias Döpfner dispatched Bild editor-in-chief Kai Diekmann for a year-long mission to Silicon Valley. On Mr. Diekmann’s return earlier this summer, Mr. Döpfner dispatched several legacy newspaper titles. A CEO’s mandate is to be attentive to the shareholders and investment bankers. 

For lugubrious family-owned media companies the canary in the digital mineshaft perished in 2007 when Rupert Murdoch paid the hapless Bancroft family US$5 billion for the Dow Jones services and the Wall Street Journal. Five years later Mr. Murdoch “unlocked shareholder value” by splitting the entertainment and television business from the publishing business. The Washington Post Company share price gained 5% in after-hours trading, reported USA Today (August 5).

Not to be ignored in this transaction is Mr. Bezos’ digital credential. He founded online bookseller Amazon barely 20 years ago, now the leading edge of the digital retail world and leaving brick and mortar bookstores to the dustbin of history. Amazon’s e-reader Kindle set table technology on fire. The company is reportedly working on its own smartphone product. The Washington Post is a personal investment of Mr. Bezos and, according to all sources, will not become part of Amazon.

Don Graham reached out to formidable investment banker Allen & Company earlier this year, reported Reuters (August 6), and the deal was agreed at the annual Allen & Co. Sun Valley (Idaho) conference less than a month ago. Widely known for confidentially, Allen & Co. was an underwriter for the Google IPO and had a hand in Mr. Murdoch’s Dow Jones acquisition. “I named a price and Jeff agreed to pay it,” said Mr. Graham.

See also in ftm Knowledge

Digital Transitions

Media's transition from analogue to digital has opened opportunities and unleashed challenges beyond the imagination. Media is connected and mobile yet fettered by old rules and new economics. Broadcasters and publishers borrow from the past while inventing whole new services. This ftm Knowledge file explores the changes. 88 pages PDF (March 2012)

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