The past month has seen two of America’s most venerable business minds scoop up two of its most venerable newspapers, with Amazon.com founder Jeff Bezos purchasing the Washington Post for a cool $250 million and Boston Red Sox owner John Henry acquiring the Boston Globe for a paltry $70 million.
Let’s be frank: these were value-driven acquisitions. $250MM and $70MM are a relative drop in the bucket. Bezos is estimated to be worth $28 billion, and he has reportedly gotten $5 billion richer since 2012. All told, this acquisition represents less than 1% of his net worth.
Meanwhile, Henry bought the Boston Globe for $1 billion LESS than the NY Times Company paid for the same paper back in 1993 (is there another industry that has experienced more deflation over the past 20 years?). Heck, Henry is paying the Red Sox’ second baseman more money!
Dollars and cents aside, these are two guys who know a thing or two about investing and it’s hard to believe that they would even flirt with the idea of buying assets lacking inherent value and the opportunity to create even more.
I’d venture to say that the purchases made by these billionaire tycoons say little about the newspapers themselves and a lot about what the publications stand for.
You see, daily newspapers and the media companies that come with them bring a tremendous degree of ‘stuff’, both tangible and otherwise. Robust technology platforms, multi-million dollar advertising contracts, priceless consumer data, and national brand names that have been around for a combined 277 years. Each of these elements is worth something.
Most importantly, media companies bring a level and depth of human capital rarely found in corporate America. From news reporters and sales personnel, to web programmers and photographers, media companies employ lots of talented people whose skill sets can be applied to various areas of business.
John Henry and Jeff Bezos understand the value of human resources. Amazon routinely scores some of the e-commerce industry’s highest marks for customer service; the Red Sox’s penant hopes live and die with the performance of players. You get the idea. Staffing up a newspaper from scratch today and expecting the results one might expect from the Boston Globe or Washington Post might take decades to achieve, at best.
The bottom line: despite an untold but daunting level of competition and a business model that by all accounts has been rendered unsustainable, society trusts newspapers and what they represent. We trust their reporters. We trust their websites. We trust their brands.
Bezos and Henry just purchased that credibility and the mindshare that has built it up over time. They are richer because of it; now let’s hope their newest assets share in the riches too.
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