Amazon.com Inc. Chief Executive Officer Jeff Bezos agreed to buy the Washington Post for $250 million in a bet that he can apply his success in e-commerce to the struggling newspaper industry. The CEO is making the deal as an individual and not as part of Amazon, the world’s biggest online retailer, according to a statement yesterday. Current owner Washington Post Co., which isnt selling its Kaplan education division and other businesses as part of the transaction, now plans to change its name.
Seven years of declining sales, triggered by an industrys advertising decline, ultimately pushed the family to sell the business. Investment bank Allen & Co. handled the process.
“This is a day that my family and I never expected to come,” Publisher Katharine Weymouth, niece of Chairman Don Graham, said in a letter to readers. “The Washington Post Co. is selling the newspaper it has owned and nurtured for eight decades.”
Washington Post Co., which also owns Post-Newsweek Stations and Cable ONE, hasnt announced what its new name will be. In addition to buying the Washington Post, Bezos will get Greater Washington Publishing, the Gazette newspapers, Express, El Tiempo Latino and Robinson Terminal.
Washington Post Co.’s newspaper division reported piling operating losses in the past two years, including a $53.7 million loss in 2012, according to its annual filings. The division’s annual sales declined 7% to $581.7 million in 2012, with the Washington Post’s print advertising, once the lifeblood of the paper, falling 14% to $228.2 million in the same period.
As part of the agreement, Bezos will take on the pension obligations of current employees while Washington Post Co. will handle retired workers. The company also will provide Bezos with $50 million to help pay the obligations.
Most of Bezos’s fortune is tied to a 19% stake in Amazon. Since the company’s initial public offering in 1995, Bezos has sold almost $2 billion in Amazon stock. Much of that has been plowed into Blue Origin, his closely held space-exploration company.
Washington Post Co. shares rose 5.1% to $597.50 in extended trading yesterday after the deal was announced. The stock had closed up 1.6% to $568.70 in New York, taking its gain this year to 56%.
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