Letting Go of the “Washington Post”
The inside story of how “Post” owner Donald Graham came to accept that it was time to cut ties to his family’s 80-year newspaper legacy.
Former Washington Post executive editor Leonard Downie Jr. was driving on Monday, August 5, when he got a call from the paper’s owner, Donald Graham. In several hours, Graham would tell the staff he was selling the Post—his family’s crown jewel for 80 years—to Amazon founder Jeff Bezos for $250 million.
Graham didn’t have answers to the questions the newspaper industry posed. Neither he nor his niece, publisher Katharine Weymouth—the fifth family member to run the paper since her great-grandfather Eugene Meyer bought it in a bankruptcy sale—could see a way to combat internet-driven pressures without more budget and staff cuts. The phone call was Don Graham’s admission of defeat. “I didn’t know anything about this,” says Downie, who has worked with Graham for 42 years. “I was speechless. I had to pull over.”
Downie drove home, changed clothes, and went into the office. He stopped by Graham’s office to thank him. “We know each other so well that we can sense each other’s feelings,” Downie says. “He didn’t have to tell me it was a tense, difficult decision.”
Downie’s replacement as executive editor, Marcus Brauchli—who stepped down last year to become a vice president of the Post’s parent company—walked into Graham’s weekly Monday 3 pm staff meeting. The owner shut the door, then said to the group: “I have shocking news.”
• • •
The entire staff needed to be told. Management sent out an e-mail at 4:15 announcing a 4:30 meeting that day. But Post media reporter Paul Farhi worried that even that was too much time.
Farhi had been on vacation in the Dominican Republic when executive editor Marty Baron called. Baron needed him back home to write a story, but he wouldn’t give Farhi any details other than telling him he’d call him on Sunday, August 4. They spoke for 45 minutes that day, and Farhi was told about the sale but sworn to silence. After crafting his story in a Word document at home, he arrived at work around 3 on August 5 in a daze, knowing a secret that would turn the Post inside out but unable to tell anyone.
Farhi’s biggest fear—and that of the few people at the paper who knew—was that another media organization would break the news. The day before, the New York Times had profiled Weymouth without any hint of what was to come. Times reporter Sheryl Gay Stolberg had asked Graham if his niece would inherit his job running the Post Company. “[H]e ducks the question,” Stolberg wrote, quoting him as saying, “I’m not expecting her to go anyplace.”
That’s correct—for now. Under the sale terms, Weymouth and her management team, Baron and editorial-page editor Fred Hiatt, will stay on for at least a year.
At 4:30 pm, most of the paper’s 2,000 employees appeared in the auditorium. Many believed they were going to learn that the Post building had been sold—a widely reported possibility.
It had not.
Bezos had bought the Post, its printing presses, the Express newspaper, the Gazette Newspapers, Southern Maryland Newspapers, the Fairfax County Times, El Tiempo Latino, and Greater Washington Publishing—basically everything needed to produce the Washington Post and its website.
• • •
Graham—the 68-year-old son of legendary Post publisher Katharine Graham—read a brief speech.
“I was surprised he’d written down what he wanted to say,” says Downie, who joined the Post in 1964. “He’s a good extemporaneous speaker. He may have done it for legal reasons, but I think it was more so he could get through it.”
Some in the auditorium cried at the announcement.
Graham soldiered on, his voice quivering: “To say the very obvious, I’ve loved working with you. Not just those who write the stories, but those who run the presses, sell the ads, deliver the papers. … I understand there is also, and necessarily, a sense of disappointment on my side. The only person I feel even a slight sense of disappointment with would be me. But not you. No one had a better bunch of people to work with.”
The next day he reiterated that sentiment, telling Post media blogger Erik Wemple, “I disappointed myself.”
• • •
For Don Graham, selling the Post is like putting a baby up for adoption. The biological parent knows the child will have a better life than he or she can provide. But giving up that baby is still painful. It’s an admission that you can’t provide what the child needs.
Brauchli says putting the Post before his own feelings is what Graham is about: “He takes the greatest pride in doing the right thing, however difficult. He is immensely dedicated to his people and the history and legacy of the institution. He felt he was doing what was right for the institution. The pain was secondary.”
Robert Kaiser, who has worked with Graham since 1971, recalls a line that Graham’s grandfather Eugene Meyer said in 1954 after he bought a competitor, the Washington Times-Herald, for $8.5 million. Don Graham was eight; his grandfather was 78. Purchasing the Times-Herald while owning the Post meant Meyer had secured the future for the next generation.
“The real significance of this event,” Meyer said, “is that it makes the paper safe for Donnie.”
It did for decades—until a perfect storm fueled by the web, technology, and a recession brought the paper to its knees.
“On some level, Don must feel now that he has let the family down,” says Kaiser, an associate editor who joined the paper in 1964. “He didn’t live up to their expectations to keep the Post going. It was an extremely difficult decision and at the same time courageous.
“I think Don faced up to the fact that the only strategy Katharine [Weymouth] and he had wasn’t really a strategy. They were waiting for something to produce more revenue, and it never happened. He understood it was a long, downward glide involving more cuts.”
• • •
This month, Post ownership will legally be handed over to Jeff Bezos. A bash for current and former Posties is planned at the paper to celebrate Graham and his family.
Graham—who will still be chairman of the board of the not-yet-renamed Post Company—is a deeply private man. A week after the sale, he told Washingtonian he was “interviewed out.” But he wasn’t likely to be that forthcoming anyway. That’s not who he is.
Post veteran Dave Kindred’s 2010 book, Morning Miracle: Inside the Washington Post, noted that Graham is a dream owner but also “every inquiring reporter’s idea of a frustrating interview (so much there, so little said) … .”
Peter Perl, who worked at the Post for 32 years, was assigned to write an advance obituary about Graham as he nears his eighth decade—standard news procedure for prominent figures. Perl interviewed dozens of people in Graham’s life.“Nobody knows Don on a deeply personal level,” Perl says, “even people who are friends. He just got married [to his second wife] and recently had a grandchild—I can see him saying, ‘I want to leave this thing in good shape and want the newspaper to always be there.’ ”
Graham has an elder sister, Lally Weymouth, and two younger brothers, Bill and Steve. None works day to day for the Post Company, though Weymouth writes occasionally. Graham’s daughter Laura O’Shaughnessy is general manager of SocialCode, a Post Company start-up that helps businesses develop their brand on Facebook. Her husband, Tim, is CEO of LivingSocial. Graham’s daughter Molly went to work for Facebook in 2008.
I reached two of his close friends, Boisfeuillet “Bo” Jones Jr., who worked at the Post for 32 years, and Nick Friendly. They had gone to St. Albans School with Graham and have remained close. Both offered to talk about what the sale meant to him, but only with Graham’s approval. He didn’t give it.
Lally Weymouth and her daughter Katharine also declined to be interviewed, as did Graham’s daughter Laura.
• • •
Kindred’s book says Graham once told a staffer that he started each day by looking in a bathroom mirror and saying, “Don’t screw it up.”
Some may say Graham screwed it up. Forbes ran a February 2012 article titled nice guy, finishing last: HOW DON GRAHAM FUMBLED THE WASHINGTON POST CO. A Vanity Fair story last year was equally harsh, while describing how much everyone at the Post loved him.
The reality is the Post has tried many things in the last two decades. Some worked, but none was the holy grail. The internet robbed the Post of lucrative print advertising as readers moved online and circulation dwindled from a high of 830,000 in 1994 to today’s 474,767. Craigslist ate away at the once reliable cash cow, classified ads. During the last seven years, the Post Company’s newspaper division has seen a 39-percent drop in operating revenues. The future isn’t looking any better.
Twenty-one years ago, Bob Kaiser attended an Apple-organized conference in Japan on the “future of multimedia.” No one at that gathering predicted the demise of newspapers. But on August 6, 1992, Kaiser sent a memo to Post higher-ups.
“All saw an important place for us,” Kaiser wrote about the conference attendees. “… But if newspapers are not about to become extinct, I came away convinced that inevitably, more and more people will want to use their computers to consume our products. As the number of such people grows, so do our business opportunities.”
One suggestion he pushed was electronic classifieds: “Would someone looking for a reliable car for a kid going to college prefer our current [print] listings, or a list of all small cars with less than 60,000 miles selling for $5-7,000?”
He got nowhere. “The business side showed no interest in what I said about classified ads,” he says. “They didn’t want to cannibalize our own product. Tragic mistake. We might have been Monster.com.”
Kaiser had some success. He recommended creating an electronic version of the paper, which the Post did; that eventually evolved into Washingtonpost.com.
Steve Coll, who worked at the paper for 20 years, including as managing editor from 1998 to 2004, insisted the Post should capitalize on its national brand—about 80 percent of online readers came from outside the Washington area, a figure that’s risen to 90 percent—rather than focus all its energies on the local franchise. Graham disagreed. Coll left the Post, later telling Vanity Fair he didn’t want to be “managing decline.”
“Don worked that problem with greater patience and creativity than most publishers,” Coll says today. “He invested in web and digital strategies. He brought in experts from Silicon Valley. He brought [media executive] Barry Diller onto the board. He put technologists on the problem. He tried to think outside the lines about advertising models.”
The truth is that no newspaper has figured out how to monetize the internet.
“I appreciate why he called time on his own effort,” Coll says. “He felt he had done as much as he could.”
• • •
It’s easy to second-guess. If only Graham had been more hard-nosed in 2005. That’s when Facebook founder Mark Zuckerberg, after receiving a higher offer, asked to get out of a handshake deal with Graham for the Post Company to invest $6 million in Facebook. Graham released him. If he hadn’t, the Post’s stake might be worth $7 billion, according to PrivCo, a firm that researches private companies. The agreement would have given the Post Company the deep pockets it needed.
If only Graham had bought more Berkshire Hathaway stock when he met Warren Buffett in 1974. The stock was selling for $50 a share; at press time it’s $170,500. “That was a much bigger miss than Facebook,” Graham said in an interview on WAMU.
But the real problem the Post had—and why it had to be sold—was that its owners failed to find a business model that would satisfy their shareholders.
In 1971, the Graham family took the company public. The stock opened at $26 a share. The paper did well financially until the digital revolution. Owning Kaplan, the highly profitable education company, helped the Post through the tough times until Kaplan started to lose money in 2010 when government regulators cracked down on the for-profit education industry.
Graham and other executives and editors experimented. But quarter after quarter, the board and shareholders wanted to see their stock rise, not lose value. They were looking at the seventh year of declining revenues.
“How many public failures you can have is affected by shareholder reaction,” says Jim Brady, executive editor at the Post’s website from 2004 to 2009 and now editor-in-chief of the privately held Digital First Media. “At a private company, you can reorganize, restructure, try some things. If it doesn’t work, you live for another day.” A private company, depending on the owners, can afford to make mistakes without shareholder pressure.
The Post, according to media analyst Ken Doctor, ran out of three key commodities: time, money, and ideas. “They didn’t have to sell immediately,” Doctor says, “but depending on family and board pressures, they knew there would be more cutting coming, given the downturn in print advertising.”
Doctor says the 11-member Post Company board helped force the reckoning.
“I knew there were some rumblings, especially through the board of directors,” says longtime Post reporter and editor Bob Woodward of the sale. “Directors have to represent the stockholders. They are looking at this asset dwindling in value. If you look at it strictly as a business issue, you’ve got to do it.”
• • •
According to a Post insider, the idea of selling began about two years ago when Katharine Weymouth went to her uncle, who replied, “Absolutely not.”
“Katharine flew to Omaha sometime last year to see Warren Buffett,” this person says. “The thing she and Don agreed on was they needed to find out what Buffett had to say. You have to understand the extent that he is a guru to Don.”
Buffett owns 28 percent of Post Company stock. He was a friend and mentor to Katharine Graham and is a father figure to Don, who at age 18 lost his dad, Philip Graham, to suicide.
“Katharine [Weymouth] lays out the situation financially and asks Buffett for his advice,” the insider explains. “Buffett said to her, ‘If you were my daughter, I would tell you to get out.’ ”
Weymouth presented the idea at a lunch with Graham at DC’s Bombay Club in late 2012, according to a Post account. “That meeting triggered months of remarkably quiet maneuvering for a company that ordinarily prides itself in dragging other people’s secrets into the light,” wrote Craig Timberg and Jia Lynn Yang in an August 6 Post article.
“The Post is [Don Graham’s] baby,” Weymouth said in the story. “He was not going to give his baby to anybody who he thought would not care for it properly.”
Leslie Hill understands such a decision. Hill is a member of the Bancroft family that held more than half of the voting stock for Dow Jones, which owned the Wall Street Journal. “For me it was very emotional,” Hill says of the Journal’s 2007 sale to Rupert Murdoch. “Your family has had this asset for 105 years, and it’s being sold on your watch.”
Hill says she knew for a number of years that the Journal had to be sold because it wasn’t going in a direction that could be sustainable, let alone profitable: “That said, it’s very difficult to say the time to sell is right now.” It was especially hard because Hill didn’t want to sell to Murdoch.
Sarah Ellison covered the Journal’s sale as a reporter for the same paper, and she wrote a book about it. Last year, Ellison profiled the Post for Vanity Fair. “With every sale of a family paper, there comes a moment when the family believes the paper will be better off under someone else’s ownership,” Ellison says. “That’s what they believe to get themselves over this hump. That’s what the Bancrofts did. I imagine that’s what Don was thinking. It’s a pretty startling thing to come to grips with if you are born into the paper with all the expectations that Don had.”
Allen & Co., an investment firm, was hired to help find a buyer. Graham said on PostTV, the paper’s video arm, that there were fewer than a dozen prospective buyers. Allen & Co. contacted Jeff Bezos in March or April, but the discussion didn’t seem to go anywhere. Then in July, Graham attended Allen & Co.’s media conference in Sun Valley, Idaho, and met with Bezos twice. Eventually, they reached a deal.
It’s poignant that the moguls came to an initial agreement in Sun Valley, where Graham’s mother, Katharine, died in 2001 after falling while attending the same conference.
• • •
Don Graham, many say, likely spoke to few about selling his baby.
“When I asked him to talk about past decisions in his life, he very often literally would talk to no one before doing something,” Peter Perl says. “He didn’t tell anybody until he made the decision [in 1967] to go to Vietnam and had already signed up. He didn’t tell his wife. It’s not a chatty family.”
On August 5, Post Company directors approved the sale in a conference call. Director Dave Goldberg, CEO of SurveyMonkey, said in an e-mail that the directors weren’t allowed to talk about the details. Because the company is publicly held, under SEC rules it had to make the sale public immediately. So Graham and Weymouth hastily convened their employees.
It has all the tragedy of a 19th-century novel, says New Yorker editor and former Postie David Remnick. Graham tried to do everything right, and for years he succeeded. “And then along comes a technological revolution that throws it all into chaos,” Remnick says by e-mail. “And then, because he sees no good future for his company or for the paper, he sells it—to a leader of that revolution.”
Adds Steve Coll: “Selling the paper doesn’t diminish the achievements of his lifetime, but it’s not the way Don wanted it to end.”
Alicia Shepard (email@example.com) is a media writer and the author of Woodward & Bernstein: Life in the Shadow of Watergate.
This article appears in the October 2013 issue of The Washingtonian.