The Sale of the “Washington Post”: A Smart Decision for the Graham Family

The sale of the
Washington Post to
Jeff Bezos Monday left us guessing about the fate of the fabled newspaper, but Wall Street’s
reaction was swift. In after hours trading Monday, the day news of the impending deal broke, the Washington Post Company’s stock gained 29 points, from $568 at the close of the bell to $597, according to MarketWatch. First thing Tuesday, investors snapped up shares and sent the share price over $600.

The sale of the newspaper division was a smart business decision, plain and simple.

No doubt the
Washington Post, and journalism in general, thrived under the Graham family’s stewardship for the
past 80 years. How many journalists got into the game because of Woodward and Bernstein,
brought to you by the
Washington Post? The
Post helped establish investigative journalism. We all wanted to defrock a president—or
a mayor, at least.
Kay Graham, in her quiet and reserved way, broke barriers for women in business and publishing.
On its worst days, the
Post still published great journalism.

But the storied newspaper could not withstand the disruptions brought on by the digital
era. Like many other daily print publications, its business model quit working. Starting
a decade ago, it began losing readers and revenues. Over the past six years it saw
a 44 percent decline in operating revenue, according to the
Post article announcing the sale. The Post Company’s newspaper division posted an operating
loss of nearly $50 million over the first six months of 2013. Online revenue rose
15 percent, but that barely offset the losses.

When the Post Company roped off its daily newspapers into a separate News division
not long ago, it became one of five distinct divisions that included Education, Broadcasting,
Cable, and “Other Businesses, Ventures, and Investments.” Reporters wondered at the
time if the reorganization would set the stage for the Grahams to sell the newspaper
and keep its profitable divisions.

That’s precisely what the Bezos deal described.

The Post Company kept its Kaplan education division, which could soon return to being
profitable. The money-making broadcasting and cable divisions are not going to Bezos.
The Post Company kept its valuable real estate holdings in downtown Washington, DC,
and in the Robinson Terminal, along the Alexandria waterfront.

In jettisoning the news division, the Grahams cut their losses. The company will have
to change its name, but without the news division’s drag, it’s likely to see growth
in its stock value, judging from Wall Street’s immediate reaction to the Bezos news. Keep in mind Post Company stock was selling for $26 a share when Kay Graham took it public in 1971.

Selling the iconic newspaper might wind up being bad for journalism—or Bezos might
figure out a way to make money and good journalism at the same time. Either way, the
deal is very good for the Grahams, who control the company and its stock, worth many
billions of dollars.