Washington Post Sale Behind Him, Donald Graham Moves On

On May 8, Donald Graham chairs his public company’s last annual meeting at the Washington Post’s longtime home on DC’s 15th Street, Northwest. The gathering ends a months-long parade of moist-eyed valedictories in the building where Graham’s mother, Katharine, built a media power from her father’s newspaper, which Graham sold last year to Amazon founder Jeff Bezos for $250 million.

But nobody in the room will be crying for Don Graham, least of all Graham himself. His renamed firm, Graham Holdings, is headed toward doubling its stock price in the past year. The day the Post sale went through, in October, the stock hit a five-year high.

In its most recent SEC filing, Graham Holdings reported $570 million in cash on hand. Since then, the company added $159 million from the sale of its headquarters (the Post is reportedly negotiating to move into 1301 K Street, Northwest, next year) and expects about $95 million from its share of Apartments.com, which sold in March. With steady profits from TV stations, Graham Holdings is a $5-billion company in the market for new ventures. Indeed, the company, which moves to Rosslyn’s Arlington Tower in August, has branched out into health care with a hospice firm; last year it bought Forney, a company that makes equipment for power plants.

Graham’s expansion counters the conventional wisdom that his fortunes are too much tied to Kaplan, the company’s for-profit education division. Once a cash cow, Kaplan has seen declining revenues, according to SEC filings. Federal regulators, Iowa Democratic senator Tom Harkin, and most recently President Obama have been questioning the high default rates on federal loans that support for-profit colleges like Kaplan’s. According to Graham Holdings’ recent SEC filing, Kaplan faces multiple lawsuits and investigations launched by attorneys general in four states. “It’s still a troubled sector,” says Liang Feng, an equity analyst with Morningstar. “It presents the most uncertainty.”

Graham clearly feels Kaplan can be salvaged. He has been lobbying senators and the White House on its behalf, meeting with regulators, and positioning himself as an expert on education reform. In a February 24 Post op-ed, he supported schools chancellor Kaya Henderson against meddling DC Council members, calling mayoral hopeful David Catania “a bully.”

Which brings us back to the loss of the Graham family’s institution. Don Graham has, in a real sense, been able to sell his paper and keep a grip on it, too. His niece Katharine Weymouth has stayed on as publisher of Washington Post Media while sitting on the board of Graham Holdings. And if he wants to publish an opinion piece, he can offer it to his friend and former employee Fred Hiatt, the Post’s editorial-page editor.

Graham, 69, lives in a lovely brownstone on DC’s Hillyer Place, around the corner from the Phillips Collection, near Dupont Circle. He declined to discuss business or personal matters, but word is he’s spending more time with his second wife, Amanda Bennett, who left Bloomberg News last November. He works with a daughter, Laura O’Shaughnessy, CEO of SocialCode, an advertising firm that’s one of Graham Holdings’ fastest-growing subsidiaries.

Among his friends, he counts Warren Buffett, to whom Graham recently traded a Miami TV station, stock, and cash for Buffett’s $1.1-billion stake in Graham Holdings. The deal, which will save both companies hundreds of millions in taxes, effectively takes the Berkshire Hathaway founder, a longtime investor in the Post, out of the Graham company.

If the two disagree, it may be over Buffett’s recent habit of buying newspapers. If stockholders ask at this month’s meeting if Graham is in the market for a print publication, the answer is likely to be no.

This article appears in the May 2014 issue of Washingtonian.

Harry Jaffe