Jeff Bezos, the chief executive of Amazon.com, entered an agreement with the Washington Post Co. Monday to buy its newspaper publishing businesses for $250 million, including its flagship newspaper after decades of family ownership.
The purchaser is an entity that belongs to Bezos and is not Amazon.com.
It follows other indications of Bezos' interest in news. He made a $5 million investment in Web news publication Business Insider earlier this year, and Amazon last week published a long-form Q&A with President Barack Obama on its Kindle Singles platform.
In a release, Washington Post Co. Chairman and CEO Donald E. Graham praised Bezos, saying that his "proven technology and business genius, his long-term approach, and his personal decency make him a uniquely good new owner for the Post."
Bezos said he understands "the critical role the Post plays" in the nation's capital and for the country as a whole."The Post's values will not change," he said. "Our duty to readers will continue to be the heart of the Post, and I am very optimistic about the future."
Though the deal includes the Post and other traditional publishing properties, it doesn't include more digital-leaning assets in the company's portfolio, like Slate magazine and TheRoot.com. The Washington Post Co. that remains after selling its namesake publication -- which includes Kaplan, Post-Newsweek Stations and Cable ONE -- will be changing its name because of the sale. The new name hasn't been released.
The deal had watchers of both Amazon and the newspaper industry scratching their heads about what to expect. Bezos is known to rain his largesse onto eccentric ventures -- a rocket space-travel project, a 200-foot-tall clock, and a maker of glass votives. His farflung investments mean clues to his strategy with the Washington Post are still to be sussed out.
In a letter to Post employees, in which Bezos acknowledged that many would greet his purchase with apprehension, he noted that the paper's editorial leadership would continue to lead day-to-day activities, as he remains focused on his "day job" at Amazon.
"The paper's duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we'll work hard not to make mistakes. When we do, we will own up to them quickly and completely," Bezos wrote.
He also told workers to count on change to come. He didn't give specifics other than noting that the Internet transformational effect on the news business makes radical change inevitable for the Post no matter who owns the paper.
"The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs," he said. "There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment."
In an interview with The Washington Post, Graham said the Post would have been profitable for the foreseeable future under the family-owned stewardship that has guided it for decades.
"But we wanted to do more than survive. I'm not saying this guarantees success, but it gives us a much greater chance of success," he said in the interview.
Dan Kurnos, an analyst with Benchmark Co., said the questions about Bezos' involvement with The Washington Post are what element of expertise will he apply and whether his digital mastery is able to revitalize an otherwise sinking business.
"Bezos has his roots in traditional publishing, and he's also built an e-book empire," he said. "He understands circulation; he understands reader patterns. ... He's getting e-books at a price that's almost the same as real books."
In addition, Bezos has one of the largest ad networks and a gigantic trove of consumer purchasing data at Amazon. "If he can do with newspapers what he's done with e-books, then he's going to have a massive cash flow machine," Kurnos said.
Update, 2:36 p.m. PT: with excerpts of Amazon CEO Jeff Bezos' letter to employees and further comment from Washington Post Co. Chairman and CEO Donald E. Graham.
Update, 4:13 p.m. PT: with further details from Bezos' letter, analyst comment and context.