http://finance.yahoo.com/news/newspapers-billionaires-latest-trophies-005842984.htmlJust $250 million. That’s all Jeffrey P. Bezos paid on Monday for The Washington Post, which was once worth several billion dollars.
$70 million. That’s all John Henry paid on Friday for The Boston Globe, a paper The New York Times had acquired for $1.1 billion in 1993.
Next to nothing. That’s what IBT Media paid to buy Newsweek over the weekend from IAC, which itself had paid only $1 plus $40 million in pension obligations to buy it two years ago. How do you explain the prices that these storied media institutions have been sold for over the last 72 hours?
The answer has little to do with dollars and cents, spreadsheets and valuation metrics. If it did, in truth, the buyers might have paid even less. If it wasn’t clear that newspapers have become trophies for the wealthy with an interest in journalism or power — or a combination of both — it should be now. “These deals don’t make financial sense,” said Ken Doctor, an analyst at Outsell, a research and consulting firm for the publishing industry.
He suggested that Mr. Bezos’s valuation of The Washington Post was a generous gift. “It is a combination of good will and real estate,” he said, before adding, “I mean good will in the moral sense, not the financial sense.” Mr. Bezos, the chief executive of Amazon.com, is paying cash for The Washington Post out of his own personal wealth, currently estimated at more than $25 billion. The Post will cost him roughly 1 percent of what he owns in Amazon stock alone. Some billionaires like cars, yachts and private jets. Others like newspapers.
“Newspapers have gone from the public markets to the hands of a relatively few billionaires who have an appetite for social, civic and financial roles,” Mr. Doctor said.
Based on the math, it is hard to justify a $250 million valuation for The Washington Post. The company reported it lost nearly $50 million for the first half of the year on its newspaper operation that generated $138.4 million in revenue. Of the $50 million loss, nearly $40 million was a noncash pension expense. So you could argue that the company lost only $10 million on operations. But it lost $33 million in the first half of 2012, too, also including pension costs. Circulation fell about 7 percent in the first half of 2013. At the end of last year, the company valued its newspaper assets at $293.6 million, no doubt a generous figure.
