The Fixer

Amazon CEO Jeff Bezos has a genius for seeing old businesses in new ways, growing what began as an online bookseller into the dominant retailer on the Web. So when he committed to buy the venerable Washington Post for $250 million, the reaction in the battered world of journalism quickly went from astonishment–the Post has been owned for 80 years by the Meyer-Graham family of Washington–to a guarded hope that Bezos might find a way forward for an important but endangered institution.

With this transaction, the era of the metropolitan daily colossus with a monopoly on its region officially ends. Like other big-city dailies from Los Angeles to Chicago to Boston–where the Globe sold this month for pennies on the dollar of its former value to Red Sox owner and hedge-fund billionaire John Henry–the Washington Post is a business from a vanished past. These enterprises still have a valuable mission. What they lack is a viable business model.

What made the great metro newspapers great was a passing historical moment when dominance in the morning was a license to print money. While the Post is most famous for its Watergate reporting, which helped bring down a corrupt President, its power stemmed from a much earlier moment. In 1954, after years of effort and red ink, the paper’s owners, financier Eugene Meyer and his son-in-law Philip L. Graham, finally bought out their last remaining a.m. rival. Owning the morning meant that the Post would thrive as afternoon newspapers fell to the competition of television news. Advertisers hoping to reach a broad Washington audience had no choice but to pay the Post’s steadily increasing rates. While the Sulzbergers of the New York Times pursued an elite national audience, in cities across the country great fortunes were made in the morning, and some beneficiaries–the Chandlers of Los Angeles, the Coxes of Atlanta, the Knights of Miami, to name a few–poured significant shares into better journalism. None outdid the Grahams.

Unbundling the News

A common mistake is to say that the Internet derailed this gravy train by giving readers the news for free. In truth, free news was nothing new. Publishers never made much money on the news. During some of the Post’s most robustly profitable years, subscribers paid as little as 20¢ a day for home delivery–far less than it cost to gather, edit, print and hand-deliver the news by 6 a.m.

The money came from the advertisers, from the individual classified-ad buyer eager to sell a used lawn mower, to the grocers and department stores and car dealers who bought page after page of costly display ads. The business was about collecting a mass audience for those advertisers, so publishers bundled all sorts of diverse content–from box scores to horoscopes, from coverage of debutante balls to news of distant war zones–into the most broadly appealing package they could muster, then delivered it at a loss in exchange for eyeballs.

The digital revolution has unbundled the bundle. A movie fan no longer needs a newspaper to find the reviews and showtimes that she seeks, nor is it necessary to skim past the editorial page to read Dear Abby’s advice. At the Post, as more Washington-area readers customized their own content, circulation of the old bundle sank steadily, from a peak of more than 820,000 a day in the early 1990s to less than 475,000 today.

The sale amounted to a recognition that Meyer’s descendants–not to mention the board of directors of the publicly traded parent company–had run out of ideas to revitalize a business that has seen revenues decline for seven straight years, with no end in view.

Announcing the sale to the astonished Post staff on Aug. 5 was a visibly emotional Donald E. Graham, chairman of the soon-to-be-renamed Washington Post Co., which will continue to own a string of other assets. He expressed “shock” in an interview with the Post at finding himself selling the newspaper that his grandfather bought at a bankruptcy auction in 1933. Graham’s mother, the late Katharine Meyer Graham, took over the operation after the suicide of her husband in 1963 and became one of the great publishers in history. With Warren Buffett as her chief financial adviser and Benjamin C. Bradlee as her swashbuckling editor, she led the Post through the Pentagon Papers and Watergate to an era of robust profits and global influence. Her granddaughter and namesake Katharine Weymouth will continue as publisher after the sale.

Few newspapers in the world have been more closely identified with a single family, and after decades of proud ownership it lacked the heart for more cuts to a staff that has dwindled from more than 1,000 newsroom employees in the peak years of the 1990s to 600-plus today.

I was one of those fortunate 1,000. I admired Don Graham as the best publisher of his generation. And I’ve come to see, as he did so painfully, that “saving” the Post–and metro newspapers generally–will not involve resuscitation or rehabilitation. It will be an Avatar project, a powerful brain replanted in an entirely new body. Or many bodies, as the old familiar newspaper splits into smaller packages.

Betting on the Future

And that’s where a visionary billionaire comes in. As sole shareholder–he, and not Amazon, is the buyer–Bezos has flexibility to make the long-range bets that he relishes and Wall Street abhors. In a letter to the Post staff, Bezos said he has no map for the paper, nor does he intend to be a day-to-day manager. His willingness to invest is inferred from the notion that no one buys a newspaper with 58 Pulitzer Prizes in its history intending to tear it down. “The values of the Post do not need changing,” Bezos wrote.

If stewardship were all the Post needed, though, the sale would never have happened. Having upended more than his share of business models, Bezos is unlikely to spend precious time and capital on trying to re-create the old bundle in pixels while it clings to life in print. Instead, he is likely to look for ways to break it up and give people the content they value in whatever form they want it–for a price. Personalized content and micropricing fit nicely alongside existing Amazon projects. Kindle Singles, for example, are downloadable texts roughly the length of an in-depth magazine article or a four-part newspaper series of yore. Most sell for a buck or two, and people who like that sort of thing are willing to pay. Other people with other tastes might be willing to pay for other bits of the old bundle. Last year, for instance, the New York Times peeled its popular crossword puzzles out of its online bundle and began charging a premium for them.

But that makes it sound too easy. All the people who once bought newspapers to search the highly lucrative classified ads now have Craigslist, which is free. How much of the unbundled content will have value to readers or advertisers is an open question–and the value of investigative reporting and foreign coverage to paying readers or sponsors is the most troubling question of all.

Wealthy beyond imagining from success in other fields, and drawn to journalism as a competitive challenge rather than as a money machine, Bezos is in some senses a modern-day Eugene Meyer, buying low and looking to reshape the marketplace. That’s good news for the news business. As long as people who are able to buy anything still want to buy into journalism, there is light behind the storm clouds.