email@example.comThere’s no telling how many billions of dollars were spent last week on business acquisitions, but the media only reported two with vigor. For the media, all other business deals pale in the face of the sale of one of their own – or, in this case, two: The Boston Globe and The Washington Post. News organizations love to write about themselves, even at the expense of stories that may have more import. And so, last week, in print, broadcast, social media and all over the Internet, people were asking: Why in the world anyone would buy The Boston Globe or The Washington Post? The “anyones” at issue in this story are John Henry, the Boston Red Sox owner who bought The Globe, and Amazon founder/CEO Jeff Bezos, who bought The Post.
Neither has said in any detail or with any clarity why he decided to buy a newspaper. Insanity appears to have been ruled out. Bezos’ acquisition is by far the more intriguing because he’s the epitome of a guy immersed in cool, hip, new media and now he has chosen to dive into a money-losing (estimated loss: $50 million a year) sinkhole emblematic of stiff-legged, decidedly not cool old media. Theories abound regarding each man’s motives and the theorizing is mildly entertaining. But it’s all speculation until one or both serves up an explanation – or we see what they do with the properties. One point that requires no speculation is this: At $70 million, Henry made a great deal; Bezos, forking over $250 million for The Post, paid too much. Overlooked in much of the dissection of possible reasons for the purchase are several key facts: • Newspapers are not dead. There are still readers and there are still advertisers – not as many as there used to be, but the medium still works on several levels. As the industry adapts and adopts practices and tools from new media it will stabilize and, in fact, may grow. • These two papers are great brands. They’re not making Boston Globes anymore and it took 80 years for the Graham family to build The Post brand. Anyone who believes in the power of branding – anyone who doesn’t is nuts – can recognize that these are among the most powerful brands in the information business today. Underline “information business,” and stay away from the term “newspaper.”
Brand matters. • Newspapers know a lot about you as a customer. They deliver a product to your door every day – every day – so they know exactly where you live. They know the cars you drive and other shopping patterns and they’re tuned in to your behavior as a consumer. They know your socio-economic demographic. But, amazingly, newspapers have never leveraged the power of this information. • Journalism still matters. Just as the First Amendment matters, not only to journalists but to all citizens. The media, especially newspapers, are still the best at practicing and protecting the First Amendment and free speech. Sure, anyone today can blog and email and tweet but professional journalists are still your most reliable and truthful source of news and opinion. Professional journalists have credibility that others do not have. • With all the options available for processing and delivering information, the future has never been brighter for journalism. Never brighter. Journalism is not dead; it is not going away. What both men will find out soon enough is that for decades and decades their newspapers have been poorly run and horribly managed by clueless executives. The typical newspaper executive is not a risk-taker, is not creative, and has no sense of how to build an invigorating workplace. The people who run newspapers institutionalized the practice of being “stodgy.” Over the last 30 years, in the era of media consolidation, local newspapers have often been bought by large corporations. Corporate America, at least at the public company level, is not entrepreneurial; these companies rarely develop truly great leaders and innovators. And they could get away with their stodginess because until about 10 years ago newspapers minted money. They made obscene amounts of money. Profit margins approached 50 percent in many markets, large and small. Why would they want to tamper with that money tree? They wouldn’t and didn’t. Jason Calacanis, who runs a blogging company, Weblogs Inc., wrote about the newspaper sales last week and came up with one of the best summaries of the problems facing newspapers over the last decade. He wrote: • Craigslist took all your classifieds • Niche sites took your audience and your top journalists • No one wants dead trees on their doorstep • News breaks, is processed and largely resolved in the same day on Twitter • Some of the country’s last unions are grinding down already ground-down newspapers I could quibble with some of his reasons but basically he is correct. He apparently does not, however, understand the level of ineptitude in newspaper management for the past 30 to 50 years. There’s also a touch of irony in his list and it shows how fast media change today. Five years ago, all anyone talked about was Craigslist. Not so much anymore. Craigslist undeniably put the first big nail in the coffin of newspapers’ most lucrative cash cow, classified advertising. Remember when classifieds were generically referred to as “the want ads?” But this is how fast the media world changes these days: Craigslist is out of date. And here is another sign of rapid change. People are always telling me, as a way of saying my industry is dead, that their children do not read newspapers. Well, guess what? My 13-year old does not tweet or even have a Twitter account. She uses Instagram and Tumblr. The next big thing is always an eye blink away from obsolescence. Calacanis made a valid point about the transformation of classified advertising. If you looked at newspaper profitability, particularly increased profitability, from the mid-1970s to 2000, you would see that increased classified business, in dollars and cents, accrued directly to the newspaper’s bottom line. Most growth in advertising revenue was driven by growth in classified. When that stopped, and then eroded, newspapers began losing profitability – not losing money, but losing the amount of profit they had. And they were too slow to react to this change. Newspapers, especially local papers, can still make money from classified sales but it is one piece of advertising revenue that will never return to its historic levels.
Like many of you, I suspect, I have read a lot about Bezos and his management style in the last few days. First of all, believe me, Post employees are hoping he will stay put in Seattle, where he lives and where Amazon is headquartered. Not a chance. Bezos leaves his imprint on everything he owns and does. You do not become as successful as he is without paying attention to details, and without impacting them. He is obsessed with customer service. Newspapers are not. They are among the worst of the worst at customer service. Bezos loathes and breaks down bureaucracy. Most newspapers rival government for bureaucracy and stupid rules. Change those aspects of the newspaper business alone, and you win. Finally, how about this for the world of media? The best story I read about the Bezos purchase came to my inbox through LinkedIn.
Contact Connor at firstname.lastname@example.org