Amazon Founder Jeffrey Bezos To Buy Washington Post For $250 Mln

(RTTNews) - Education and media company Washington Post Co. (WPO) said Monday that it has agreed to sell its newspaper publishing businesses to Amazon.com Inc.'s (AMZN) founder and CEO Jeffrey Bezos for $250 million.

The deal includes the Washington Post newspaper, the publication credited with breaking the Watergate scandal that led to the resignation of President Richard Nixon in 1974. Shares of Washington Post gained 5 percent in extended trades following the announcement of the surprise deal.

The purchaser is a company that belongs to Bezos in his individual capacity and is not related to Amazon.com.

Washington Post, like others in the industry, has been grappling with weak earnings and falling subscriptions at its traditional newspaper publishing business amid the formidable challenge posed by the Internet. As a result, the company had resorted to cost-cutting measures, including job cuts and closing down newspaper bureaus. However, the company had previously not hinted at the sale of its newspaper publishing business.

The deal covers The Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.

Commenting on the deal, Donald Graham, Chairman and CEO of Washington Post Co. said, "I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post (after a transaction that would be in the best interest of our shareholders). Jeff Bezos' 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, "I understand the critical role the Post plays in Washington, DC and our nation, and the Post's values will not change. Our duty to readers will continue to be the heart of the Post, and I am very optimistic about the future."

Donald Graham is the grandson of Eugene Meyer, who bought the Washington Post during the Great Depression in 1933. The deal thus marks the end of eight decades of ownership of the Washington Post by the Graham family.

Bezos has asked Katharine Weymouth, CEO and Publisher of Washington Post; Stephen Hills, President and General Manager; Martin Baron, Executive Editor; and Fred Hiatt, Editor of the Editorial Page to continue in those roles.

Washington Post said that Slate magazine, TheRoot.com and Foreign Policy are not part of the sale transaction and will remain with the company, along with the WaPo Labs and SocialCode businesses, the company's interest in Classified Ventures and certain real estate assets.

The real estate assets include the headquarters building in downtown Washington, DC. Washington Post Co., which also owns Kaplan, Post-Newsweek Stations and Cable ONE, will be changing its name in connection with the transaction. However, the company did not announce any new name yet.

Last Friday, Washington Post reported a 14 percent decline in profit for the second quarter, as last year's results included profit from a discontinued business. Earnings from continuing operations improved from a year ago, driven by improved operating profit at cable television, TV broadcasting and Kaplan education, despite weak revenues at newspaper-publishing and Kaplan University segments.

Newspaper publishing revenues for the quarter declined 1 percent to $138.4 million, reflecting a 4 percent decline in print advertising revenue at the Washington Post newspaper.

In another recent deal in the newspaper industry, New York Times Co. (NYT) said on August 3 that it has agreed to sell the New England Media Group, including the Boston Globe newspaper, to Boston Red Sox owner John Henry for $70 million. The company had acquired the Boston Globe in 1993 for more than $1 billion.

WPO closed Monday's regular trading session at $568.70, up $8.75 or 1.56 percent on a volume of 77,650 shares. In after-hours, the stock further gained $28.80 or 5.06 percent to $597.50.