Digital editions, paywalls, and consolidation aren't the only life rafts that can help keep newspapers afloat today. The fate of many valued dailies and weeklies may also rest in the hands of big boys with big bucks aiming for private but powerful ownership. Jeff Bezos' recent purchase of the Washington Post certainly isn't a one-off anomaly. Earlier this year, Boston Red Sox owner John W. Henry snatched up The Boston Globe, Wellesley businessman Aaron Kushner bought the Orange County Register and six other dailies last year, and in 2011 the San Diego Union-Tribune was sold to hotelier Doug Manchester. Additionally, Warren Buffett acquired dozens of local papers, the newest of which are the Roanoke Times and Press of Atlantic City (although his investment firm recently dumped shares of Gannett).
Ken Doctor, a news industry analyst and publisher of Newsonomics, says there are several key reasons why savvy private investors like Bezos are investing in print news today. "First, the old fraternity broke up. It used to be that almost all newspaper sales occurred within the industry, but that has changed," says Doctor. "Second, prices for newspapers are about one-tenth of what they were in 2000. Third, (investors) believe they're buying a distressed asset at the bottom of the market. Fourth, there are mixed reasons of ego and civic involvement-where these private owners want to advance their particular city-as well as personal reasons, like the way (politically conservative owner) Doug Manchester uses his paper as a platform."
The recent purchase of newspapers by private ownership entities is a trend that will continue to grow, says Greg Bobolo, CEO of SendtoNews. "I think traditional print organizations lack the required innovative DNA that some of the private ownership groups are able to put into place and succeed with in the digital world," says Bobolo. "Public companies are often blinded by maximizing profits. Investors never like to hear ‘we are going through a restructuring period and will be reinvesting into operations.' They want revenue and profit."
Doctor forecasts less uniformity in the U.S. newspaper industry and greater innovation as a result of the influx of new publishers coming from outside a previously insular industry. "These (private owners) are less beholden to the traditional groupthink of conventional newspapers. And the ones who understand customer relationships and marketing to consumers in different ways will have the greatest chance of success," Doctor says. "Also, some fresh models will emerge that will produce new revenue beyond advertising and circulation. For instance, if Bezos can apply his analytical Amazon thinking to smartly segment customers while also understanding what is different about the Washington Post, we'll likely see new models emerge out of Washington, D.C."
Scott Lorenz, president of Westwind Communications, says he admires Bezos' guts in purchasing a major paper. "Bezos once again is demonstrating that he's way ahead of his competitors. He can distribute content from the Post on Amazon in a Kindle product and online," says Lorenz. For example, if an author or a book is mentioned in a Post article, it's one click and a few seconds away from ending up in your Kindle. The same process can apply to music and other digital products.
"If it all works as planned, with editorial and advertising leading to direct purchases, it'll be the most incredible marketing juggernaut conceived to date," Lorenz says.
Bobolo predicts that several goals will loom large on the agendas of new private owners like Bezos and Henry. "Video consumption is now evolving into a paradigm changer and has to be huge on their list," says Bobolo. "Also, complementary channels to control a geographic market would be on my list, as would the attempt to control convergence and consumption. People want what they want when they want it-they want to read about weather, sports, and national headlines. That needs to be recreated in a new digital format that thoughtfully converges all news mediums through one unified gold standard brand involving copy and rich media."
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