For years, Washington Post Co. (WPO:US) Chairman Don Graham turned to Jeff Bezos for advice about technology and the news business. Their conversations gave him the conviction to place the future of his family’s storied newspaper into the hands of Amazon.com Inc.’s founder.
“I know Jeff, I know about his personal qualities and technology ability,” Graham said in an interview at the Post on Washington’s 15th Street. “We had talks that centered on the well-known problems of the newspaper industry. We ended those talks and he said, ‘Well I’m still interested.’”
The decision to sell the Post to Bezos for $250 million, eventually clinched over sandwiches in an Idaho resort condominium and announced Aug. 5, was rooted in frank talks between Graham and Post publisher Katharine Weymouth over several weeks late last year. The pair -- uncle and niece -- focused on whether their family was the best owner for the Post as the Internet was forcing rapid changes in the industry.
“To our surprise -- we asked each other whether there might be some person or company out there who could bring something different,” Graham said in the interview on the day of the sale. While no one in the family really wanted to sell, he said they wanted to give the Post “the maximum chance for success.”
To seek buyers for the newspaper assets quietly, Washington Post Co. hired Allen & Co., which it also had enlisted in 2010 to sell money-losing Newsweek magazine.
As happened back then, the task was entrusted to Nancy Peretsman, an Allen & Co. managing director who also serves on the boards of Princeton University and Priceline.com Inc. (PCLN:US) The family drew comfort that she was a friend of Graham’s late mother, Katharine, who led the company during the tumultuous 1970s as Post reporters helped expose the Watergate scandal that ultimately toppled U.S. President Richard Nixon.
Graham said Peretsman had several phone conversations with Bezos early this year and then -- the billionaire went silent. For two months, talks continued with other potential buyers whom Graham won’t name.
Bezos emerged again last month with an e-mail to the media executive. The talks were on.
“I was fascinated that he was interested,” Graham said. “Obviously he’d been thinking about it. This wasn’t a sudden or impulsive decision.”
Graham, 68, and Bezos, 49, have known each other for more than a decade. They had worked closely during the introduction of the Kindle and the Post’s Kindle edition.
While the Post’s digital business was growing, it wasn’t enough to offset declines in print advertising at the paper, where revenue had been shrinking for seven years (WPO:US). The company’s total revenue declined almost 3 percent last year to $4 billion as operating income dropped 56 percent.
Efforts to draw new readers and cut costs didn’t offset the declines in print advertising, Graham said. Family members came to realize there wasn’t much they could do to save the paper they had nurtured for four generations.
“We’ve tried,” the chairman said. “We have innovated very successfully in terms of building audience, in terms of our reputation and in terms of our products, but not in terms of offsetting the decline in revenues.”
The deal was eventually reached in two one-on-one meetings between Graham and Bezos in mid-July at Allen & Co.’s annual media conference in Sun Valley, Idaho.
They first met on a back porch at the conference center and spoke for about an hour, Graham said. The second encounter was in a condo at the Sun Valley resort. Graham bought sandwiches and drinks and the two men gathered at the dining room table.
As Graham munched on turkey and cheese, the men had a meeting of the minds and agreed to what Graham considered “a fair price” based on talks with other potential buyers. Drew Herdener, a spokesman for Amazon, didn’t immediately respond to a request for comment. Bezos is buying the Post through a separate company.
Graham said he and Weymouth repeatedly consulted board members and billionaire investor Warren Buffett, the largest shareholder, asking, “Does this make sense?” Once Graham recommended the deal, the board agreed unanimously.
Graham and Weymouth broke the news to employees on the afternoon of Aug. 5, at a crowded meeting in a ground floor room off the lobby of the 15th Street building.
Their reaction was “sad, because of the affection and respect they have for Don and the Graham family,” Weymouth said in a telephone interview yesterday. “And shocked. But also appreciative that it’s Jeff Bezos and that he shares the values of the Graham family and the track record he has. And that we were not on the auction block.”
Bezos, who has asked Weymouth, 47, and her staff to continue to run the paper, said he will keep his focus on Amazon.com. (AMZN:US) At the same time, he will be thinking about how to revitalize the news business, Graham said.
“He knows how to get people together to develop successful changes in what we do,” Graham said. But first, “he’s going to have to get familiar with why we aren’t growing in the first place, where news comes from, what our readers want.”
Bezos yesterday told employees the Post’s values don’t need changing and its duty “will remain to its readers.”
Graham said he was heartened by the new owner’s tone and that “one of the wonderful things he said is that it’s all going to begin with readers.”
After all, Graham said, it’s the same message his grandfather, Eugene Meyers, imparted when he bought the paper in 1933.
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