NEW YORK (
) -- Everyone loves newspapers, or at least the editors of major news organizations, all of whom spent their formative years in print.
So, it's to be expected that the sale of
The Washington Post
principal owner Jeff Bezos has produced reams of analysis, nostalgia and innumerable references to Woodward and Bernstein.
But for investors, the question as to whether Bezos can turn around
The Washington Post's
declining numbers is no longer their problem. Donald Graham's decision to offload his legacy print publication is ultimately good news.
And the stocks are reflecting that sentiment.
Washington Post Co.
shares jumped 4.3% to close Tuesday at $593 on the assumption that the Washington D.C.-based media company that also owns the education business
and an assortment of broadcast and cable-TV stations will soon be free of the conundrum known as print. Similarly,
New York Times
gained 1.7% to finish the day at $12.08, fresh off its announcement on Saturday that Boston Red Sox owner John Henry has agreed to buy
The Boston Globe
"The message here from investors is clear: the less newspapers, the better," Larry Haverty, a portfolio manager at GAMCO Investors and an owner of
21st Century Fox
, said in a phone interview. "It's very clear that the traditional model of newspapers is thoroughly endangered, and it looks as though we're in second derivative-ville where the rate of decline is accelerating."
Bezos, who is paying $250 to buy the
, separate from Amazon, certainly has the cash on hand. The Amazon founder has a personal fortune of $27.9 billion, according to data compiled by
, making him the 16th wealthiest person in the world. By spending $250 million to buy the
, Bezos is making a wager that he can afford to lose while taking on the noble challenge of charting the course for a venerable industry desperately trying to establish a sustainable business model.
For Bezos, its a game of low-risk, high-reward. Building Amazon is one thing, rebuilding the U.S. news business is another.
The Washington Post newspaper won't be easy to fix. The capitol's best-read daily has been losing money while hemorrhaging readers to an assortment of Web sites led by
. This has come even as the Post became one of the most innovative newspaper Web sites in the country, introducing high-quality video long before it became an Internet staple.
Nonetheless, the Post under Graham made the fateful decision back in the 1980s to concentrate on being a local newspaper rather than seeking national ambitions, as the New York Times. As local advertising and local circulation has plummeted in the age of the Internet, the company's newspaper division posted a loss of $49.3 million in the first half of 2013.
Looking ahead, a clue to Bezos' strategy may be found in his investment earlier this year in
the opinionated, snarky and fun-loving Web site owned by Henry Blodget. Back in April, Bezos led a $5 million investment in the Web site.
"What he definitely wants to do is salvage the content of the
, and try to figure out some way to make a decent living on it," said Haverty, who manages the $215 million Gabelli Multimedia Trust. "What he wants to do is improve the product but deliver it electronically."
The company plans to change its name and concentrate on Kaplan, the education business Graham bought in 1984 for $45 million. In 2012, Kaplan reported $2.2 billion in sales, more than half of the company's total revenue.
Graham may attract a new crowd of investors, and they won't be pining for the return of his newspaper.
Written by Leon Lazaroff in New York
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