Amazon.com Inc’s (AMZN - Analyst Report) founder and CEO Jeff Bezos announced that he will purchase The Washington Post for $250 million in cash.
The Washington Post is one of the legendary publications in American journalism. However, The Washington Post Company’s publishing business has long been grappling with sinking revenues. According to regulatory filings, revenues in the company's newspapers division fell 31% year over year to $582 million in 2012. The company is thus looking to pursue other growth opportunities.
In fact, the publishing industry as a whole has been struggling in terms of revenues and readership due to the increasing availability of online news. This has rendered the print-advertising model increasingly irrelevant.
This deal also comes in the midst of a rapidly shifting media landscape. Recently, the New York Times (NYT - Analyst Report) sold the Boston Globe to Red Sox owner John Henry and IAC/InterActiveCorp (IACI - Snapshot Report) divested the Newsweek brand to IBT Media, the publisher of the International Business Times.
The takeover of The Washington Post entitles Bezos to the ownership of other newspapers such as the Express, the Gazette, Southern Maryland, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing that are affiliated to the Washington Post Co.
Amazon.com has no role in the purchase as Bezos bought the newspaper on his own. Instead, Bezos who has assets worth $25 billion, estimated by Forbes magazine, will become the sole owner of The Washington Post newspaper.
Bezos is credited with Amazon’s transformation from a book-selling website to the largest online retailer. Though we don’t doubt his expertise, we are not yet sure of the extent to which this deal would prove to be beneficial or whether it would impact Amazon.com in any way.
Amazon has a Zacks Rank #5 (Strong Sell). Other stocks that are performing well at current levels include SanDisk (SNDK - Analyst Report), Syntel Inc. (SYNT - Snapshot Report), and InvenSense Inc. (INVN - Snapshot Report), all carrying a Zacks Rank #1 (Strong Buy).