Why do billionaires buy media companies?

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NEW YORK >> The Washington Post. Time magazine. L & # 39; Atlantic. The voice of the village The Los Angeles Times. All American media icons, all bought by billionaires in the last five years. Some are booming. One is dead. On the rest, the jury is still outside.

However, for the beleaguered information organizations, the prospect of a lifeguard in their pocket – even the same technology industry that has upset the traditional business model of the media – is anything but irresistible.

But success is not guaranteed. And the risks range from external companies making bad business decisions to undue influence on editorial operations.

For billionaires, on the other hand, the ownership of magazines or historical newspapers offers an alluring combination of trophy-goods, a high-profile opportunity to demonstrate their keen business acumen and a chance to demonstrate exemplary civility.

"There is nothing more satisfying than seeing your name at the head of a publisher as a publisher or publisher or owner," said Samir A. Husni, a professor of journalism at the US. University of Mississippi.

While some new billionaire owners claim to do so for civic purposes and ensure that journalism will continue as an institution, these people are still businessmen, Husni said. If their investments do not work, there is no guarantee that they want to distribute publications as charities.

Billionaires are used to success. But they also have enough money to fail. That includes technology magnates like Jeff Bezos, who bought the Washington Post in 2013 for $ 250 million, or Marc Benioff, Salesforce's CEO who bought $ 190 million from Time Magazine, and even Steve's widow Jobs, Laurene Powell Jobs. a majority stake in The Atlantic.

Benioff told tech journalist and New York Times columnist Kara Swisher this week that he viewed Time magazine as a start-up that had been "embarrassed by opportunities."

"But we are here to liberate them," he said.

Bringing these technological feats into a centuries-old industry could help bring new ideas and new blood, by reinventing not only magazines and newspapers, but also the old business model of relying on advertising for revenue. .

"What they see even more than traditional media people," he said, is the need to change the industry's business model.

However, a newspaper owner who has a civic duty and a higher goal may be more forgiving if the newspaper does not immediately realize a profit, or if earnings growth is low.

Bezos said the post office was profitable. But even if it were not the case, the richest man in the world – whose company Amazon.com Inc. has not benefited for years – would probably be more patient than a hedge fund or even Wall Street.

For many recently purchased media companies, it's too early to tell if their new owners have been satisfied for years.

"They want the publications to be professionally managed and not spend money and money," said Rick Edmonds, Media Sector Analyst at the Poynter Institute. "It would embitter them."

Joe Ricketts, founder and CEO of TD Ameritrade and owner of the Chicago Cubs, closed last year two popular news sites in New York, citing business reasons – a week after their staff voted to unionize. He founded one of them, DNAinfo, in 2009 and bought Gothamist in New York in 2017 (Gothamist was later bought and restarted by the WNYC public radio station).

"It was a pretty clear case of a businessman who was choosing to leave the company because of business problems," Edmonds said.

The legendary Village Voice of New York closed its doors last month after 63 years of Pulitzer Prize, conducting investigations and publishing infamous commercials. Its publisher, Peter Barbey, whose family has earned billions in the textile and clothing industry, bought the weekly alternative in 2015. Barbey wanted to save the Voice after a series of owner changes, departures and loss of readers and advertisements. in perpetual danger.

He closed the print edition last summer in an attempt to save money. He did not record the voice.

"Like many others in the edition, we were continually optimistic that relief was around the next corner," wrote Barbey.

Long-time media analyst Ken Doctor said the new wealthy owners sometimes forget that it's not the decline of a company, but an entire industry, they are witnessing.

"It's been declining for a decade and nobody has reversed the trend," said the doctor.

John Henry, the main owner of the Boston Red Sox, paid $ 70 million for The Boston Globe in 2013, but five years later, he is still trying to change the business of the newspaper. Biotech billionaire Patrick Soon-Shiong has bought the Los Angeles Times and other newspapers this year for $ 500 million, claiming that they are "more vital than ever" and qualifying the false information of "cancer of our era".

But Soon-Shiong also acknowledged that digital changes "pose an existential threat to the traditional newspaper industry" and that newspapers "must be run like a business to grow and prosper".

At first, Bezos did not want the Post, when a friend contacted him to buy it.

"I had no intention of buying a newspaper," he said earlier this month at the Economic Club of Washington, DC. "It never came to my mind, it was not a childhood dream.

He said that he had changed his mind because he realized that it was "an important institution".

This purchase has been regularly criticized by President Donald Trump, who claims that Bezos uses it as a spokesperson to support Amazon. The editorial says that Bezos stays out of editorial decisions.

"It's the newspaper, in the capital of the most important country in the world," he said. "The Washington Post has an extremely important role to play in this democracy."