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The purchase of a news publication is not usually a good investment.
Take 2017, a year in which cable revenues increased by 10%. That year, newspaper advertising revenue declined by the same amount. According to an analysis by the Pew Research Center, the daily circulation of newspapers has dropped by 11%, marking the 29th consecutive year of declining print prices.
Magazines have not been spared either. The circulation of Time and Newsweek, to name two notable examples, have collapsed in recent years. Last year, Time announced a drop in revenue and decided to reduce its print editions.
Yet none of this prevented Salesforce founder Marc Benioff and his wife Lynne from buying the magazine. Time's parent company, Meredith Corporation, announced the deal on Sunday.
The sale is the latest in a trend of billionaire entrepreneurs who buy news publications.
Billionaire Patrick Soon-Shiong bought the Los Angeles Times in June of this year. Lauren Powell Jobs, founder of the Emerson Collective, took a majority stake in Atlantic Magazine in 2017. In 2014, Las Vegas casino mogul Sheldon Adelson purchased the Las Vegas Review-Journal.
The previous year, Amazon's founder, Jeff Bezos, had bought the Washington Post and the owner of Red Sox, John Henry, had bought The Boston Globe.
Warren Buffett, the CEO of Berkshire Hathaway, became the owner of 63 daily and weekly newspapers in 2012.
So why are billionaires spending their money on newspapers and magazines that seem to be losing money?
A mix of philanthropy, ego and ambition.
"They are all people who have done something in business against great difficulties. They want to prove that they can do something that other people can not do, "said Ken Doctor, a media analyst who launched the Newsonomics website.
Benioff told the New York Times that Time has "big assets" and said the purchase was the type of impact investment he makes. Impact investing is the popular term for investments made to stimulate social or environmental good.
The social aspect of impact investing in the media seems to be one of the factors that leads wealthy entrepreneurs to look for ways to define their legacies, the doctor said. "They want to be known for leaving the world better."
This benefactor mentality may have other indirect benefits for the new owners of these media organizations.
Doctor calls this a "halo effect" on their other businesses. Although it is virtually impossible to quantify the benefits, consumers often think better of other entrepreneurial companies if they invest in the "public good".
These billionaires often make a concerted effort not to influence the editorial direction of the publications they own, but they still have a seat at the table.
"It's indirect, but they're in the conversation as they were not before," said Rodney Benson, a professor at New York University, whose next book focuses on the evolution of property ownership. media.
Think of the covers of Time magazine as the annual person of the year. In 2017, these are the women of the #MeToo movement. In 2016, the person of the year was Donald Trump. These magazine covers sparked a public dialogue, and Benioff will now be part of it.
Time and other national publications are also familiar names and have a reputation developed over the decades. Such institutionalized brands are not often sold and possessing one can instantly place a contractor in another league of influence.
This influence is not new. During the first half of the 20th century, wealthy families like the Pulitzers, Hearsts and Ochs-Sulzbergers used to publish their own publications.
Of course, owning a media company also has its share of risk.
Chris Hughes, co-founder of Facebook, has invested $ 20 million in The New Republic in four years before selling it to publisher Win McCormack.
In 2014, two years after the purchase of the publication by Hughes, dozens of staff and editors of the New Republic also resigned en masse because of the management of the magazine.
Under the direction of Hughes, The New Republic was criticized for its lavish spending and had two reshuffles that did little to improve the magazine's bottom line.
Media ownership also carries the risk of being caught in the political melee.
President Donald Trump has consistently criticized Amazon on Twitter. Many political observers do not think that Amazon would be targeted if Bezos did not own the Washington Post.
Until now, this has not started the activity of Amazon. It has become the second largest American company in history to be valued at more than one trillion dollars.
The Washington Post is also resisting the trend. He made a profit for two consecutive years. In 2017, the publication doubled its digital subscriptions and increased its digital advertising revenues.
Bezos and The Washington Post could be exceptions to the rule. But the appeal of a wider cultural influence and the possibility of turning around a dying industry seem to attract more billionaires, not less.
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