Industry Insight: How a New Breed of Billionaire Owners is Shaping the Newspaper Business

Hoping a random billionaire buys your local newspaper and makes everything great again is probably not a solid plan for saving journalism in most of America. But examples of just that in Boston and Washington, D.C., are providing room for experimentation that could help the rest of the industry figure out new business models.

That’s partly the conclusion of a new book by Northeastern University journalism professor and Boston media critic Dan Kennedy. “The Return of the Moguls: How Jeff Bezos and John Henry are Remaking Newspapers for the 21st Century” explores turnarounds at the Washington Post and Boston Globe, failed attempts elsewhere, and the overall limits and pitfalls of the “billionaire savior” model.

Along the way, Kennedy offers concise histories of the Boston Globe, Washington Post and Orange County Register, and goes in-depth on the drama around the sale of each, as well as the Philadelphia Inquirer, Worcester Telegram & Gazette and Maine’s Portland Press Herald.

Jeff Bezos, the billionaire founder of Amazon, bought the Washington Post from the Graham family for $250 million in 2013, after its newsroom staff had been cut by almost half its peak of 1,000 employees. That same year, the New York Times Co. sold the Boston Globe to billionaire investor and Red Sox owner John Henry for $70 million, after having purchased it for $1.1 billion 20 years earlier.

This happened as U.S. newspaper print advertising revenue declined from $47.4 billion in 2005 to $16.4 billion in 2014, while overall newspaper ad revenue, with digital included, dropped from $49.4 billion to $19.9 billion.

Kennedy explores Bezos’ investment in the newsroom (adding more than 100 new jobs), technological innovation, strategy to become a national digital news powerhouse, and emergence as a major player in accountability journalism in the Trump era.

Meanwhile, Henry has focused on getting readers to pay substantial digital subscription rates and supported the development of niche media enterprises that leverage, but are separate from the Globe’s core business, such as life sciences site Stat.

In Philadelphia, Gerry Lenfest has created a unique nonprofit ownership model after purchasing the Inquirer and the Daily News, and is using the Lenfest Institute to explore the “table stakes” that journalism businesses need to have to be successful in a world disrupted by digital.

And while the jury is far from out for the Patrick Soon-Shiong era at the Los Angeles Times, the trend continues. The billionaire doctor’s recent purchase of the paper from Tronc came after Kennedy’s book went to press.

A significant part of Kennedy’s book explores ownership situations and experiments that didn’t work—chiefly, Aaron Kushner’s ill-fated purchase of the Orange County Register, heavy spending on newsroom expansion, and focus on print. The short answer on that one: He didn’t have the deep pockets of a billionaire, but did have too much confidence in his own vision and abilities.

So be careful what you wish for, Kennedy advises. Instead of a Jeff Bezos, you could end up with a Sam Zell, whose leadership of Tribune newspapers was disastrous, or a Warren Buffett, who has taken a hands-off, wind-down-the-business approach similar to the most-criticized corporate newspaper chains.

Billionaires can also get bored or have competing priorities, as seen in the book’s depiction of  Donald Sussman’s promising, but brief ownership of the Portland Press Herald, and the more recent example, in the local online news world, of Joe Ricketts’ abrupt decision to shut down DNAInfo and Gothamist.

But beyond how much a renaissance at the Globe and Post means for Boston and Washington (and national political reporting in the case of the latter), Bezos and Henry offer something important to journalism at-large.

The newspaper business is consolidating into the hands of a small group of big corporate chains that aren’t built for experimenting or investment in the future. Do we expect new business models and best practices to emerge from GateHouse Media or Digital First Media when their hedge fund owners are cutting their way to the maximization of declining profits? Or from Gannett, Tronc, McClatchy, or even Warren Buffett’s Berkshire Hathaway, when all are managing to quarterly profits and shareholder return in a challenging industry?

Even though it was controlled by the Grahams—legendary for investing and standing up for strong journalism—Kennedy points out that the Post’s pre-Bezos troubles were bound to happen after the family sold stock. Bezos and Henry “have the freedom to spend in ways that were lost to the Grahams once they’d made the decision to go public.”

If nothing else, the deep pockets of publishers such as Bezos and Henry offer a runway for experimentation and growth that others in the industry are unable or unwilling to provide.

Matt DeRienzo is executive director of LION Publishers, an organization that supports local independent online news publishers from across the country. He is a longtime former newspaper reporter, editor, publisher and corporate director of news.