Billionaires breathe new life into newspapers

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August 6, 2013, 8:02 pm
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(NECN: Peter Howe, Boston) - Jeffrey Bezos, John Henry. Both billionaires. Both just bought venerable newspapers for fractions of their onetime value.

But to many experts, the similarities end there – and expectations for what the two men will do with The Washington Post and The Boston Globe and their associated websites differ widely.

"I see Jeff Bezos' Washington Post having a core connection to Amazon, and I see John Henry as maybe more of a vanity play," Venkat Venkatraman, a professor of management and digital technology at Boston University and chairman of the Information Systems Department of BU’s School of Management, said in an interview Tuesday. "He was interested in the Boston sports scene, he wanted to have an impact in the Boston area."

But even though Bezos is spending $250 million of his own fortune to buy the post, separate from the business activities of Amazon.com, Venkatraman expects the Post’s future will be closely tied to Amazon technology and vision – like much wider distribution on the Amazon Kindle tablet and distribution of Post-created content globally from Amazon’s massive data-storage capacity.

"With the cloud capability that he has built with Amazon Web Services, he can do things with very good content that no newspaper can do," Venkatraman said. "I think Bezos has a greater opportunity to scale up the content from The Washington Post on a national basis if not international basis."

That’s not the kind of expectations you hear for The Boston Globe, considered a great U.S. regional paper – but regional. Henry is paying just $70 million for the Globe as well as the Worcester Telegram & Gazette – factoring in inflation, just 4 percent of the $1.4 billion The New York Times Co. paid in the early 1990s for both properties.

Especially with the divergence in prices and valuations for the paper, Michael Tyler, chief economist of Eastern Bank and a former technology trade publication editor, finds it hard to imagine Henry pursuing an Amazon-sized revolution at the Globe.

"I suspect he’s more of a hands-off owner who wants to see what the Globe can do by itself. He may have other motivations regarding the real estate, or other issues that I'm not aware of, but I don't think he wants to transform the paper in the same way" Bezos is likely to transform the Post, Tyler said.

Because the $70 million purchase price includes gaining ownership of the 17-acre Globe office and printing complex and land in Dorchester that the city values at $38 million, it’s been widely expected Henry may look to pursue a redevelopment of the 135 Wm. T. Morrissey Boulevard Property. What’s left of the Globe’s newsroom, ad sales and printing and distribution craft workers after years of cutbacks are often described as swimming in excess, vacant space.

Bezos, both Tyler and Venkatraman agree, is far more likely to be the kind of top-to-bottom rethinker and change agent who, at the Post, writes a new playbook to be followed by the Globe and many other papers.

"Let’s face it, very few newspapers have done a really great job at creating and maintaining a digital presence that people want to go to and that brings in revenue income," Tyler said. "I think he has some very good ideas as to how to transform the Post from a newspaper with a good website to a very good website that has a great newspaper" associated with it.

Notably, unlike the current Globe and Post owners, The New York Times Co. and The Washington Post Co., neither Bezos nor Henry will have to worry about answering to shareholders and Wall Street expectations once they take over the papers.

Bezos has been legendary for his level of patience and long-term thinking – and willingness to experiment – as Amazon has over the years come to utterly dominate one business sector after another.

With the Post, Venkatraman said, "He can build it up over the next few years and create something profoundly interesting and innovative in the marketplace."

With videographer Todd LaBrecque

Tags: Boston, John Henry, Peter Howe, The Boston Globe, Washington Post, Jeff Bezos
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