When people think of newspapers they do not usually think of billionaire investors swooping in, taking them over, and re-inventing the business model, but that is exactly what has been happening recently. From the Boston Globe being purchased by the owner of the Red Sox, the several Omaha newspapers being purchased by Warren Buffet, to the headline story of Jeff Bezos purchasing the Washington Post, the newspaper industry is undergoing a dramatic shift. While this is interesting to discuss and has caused a lot of chatter in the media, what exactly does this mean for you and your money?
Let’s start with the obvious – the traditional print media that has traditionally sustained newspapers is a dying business model. The news and financial press has been full of stories of declining newspaper revenues, failing papers, and an overall gloomy outlook for the industry. All is not lost, however; just because a particular business model no longer is profitable does mean that the underlying business is doomed. Sometimes what is needed is a repackaging, rebranding, or otherwise phrased renovation of the business so it can continue to deliver it products/services, but in a manner that is sustainable in the current economic climate.
Jeff Bezos, founder and CEO of Amazon, certainly has the business savvy and expertise to run a business, and his entrance into the newspaper business has raised some eyebrows. He is in a unique situation to eventually merge the best of both worlds, and by that I mean merge the worlds or media and commerce into one entity. While the purchase of the newspaper was funded with his personal funds (I know that if a CEO of a company I invested in had spent a quarter of a billion shareholder dollars purchasing an unprofitable business I would have some questions), it is relatively easy to see how he could eventually fold it in to Amazon. Merging the e-commerce and reach of Amazon with the prestige and name recognition of the Washington post could be a very interesting (and profitable) combination.
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More importantly for you as an investor, this could transform the staid and declining industry known as newspaper into a growth industry within a short period of time. Take about a brave new world!
Below are some links that I found very interesting.
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Let me know what you think, and happy reading!
