Investing in newspapers may seem counter-intuitive to the doom and gloom news we all hear about declining circulations and advertising revenues at newspaper companies. However, that is just what three savvy billionaire investors have done recently. Amazon founder, Jeff Bezos, bought The Washington Post in 2013 for $250 million. John Henry, Red Sox owner and former hedge fund manager, bought The Boston Globe last year for $70 million. Billionaire Warren Buffet bought 28 regional newspapers for $344 million and his company, BH Media Group, now owns 69 publications.
Why are these investment experts buying newspapers? Here are five reasons:
- They see value.
These publications were relatively inexpensive to buy and have reached a point of stability after years of cost cutting. Circulation revenue for papers recorded a second consecutive year of growth thanks to the increased use of paywalls and while income from print advertising is still declining, revenues from digital advertising and direct marketing are growing.
- Sense of civic duty.
There is some sense of need to save and protect the quality of journalism in this country. Many of these newspaper companies are local institutions.
- The demand for news continues to grow.
Never before has the demand for news content been so high. By focusing on targeted, regional news, newspaper companies have the opportunity to grab a large share of this digitally-driven demand.
There is a willingness to invest to innovate and figure out the future business model for the news industry that allows for high quality journalism and information for the public while still making a profit. This innovation will shape the future of the industry.
- Hope for growth.
While these investors feel that their properties will still be profitable for quite some time, they are truly hoping to grow revenue by becoming more data driven technology businesses that are involved in content and journalism creation.
It will be fascinating to watch these companies develop and help shape what the industry will look like in 25 years, most likely more targeted and geared towards a digital audience.