Creative Destruction of Capitalism at its Best--WaPo

[Michael Stuart Kelly]

Creative Destruction of Capitalism at its Best--WaPo

It's all over the news, so I'm going to let others post the articles as the discussion unfolds.

The Washington Post has been sold to Jeff Bezos. Here are some of the highlights from my perspective:

1. Jeff Bezos bought it out of his own money and there is no connection with Amazon (at least so far).

2. The price, $250 million, seems really low for a media property of that influence.

3. The history of WaPo's decline (especially Newsweek) is proof that wedding Progressive political lobbying and propaganda with actual news is not profitable. Why? The oldest reason of all. American people just don't buy it as news after a certain point gets crossed. That recipe needs survival by political pull, not competition in the free market.

4. I don't know much about the political views of the Graham family, but I imagine they reflect what WaPo has done over the last few decades. If so, I personally am glad to see them get out of the mainstream press business. I'm not against Progressives have their mainstream voices (and there are plenty left over), but they need to start earning their place at the news table.

5. I also don't know Jeff Bezo's politics other than he is taking a strong stand against state tax on Internet affiliate sales by simply refusing to do Amazon affiliate business in states that have it, but in looking at the Wikipedia article on him (see here), some people who know him claim he is libertarian. If true, the way he will run WaPo this is going to get interesting...

6. The left is in a total daze as if they were sucker-punched.

7. The Washington Post will change its name. Talk about dumping mental real estate and the covert emotional load that goes with it! Best of all, this is a standard Progressive history rewrite trick.

There.

That's enough to start off a very pleasant morning.

Michael

[BaalChatzaf]

I love Objectivist schadenfreude!

[Reidy]

$250 million is not such a low price. NYT just sold the Boston Globe and a Worcester paper for $7 million, having paid $1.1 billion for them several years ago.

WSJ's morning download offers reasons why this could be a sound business move. Kindle gives Bezos an opportunity to sell news to an audience that is used to paying for content, and the Post has an infrastructure for same-day physical delivery, a business that Amazon is trying to get into.

[Michael Stuart Kelly]

btw - Glenn Beck's TheBlaze just got it's White House Press Corps credentials.

(Nobody expects Jay Carney to be calling on Fred Lucas, the WH correspondent for TheBlaze, but still... )

Others may see things differently, but to me, the WaPo sale and the Washington office of TheBlaze are canaries in the Progressive coal mine.

Michael

[Michael Stuart Kelly]

$250 million is not such a low price. NYT just sold the Boston Globe and a Worcester paper for $7 million, having paid $1.1 billion for them several years ago.

Pete,

My perspective was not current price compared to the current price of other properties. It was the standard that dropped The Boston Globe from over a cool billion to under 10 million.

You don't think $7 million is a low price compared to a fairly recent $1.1 billion price tag?

I know I do.

I call that a financial disaster.

It's not too hard to apply the same thinking to the WaPo sale. So Bezos paid a turkey dinner for it and not peanuts. So what? It's still a disaster.

It's obvious why, too. Progressive lobbying sold as news is not a good business model for a news organization, that is, unless it gets government funding and legal protections. It tanks in the American free market over time.

That was my point.

Michael

[Reidy]

Correction: $70 million, not 7. Still a huge loss.

[Robert Baratheon]

It's not just progressive political coverage doing in these news organizations - it's the progressive structure of the organizations themselves.

 

Just look at these erudite fools from the New York Times writers' union whining about potential reductions to their gold-plated pensions with bloated compensation packages flashing across the bottom of this video:

 

 

 

The fatal union conceit is in thinking this display buys them sympathy with the public instead of the condemnation they deserve.

 

I understand the unfunded pension liabilities of the Boston Globe were similarly astronomical. This is the inevitable result of the mandatory union work environment - the complete destruction or restructuring of the host organization.

 

As an aside, I've always been interested in how the comments sections of progressive/liberal publications tend to be dominated by conservative and libertarian voices. Every puff piece in the Globe on a (corrupt) liberal Boston politician or municipal workers union would be met with hundreds of right-leaning comments in opposition.

 

 

 

[Brant Gaede]

It's not just progressive political coverage doing in these news organizations - it's the progressive structure of the organizations themselves.

Just look at these erudite fools from the New York Times writers' union whining about potential reductions to their gold-plated pensions with bloated compensation packages flashing across the bottom of this video:

The fatal union conceit is in thinking this display buys them sympathy with the public instead of the condemnation they deserve.

I understand the unfunded pension liabilities of the Boston Globe were similarly astronomical. This is the inevitable result of the mandatory union work environment - the complete destruction or restructuring of the host organization.

As an aside, I've always been interested in how the comments sections of progressive/liberal publications tend to be dominated by conservative and libertarian voices. Every puff piece in the Globe on a (corrupt) liberal Boston politician or municipal workers union would be met with hundreds of right-leaning comments in opposition.

I stopped reading the NYT 20 years ago after my Father died. He wanted it, I didn't. Too crappy. Many of these idiots were making it crappy back then.

--Brant

not an American newspaper--a U.N. newspaper?

[jts]

In the 1960s when I went to school, "it's" was a contraction of "it is". The possessive form was "its". Did that get changed?

[Reidy]

My impression is that the old media outlets are doing the best job they can of keeping up with they only audience they know how to address - middle-aged and elderly welfare statists - and giving them just what they want. The problem is that this audience is aging and shrinking, and these outlets have reduced themselves from "mainstream" to niche.

[Darrell Hougen]

btw - Glenn Beck's TheBlaze just got it's White House Press Corps credentials.

(Nobody expects Jay Carney to be calling on Fred Lucas, the WH correspondent for TheBlaze, but still... )

Others may see things differently, but to me, the WaPo sale and the Washington office of TheBlaze are canaries in the Progressive coal mine.

Michael

I think the canaries died a while ago. Now the tunnels are starting to cave in. Why do I feel so gleefully happy!

Darrell

[caroljane]

RB,

I doubt that unfunded pension costs and unions were the straws that broke the camel's back in this case.

Newspapers are a dinosaur industry thrashing around desperately to find ever-scarcer sustenance. They are already employing the fewest full-timers they can at the lowest cost they can get them.

Henry Ford, who hated and despised labour, nevertheless paid his workers enough so they could afford to buy his cars. He invested that capital in wages, in a labour-intensive economy, because his industry was a new one he wanted to "grow".

In an economy rapidly polarizing between luxury and poverty, many people are "middle-class" because they earn "middle-class" wages for jobs that are mundane or semi-skilled or even unnecessary. They can, however, buy stuff, which the minimum-wagers and unemployed cannot, and thus prop up other businesses, even the dinosaur ones .

When crystal clarity and meritocracy and a true free market arrives unshackled by government regs and unions. my daily newspapers will be gone, and I will follow my dinosaurs into the mist.

.

[william.scherk]

WSJ's morning download offers reasons why this could be a sound business move. Kindle gives Bezos an opportunity to sell news to an audience that is used to paying for content, and the Post has an infrastructure for same-day physical delivery, a business that Amazon is trying to get into.

Bezos's article in the Post yesterday speaks to two important issues, editorial control and income:

So, let me start with something critical. The values of The Post do not need changing. The paper’s duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads, and we’ll work hard not to make mistakes. When we do, we will own up to them quickly and completely.

I won’t be leading The Washington Post day-to-day. I am happily living in “the other Washington” where I have a day job that I love. Besides that, The Post already has an excellent leadership team that knows much more about the news business than I do, and I’m extremely grateful to them for agreeing to stay on.

There will, of course, be change at The Post over the coming years. That’s essential and would have happened with or without new ownership. The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs. There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment.

[caroljane]

"News-gathering costs" I take to mean "paying actual journalists to gather the news in person and be accountable for it" instead of trawling the internet.

[Michael Stuart Kelly]

In the 1960s when I went to school, "it's" was a contraction of "it is". The possessive form was "its". Did that get changed?

jts,

You're right. I screwed up.

It's fixed now.

Michael

[Michael Stuart Kelly]

William,

Heh.

Imagine the response if Bezos, in speaking to two "very important issues," had said:

"I will be gradually weaning out the Progressive slant and focusing instead on true what-when-where-why-how journalism."

AND

"I intend to micromanage The Washington Post just like I micromanaged every business venture I have ever undertaken because I will make this sucker make money.."

Would "kaboom" be accurate?

Michael

[BaalChatzaf]

My God! You mean news that tells us what is going on????!!!!! Freaking un-believable!!!!!

[Michael Stuart Kelly]

Here's an interesting angle. I'm giving a Breitbart article below, but it discussed a Huffington Post article. So for those who dislike Breitbart for whatever reason, they can go here for the same information with a slightly different slant (but not much).

The angle is that WaPo had been maintained financially for years by a diploma mill (Kaplan).

EXPLOITATION OF MINORITY AND POOR STUDENTS ENSURED VALUE OF WASHINGTON POST
by JOHN NOLTE
7 Aug 2013
Breitbart

From the article:

The Huffington Post reports that the Washington Post might have been forced into its fire sale this week after the threat of federal action in 2010 resulted in the drying up of a Washington Post Co. cash-cow division called Kaplan Higher Education.

Acquired by the Washington Post Co. in the 80's as a business that helped students prepare for tests, another acquisition in 2000 turned Kaplan into a for-profit university that generated hundreds of millions of dollars for the company. The timing was perfect because the company's flagship newspaper, the Washington Post, was about to enter into a startling financial decline.

. . .

One of our society's great scams is the student loan racket. Every year, the federal government gives away tens of billions of tax dollars in the form of student loans. The ultimate beneficiaries are sometimes the students, but always the schools.

. . .

... these for-profit universities offer bachelors and associate degrees, and some of them provide a legitimate public service. Too many of them, though, are what are known as "diploma mills" that run like used car dealerships. Recruiters troll for suckers, employ a high-pressure sales pitch, sign the sucker up for a government loan, and collect the taxpayer cash.

The results are great for the school. At this point there is no way for them to lose because they have been paid by the federal government with our tax dollars. Meanwhile, the student that was pressured into signing up drops out and is either saddled with a huge debt for something that did them no good, or they default on the loan and the taxpayer takes it in the neck.

. . .

According to HuffPo, while the Washington Post newspaper was losing as much as $150 million in '08 and '09, Kaplan was raking in the money thanks to its 60 for-profit schools that housed over 100,000 students. But it was only the Washington Post Co. profiting.

Students, on the other hand, were not doing so well...

. . .

If that isn't troubling enough, a 2010 New York Times investigation into Kaplan revealed whistleblower lawsuits alleging that recruiters in one location profiled students based on "markers like low self-esteem, reliance on public assistance, being fired, laid off, incarcerated, or physically or mentally abused."

Kaplan also boasted about the number of poor and minority students they regularly enrolled.

. . .

... in a delicious twist, the very same Obama administration that the Washington Post newspaper sold its soul to put in the White House is the very same Obama administration that would eventually help to bring about the end of the Post's sugar daddy.

. . .

If you are looking for a moral to this sordid story, it is this: Ten years ago, the Washington Post was worth $2 billion. Monday it sold for $250 million...

Kaplan targeted the underprivileged and underachievers. It stuck its snout in the government-backed student loan trough. And it poured the money into WaPo.

That's ugly enough.

I wonder what's behind the scenes, like who paid off who over how many years, maybe even outright quid pro quo bribery, and so on...

Another interesting aspect is that the Huffington Post currently makes no bones about feeding off the Washington Posts's woes. They're supposed to be comrades in arms, fer Pete's sake.

Heh. If you want a friend in that crowd, get a dog.

Michael

[caroljane]

A for-profit business "fed off" the tax dollars extorted from Americans, in order to create wealth for themselves - isn't this the archetype of an Objectivist coup , using the resources of the evil to promote good?

As for the students, caveat emptor.

[caroljane]

And \Michael, your "friend in this business" comment tells me that you do not understand the business of actual journalism, apart from spinning. Maybe Arianna hates the ex-owners of the WP and all their works, or maybe they are her bffs, but if her purported news organ did not report on this significant story it would be remiss. Should friendship trump objectivity in business and professionalism?

[Darrell Hougen]

A for-profit business "fed off" the tax dollars extorted from Americans, in order to create wealth for themselves - isn't this the archetype of an Objectivist coup , using the resources of the evil to promote good?

As for the students, caveat emptor.

According to ARI, Ayn Rand said:

Man—every man—is an end in himself, not the means to the ends of others. He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself.

So, no, the above would not be an Objectivist coup. Besides, it sounds more like the resources of the gullible and the defenseless were used to promote some very questionable ends.

Darrell

[caroljane]

All fine and well, but the ARI and innumerable other "not for profits" whose mission is to eliminate taxation and destroy the welfare state, routinely reap tax exemptions in the same spirit.

Ayn Rand and Social Security, etc.

[william.scherk]

Worth reading to get a perspective on the multiple businesses that fall under the to-be-renamed Washington Post Company (WPCo) is this Wall Street Journal article, Without the Newspaper, What’s Left at the Washington Post Company?

Also see the New York Times report from late 2010, Scrutiny Takes Toll on For-Profit College Company.

The NYT story gives some perspective on the 'for profit' sector of the higher learning business, with a focus on Kaplan Higher Ed and the machinations/lobbying by WaPo owners fearing a regulatory scheme that would shrink their business badly.

And Mr. Graham has gone to Capitol Hill to argue against the regulations in private visits with lawmakers, the first time he has lobbied directly on a federal issue in a dozen years.

His newspaper, too, has editorialized against the regulations. Though it disclosed its conflict of interest, the newspaper said the regulations would limit students’ choices. “The aim of the regulations was to punish bad actors, but the effect is to punish institutions that serve poor students,” Mr. Graham said in an interview.

He said the regulations’ emphasis on debt would make it harder for Kaplan to serve older working students who must take out loans to attend school.

He added that Kaplan could play an important role in meeting President Obama’s goal of a better-educated work force.

Edited August 8, 2013 by william.scherk

[caroljane]

Wowie William! Is there any way to see a similar breakdown of their costs/outgoings?

[Michael Stuart Kelly]

And \Michael, your "friend in this business" comment tells me that you do not understand the business of actual journalism, apart from spinning. Maybe Arianna hates the ex-owners of the WP and all their works, or maybe they are her bffs, but if her purported news organ did not report on this significant story it would be remiss. Should friendship trump objectivity in business and professionalism?

Carol,

I don't know who you are referring to when you talk about my "friend in the business." I do have friends in the business, but I don't recall writing about them.

And oh, but I do understand the journalism business without spin. I thought I mentioned the 5 W's and H. That's the start. One HuffPo messes up on so often its not funny.

I agree with you that "objectivity in business and professionalism" should be top value over cronyism. But Arianna's "objectivity in business and professionalism" is a bit too selective for my taste. She should trot it out more often rather than give her readers a sporadic taste once in a blue moon.

In the present case, ain't it sweet to be objective and professional? Sweet as pie. I have no doubt Arianna would be delighted to bury WaPo and spit on its grave so long as HuffPo could take its place.

Hey! Doesn't that sound like predatory dog-eat-dog capitalism of the worst sort?

Michael