Jeff Bezos has yet to describe his plan for the Washington Post, which he just bought for $US250 million. Even though the newspaper itself is part of an industry that’s in free fall, the finances of the Washington Post as a standalone paper actually have some bright spots.
He may have gotten a bargain.
Here’s what Bezos is getting for his $US250 million, based on the company’s 2012 annual report.
First, the bad news.
Revenues are going down:
- Overall revenues at the Post declined 7% to $US581.7 million in 2012.
- The paper lost $US54 million in 2012, an increase loss from 2011 when it lost $US21 million.
Print ad revenue particularly is in decline:
- – 14% in 2012
- – 11% in 2011
- – 6% in 2010
And circulation is in decline:
- – 2% in 2012
Print ad revenue is a particular problem:
- Print ad revenue declined 14% to $US228.2 million in 2012
But the online section of the Post is pretty healthy:
- Online revenue (washingtonpost.com and Slate, mostly) increased 5% to $US110.6 million
- Display online advertising revenue increased 6% in 2012,
- Online classified advertising revenue decreased 1% in 2012.
Bezos is not taking Slate.com, just the newspaper and its web sites. But still, he’s paying $US250 million for a business that has $US581.7 million in annual revenues, about one-fifth of which is a $US100 million-internet business which is growing.
It won’t take too much more growth — or too many cuts — to make the Post profitable.
He’s paying a roughly 2X revenue multiple on the whole and a .5X revenue multiple on the web business.
If those numbers were coming out of a tech startup — where valuation multiples can go as high as 6X revenues — Bezos would have gotten a huge bargain.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.