Jeff Jarvis has an interesting post about the Jeff Bezos purchase of the Washington Post, and the conflicts he faces since Amazon.com is putting the paper’s local advertisers out of business.
Ultimately, the bigger threat to the paper’s solvency prospects comes from Google’s online advertising monopoly. And if Jeff Bezos ever tires of regularly shelling out tens of millions of dollars to subsidize the company’s losses, that’s where you can expect the fur to fly.
A look at the last 10Q filing for the Post’s parent company does not break out many details of the paper’s financial woes, but it does note that the daily circulation of the dead tree version was down 7.7% year-over-year for the first quarter of this year, and 7.2% for the Sunday edition. Consequently, print advertising revenue was down 8% from $52.7 million to $48.6 million for the same period.
The company’s online revenues, however, increased 8% to $25.8 million for the first quarter of 2013, up from $23.9 million for the first quarter of 2012. Those revenues were primarily generated by both the washingtonpost.com and Slate. Online display advertising revenue increased 16% for the same period, while classified advertising on the washingtonpost.com declined 6%.
While the latest 10Q is only a snapshot of the company at a particular moment in time, it does indicate (unsurprisingly) that the majority of the paper’s revenues come from advertising in the Post’s dead tree edition, where circulation is contracting. The only place that the revenues are increasing are with online display advertising, and that’s an arena dominated by Google, whose monopoly (as discussed previously) seriously depresses display advertising revenues — and any hope of returning the paper to the black in the near future.
Until now, the Washington Post parent company has been subsidizing the paper’s losses with the revenues derived from its Kaplan Company. However, that business is also in decline, and the desire to unload the paper was no doubt motivated by serious concerns that Kaplan could continue to absorb them.
(Interestingly, it appears that the company was trying to make the Post more attractive to investors as of February 2013, when it began offering a Voluntary Retirement Incentive Program funded by the company’s pension plan to the tune of $20.4 million.)
Bottom line: Google’s online advertising monopoly is making it virtually impossible for newspapers to operate profitably, leaving them with little choice but to sell off to oligarchs who can afford to subsidize them. And that’s a dangerous trend for an already floundering US media.
While it may be tempting for some to look at Jeff Bezos for possible relief from the Post’s habitual neocon war ambitions, think about the prospect of the Koch brothers buying the Los Angeles Times, the Chicago Tribune and the Baltimore Sun.
It’s a dangerous trend for major media outlets to operate as loss-leaders for the super-rich, incapable of financial autonomy, and functioning as little more than propaganda arms for elite interests. It’s a situation that won’t change until someone decides to take on the Google display advertising monopoly.
On the bright side, Amazon is one of the only behemoths large enough to challenge Google. And with his purchase of the Washington Post, Jeff Bezos may now have a megaphone loud enough to enter the DC political fray and do it.
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