There’s an old saying about the news business: If you want to make a small fortune, start with a big one.
As news publishers’ prospects dwindled over the past decade, billionaires rushed to buy some of the country’s most legendary brands. Jeff Bezos, the founder of Amazon, purchased the Washington Post in 2013 for around $250 million. Dr. Patrick Soon-Shiong, a biotech and startup billionaire, purchased the Los Angeles Times in 2018 for $500 million. Marc Benioff, founder of software giant Salesforce, bought Time magazine with his wife Lynne for $190 million in 2018.
All three newsrooms greeted their new owners with cautious optimism, believing that their business acumen and technological know-how would help them solve the tricky question of how to make money as a digital publication.
But it increasingly appears that billionaires are struggling, like almost everyone else. Time, the Washington Post and the Los Angeles Times all lost millions of dollars last year, people familiar with the companies’ finances said, after considerable investment by their owners and intensive efforts to generate new sources of income.
“Wealth does not protect an owner from the serious challenges that plague many media companies, and it turns out that being a billionaire is not an indicator of solving these problems,” said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard. . University. “We saw a lot of naive hope attached to these owners, often from employees.”
The losses could have the most immediate impact at the Los Angeles Times, where reporters are bracing for bad news. Kevin Merida, the paper’s well-respected editor-in-chief, announced his resignation last week, a decision made after tensions with Dr. Soon-Shiong over editorial and business priorities, according to two people familiar with the matter.
As of the middle of last year, the Times was on track to lose $30 million to $40 million in 2023, according to three people with knowledge of the projections. Last year, the company cut about 74 jobs, and executives met in recent days to discuss the possibility of significant job cuts, according to two other people familiar with the conversations. Los Angeles Times union members called emergency meeting Thursday to discuss possibility of another round of ‘major’ layoffs: ‘This is the biggest,’ email reads addressed to employees.
At the emergency meeting, a guild representative said that after the proposed cuts, the Los Angeles Times would be just as small as it was after it was purchased by Dr. Soon-Shiong, undoing years expansion of the newsroom.
A spokesperson for Dr. Soon-Shiong declined to comment on specific financial figures to the Los Angeles Times, but said in an email that the company had “a significant gap between revenues and expenses” even with the layoffs and other cost-saving measures. Last year.
She said her family has invested “tens of millions of dollars” each year since acquiring the Times. “They are committed to continuing to invest,” Rep. Jen Hodson said in a statement. “But relying on a benevolent landlord to cover expenses, year after year, is not a viable long-term plan.”
Mr. Bezos doesn’t fare much better at the Washington Post. Like many news organizations, The Post has struggled to maintain the momentum it gained following the 2020 election. Declines in subscriptions and advertising revenue led to losses of about $100 million Last year. By the end of the year, the company cut 240 of its 2,500 jobs through buyouts, including some of its most high-profile journalists.
Patty Stonesifer, who served as chief executive last year, called the buyouts “difficult” but said they were necessary to “invest in our top growth priorities.” Post staffers sent a letter in recent weeks to their editor, Sally Buzbee, and their new permanent general manager, Will Lewis, expressing concern about the lack of research firepower for their stories as a result buyouts.
A spokesman for Mr. Bezos did not respond to repeated requests to arrange an interview for this article. In the past, Mr. Bezos has said he bought The Post because it was an important institution, but he wanted the company to be profitable.
“I thought, ‘If this was a financially upside down salty snack company, the answer would be no,’” Mr. Bezos said of his decision to buy The Post in 2017 . a 2018 interview.
The weather faces similar headwinds. The publication lost about $20 million in 2023, according to two people with knowledge of the publication’s financial situation. Time weighed on cost cutting in the first quarter of the year to help offset some of the losses, one of the sources said.
A Time spokesperson had no comment on the company’s finances for 2023, citing make a note of to the employees of Jessica Sibley, its general director, proclaiming an increase in audiences and advertising revenues. In a statement, Mr. Benioff said Ms. Sibley was bringing “many exciting changes based on an astonishing vision.”
“We are fortunate to have an extraordinary new CEO, Jessica Sibley, and she has done an incredible job restructuring the company over the past year,” Mr. Benioff wrote. “We’ve never had a better year, including with Taylor Swift, driven by Jessica’s vision for the company.”
The time has come to explore brand licensing deals overseas, according to a person familiar with the discussions, who said the efforts mirror the approaches of magazine companies like Forbes and Condé Nast, which have been sources reliable income.
There are, however, some bright spots in the firmament of traditional news agencies owned by billionaires. The Boston Globe, purchased by Boston Red Sox owner John W. Henry from the New York Times Company in 2013 for $70 million, has been profitable for years, according to a person familiar with the company’s finances. Those profits were reinvested in The Globe, the source said.
The Atlantic, purchased by Laurene Powell Jobs in 2017, set a goal of reaching one million digital and print subscribers combined and achieving profitability. The company said it had more than 925,000 subscribers as of last summer, although it is not yet profitable.
The challenges facing businesses are only getting worse. Web traffic has increased for many publishers as referrals from search engines like Google decline, and the rise of new AI-powered apps could potentially further erode readership.
“These vitally important news publications still find themselves ‘transitioning’ from print to digital – with major business costs underway – as they build brick by brick to a primarily digital future,” he said. said Ken Doctor, media analyst and entrepreneur.
Mr Doctor said news industry billionaires were showing “greater signs of fatigue”, due to challenges such as “news anxiety and avoidance and fierce advertising competition”. .
“The very rich find it very difficult to lose money from year to year,” Mr. Doctor said, “even if they can afford it.”
