Washington Post by the Numbers

James Greiff is an editor for Bloomberg View. He was Wall Street news team leader at Bloomberg News and senior editor for Bloomberg Markets magazine. He previously reported on banking for the St. Petersburg Times and the Charlotte Observer.
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Amazon.com Inc. Chairman and Chief Executive Officer Jeffrey Bezos had to be looking at something other than the numbers attached to the Washington Post Co. newspaper business, which he agreed to buy today for $250 million.

Those numbers tell a tale of unrelenting decline. Bezos isn't buying the rest of the company's businesses, which include the Kaplan educational test-preparation outfit, some broadcast properties and other print and online publications, including the news and opinion website Slate and Foreign Policy magazine.

According to the company's latest annual report, the newspaper division has reported losses in each of the past three years. Last year was the worst of the bunch, when it had a $53.7 million operating loss.

The loss had two main sources -- declining circulation and falling advertising revenue, as if that wasn't a familiar state of affairs for newspapers.

There's no way to characterize the decline in circulation numbers as anything other than ugly. In the past three years, average daily paid circulation for its flagship Washington Post declined 14 percent to 480,166, while Sunday circulation has dropped 11 percent to 697,026.

Falling advertising sales were, if anything, worse. Print advertising alone declined 12 percent in the past year to $228.2 million.

The real question is whether Bezos, who has a fortune estimated at $28 billion, paid too much or too little (not that it matters much since the price is pocket change to him). That's hard to know since the newspaper division loses money, and the company doesn't provide separate cash flow figures.

At least he didn't pay much over the sticker price. At the end of last year, the company valued its newspaper assets at $293.6 million. Build in a margin for further deterioration of the business this year, and Bezos probably is paying the asset's stated value for one of the great names in American journalism.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
James Greiff at jgreiff@bloomberg.net