There’s an old saying about the news business: If you want to build a small fortune, start with a big one.
As prospects for news publishers diminished over the past decade, billionaires rushed to buy some of the country’s best-known brands. Amazon founder Jeff Bezos purchased The Washington Post in 2013 for approximately $250 million. Biotechnology and start-up billionaire Dr. Patrick Soon-Shiong purchased The Los Angeles Times for $500 million in 2018. Marc Benioff, founder of software giant Salesforce, purchased Time magazine with his wife Lynn in 2018 for $190 million.
Each time, newsrooms welcomed their new owners with cautious optimism that their business acumen and technical knowledge would help them understand the complex question of how to make money as a digital publication.
But now it looks like billionaires are struggling just like everyone else. Time, The Washington Post and The Los Angeles Times all lost millions of dollars last year, people with knowledge of the companies’ finances said, despite considerable investment by their owners and intensive efforts to grow new revenue streams. after.
Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard, said, “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 a predictor of solving those problems. ” university. “We’ve seen a lot of naive expectations from these owners, and often from the employees.”
The loss may have the most immediate impact on the Los Angeles Times, where reporters are bracing for bad news. The paper’s widely respected editor Kevin Merida announced last week that he was resigning, a decision that followed tensions with Mr. Soon-Shiong over editorial and business priorities, according to two people familiar with the matter.
In 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. The company cut about 74 jobs last year, according to two other people familiar with the talks, and executives have met in recent days to discuss the possibility of deeper job cuts. Los Angeles Times union members have called an emergency meeting Thursday to discuss the possibility of another “big” round of layoffs: “This is huge,” read the email to staff.
A spokesman for Mr. Soon-Shiong declined to comment on specific financial figures for the Los Angeles Times, but said in an email that the company had “a significant gap between revenues and expenses,” even That’s despite layoffs and other cost-saving measures over the past few years.
He said his family has invested “tens of millions of dollars” every year since acquiring The Times in 2018. “They are committed to continuing to invest,” spokeswoman Jane Hodson said in a statement. “But relying on a benevolent boss to cover expenses year after year is not a viable long-term plan.”
Mr. Bezos hasn’t fared much better at The Washington Post. Like many news organizations, The Post has struggled to maintain the momentum it gained after the 2020 election. It lost nearly $100 million last year due to declining subscription and advertising revenues. At the end of the year, the company eliminated 240 of its 2,500 jobs through buyouts, including some of its best-known journalists.
Patty Stonecipher, who took over as chief executive last year, called the buyouts “difficult” but said they were necessary to “invest in our top growth priorities.” The Post’s staff in recent weeks sent a letter to its top editor, Sally Buzbee, and its new permanent chief executive, Will Lewis, expressing concern over the lack of research capacity for their stories in the wake of the buyout.
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 that he bought The Post because it was an important institution but that he wanted the company to be profitable.
“I said to myself, ‘If this were a financially upside-down salty snack food company, the answer would be no,’” Mr. Bezos said of his decision to buy The Post. An interview from 2018,
Time is also facing similar adverse circumstances. The publication faces a loss of about $20 million in 2023, according to two people with knowledge of the publication’s financial picture. Timing is considering cutting costs in the first quarter of the year to help offset some losses, one of the people said.
A Time spokesperson had no comment on the company’s 2023 financials, citing A Comment From its chief executive Jessica Sibley to its staff, everyone is announcing growing audiences and advertising revenues. In a statement, Mr. Benioff said Ms. Sibley was making “many exciting changes based on an amazing vision.”
“We are fortunate to have an amazing new CEO, Jessica Sibley, and she has done an incredible job restructuring the company over the past year,” Mr. Benioff wrote. “Inspired by Jessica’s vision for the company, including Taylor Swift, we’ve never had a bigger year.”
Time is exploring brand licensing deals overseas, according to a person with knowledge of the discussions, who said the efforts reflect a similar approach at magazine companies like Forbes and Condé Nast, which have been reliable moneymakers.
Still, there are some bright spots in the sky of traditional news organizations owned by billionaires. The Boston Globe, bought by Boston Red Sox owner John W. Henry from The New York Times Co. in 2013 for $70 million, has been profitable for years, according to a person familiar with the company’s finances. Those profits have been reinvested in The Globe, the person said.
The Atlantic, which was purchased by Laurene Powell Jobs in 2017, aims to reach one million combined digital and print subscribers and achieve profitability. The company said it had more than 925,000 customers as of last summer, although it is not yet profitable.
The difficulties facing companies are becoming more serious. Web traffic has declined for many publishers due to referrals from search engines like Google, and the rise of new applications powered by artificial intelligence is likely to further reduce readership.
Ken Doctor, an analyst and media entrepreneur, said, “These vitally important news publications are still finding themselves ‘transforming’ from print to digital – with major ongoing legacy business costs – as they build a predominantly digital future brick by brick.” are building.”
Mr Doctor said the news industry was showing “more signs of fatigue” among billionaires, driven by challenges including “news anxiety and procrastination and fierce advertising competition”.
“It’s very difficult for very wealthy people to lose money year after year,” even if they can afford it, Mr. Doctor said.