In a fascinating exploration of the challenges faced by billionaire investors in the media industry, a recent New York Times article sheds light on an intriguing phenomenon. Despite the optimism that initially surrounded their entry into the news business, several billionaires, including Amazon‘s Jeff Bezos, biotech magnate Dr. Patrick Soon-Shiong, and Salesforce‘s Marc Benioff, are facing substantial financial losses in their media ventures.
There’s an old saying about the news business: If you want to make a small fortune, start with a large one.
NYT article quoting (link)
The narrative begins with Bezos’ acquisition of The Washington Post in 2013 for about $250 million, followed by Soon-Shiong‘s purchase of The Los Angeles Times for $500 million in 2018, and Benioff’s acquisition of Time magazine for $190 million in the same year. These investments were met with a mix of hope and caution, as there was an expectation that their business savvy and technological expertise might unlock the secrets to profitability in the digital news era.
However, the reality has been less than favorable. The Washington Post, The Los Angeles Times, and Time magazine have all reported significant financial losses in the past year despite considerable investments and efforts to develop new revenue streams. This situation highlights a critical insight: wealth and business acumen do not automatically translate into success in the media industry.
At The Los Angeles Times, the situation appears particularly dire, with projected losses of $30 million to $40 million in 2023 and recent layoffs of about 74 employees. This downturn in fortunes led to the resignation of Kevin Merida, the newspaper’s editor, amid disagreements with Dr. Soon-Shiong over editorial and business priorities.
Similarly, The Washington Post has struggled to maintain its post-2020 election momentum, with a drop in subscriptions and advertising revenue leading to a loss of around $100 million last year. The company responded by eliminating 240 jobs through buyouts.
Time magazine is also facing challenges, with a loss of around $20 million in 2023. Despite efforts to explore brand licensing deals overseas, the publication is still grappling with the same issues that plague many in the industry.
Despite these setbacks, there are some success stories. The Boston Globe, acquired by John W. Henry in 2013, has been profitable for years, while The Atlantic, purchased by Laurene Powell Jobs in 2017, is nearing its goal of one million combined digital and print subscribers.
These developments underscore the complex and evolving nature of the media industry. The transition from print to digital, legacy business costs, changing web traffic patterns, and competition from new technologies like AI are just some of the challenges faced by media companies, regardless of their owners’ wealth. The article concludes with a poignant reflection on the difficulty of sustaining financial losses, even for the very wealthy.
