There's an old saying about the news business: If you want to make a small fortune, start with a big one.
As prospects for news publishers have declined over the past decade, billionaires have swooped in to buy some of the country's most legendary brands. Jeff Bezos, the founder of Amazon, bought The Washington Post in 2013 for about $250 million. Dr. Patrick Soon-Shiong, a biotech and startup billionaire, bought 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.
Each time, newsrooms greeted their new owners with cautious optimism that their business acumen and technological savvy would help solve the vexing 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 lost millions of dollars last year, people with knowledge of the companies' finances have said, after considerable investments by their owners and intense efforts to generate new revenue streams.
“Wealth does not insulate 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,” said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard. . University. “We've seen a lot of naïve hopes placed on these owners, often by employees.”
The losses may have the most immediate impact at the Los Angeles Times, where journalists brace for bad news. Kevin Merida, the newspaper's highly respected editor, announced last week that he was resigning, a decision that came after tensions with Soon-Shiong over editorial and business priorities, according to two people familiar with the matter.
As of mid-last year, The Times was on track to lose between $30 million and $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 major job cuts, according to two other people familiar with the conversations. Members of The Los Angeles Times union have called an emergency meeting for Thursday to discuss the possibility of another “major” round of layoffs: “This is the big one,” reads the email to employees.
A spokeswoman for Soon-Shiong declined to comment on specific financial numbers to the Los Angeles Times, but said in an email that the company had “a significant gap between revenue and expenses,” even with layoffs and other cost-saving measures. from last year. year.
He said his family had invested “tens of millions of dollars” each year since acquiring The Times in 2018. “They are committed to continuing to invest,” spokeswoman 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.”
Bezos hasn't fared much better at The Washington Post. Like many news organizations, The Post has struggled to maintain the momentum it gained following the 2020 election. Falling subscriptions and advertising revenue led to losses of about $100 million last year. By the end of the year, the company eliminated 240 of its 2,500 jobs through acquisitions, including some of its highly respected journalists.
Patty Stonesifer, who took over as chief executive last year, called the acquisitions “difficult” but said they were necessary to “invest in our top growth priorities.” Employees at The Post sent a letter in recent weeks to its top editor, Sally Buzbee, and its new permanent CEO, Will Lewis, expressing concern about the lack of investigative power for their stories in the wake of the acquisitions.
A spokesperson for Bezos did not respond to repeated requests to arrange an interview for this article. In the past, Bezos said he bought The Post because it was an important institution but he wanted the company to be profitable.
“I said to myself, 'If this was a salty snack company that was financially upside down, the answer would be no,'” Bezos said of his decision to buy The Post in 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 picture. Time has weighed cutting costs in the first quarter of the year to help offset some of the losses, one of the people said.
A Time spokeswoman had no comment on the company's 2023 finances, citing a memo to employees from Jessica Sibley, its chief executive, touting growing audiences and advertising revenue. In a statement, Benioff said Sibley was making “many exciting changes based on an amazing vision.”
“We are fortunate to have an incredible new CEO, Jessica Sibley, and she has done an incredible job restructuring the company over the last year,” Benioff wrote. “We've never had a bigger year, including Taylor Swift, driven by Jessica's vision for the company.”
Time is exploring brand licensing deals abroad, according to a person with knowledge of the discussions, who said the efforts mirror similar approaches by magazine companies such as Forbes and Condé Nast, which have been reliable money makers.
Still, there are some bright spots in the firmament of billionaire-owned traditional news organizations. The Boston Globe, purchased by John W. Henry, owner of the Boston Red Sox, 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 have been reinvested in The Globe, the person said.
The Atlantic, which was purchased by Laurene Powell Jobs in 2017, has set a goal of reaching one million combined digital and print subscribers and achieving profitability. The company has said it has more than 925,000 subscribers as of last summer, although it is not yet profitable.
The difficulties that companies face are increasingly serious. Web traffic has declined for many publishers as referrals from search engines like Google decline, and the rise of new AI-powered apps has the potential to further erode readership.
“These vitally important news publications are still in a 'transition' from print to digital – with significant legacy business costs – as they build brick by brick a primarily digital future,” said Ken Doctor, analyst and entrepreneur at media.
Doctor said news industry billionaires were showing “increased signs of fatigue,” stemming from challenges that included “anxiety and avoidance of the news and fierce advertising competition.”
“The very rich find it very difficult to lose money year after year,” Mr. Doctor said, “even if they can afford it.”
