Billionaires struggle to save news industry
Despite high hopes, many new owners are losing millions
There’s an old saying about the news business: If you want to make a small fortune, start with a large one.
As the prospects for news publishers waned in the last decade, billionaires swooped in to buy some of the country’s most fabled brands. Jeff Bezos, the founder of Amazon, bought The Washington Post in 2013 for about $250 million. Dr. Patrick Soon-Shiong, a biotechnology and startup billionaire, purchased the Los Angeles Times in 2018 for $500 million. Marc Benioff, the founder of software giant Salesforce, purchased Time magazine with his wife, Lynne, for $190 million in 2018.
Each time, the newsrooms greeted their new owners with cautious optimism that their business acumen and tech know-how would help figure out the perplexing question of how to make money as a digital publication.
But it increasingly looks like the billionaires are struggling just like nearly everyone else. Time, The Washington Post, and the LA Times all lost millions of dollars last year, people with knowledge of the companies’ finances have said, after considerable investment from their owners and intensive efforts to drum up new revenue streams.
“Wealth doesn’t insulate an owner from the serious challenges plaguing many media companies, and it turns out being a billionaire isn’t a predictor for solving those problems,” said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard University. “We’ve seen a lot of naive hope attached to these owners, often from employees.”
The losses may have the most immediate impact at the LA Times, where journalists are bracing for bad news. Kevin Merida, the newspaper’s widely respected editor, announced last week that he was resigning, a decision that came after tension with Soon
Shiong over editorial and business priorities, according to two people familiar with the matter.
In the middle of last year, the LA 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 have met in recent days to discuss the possibility of deep job cuts, according to two other people familiar with the conversations. Members of the newspaper’s union have called an emergency meeting for Thursday to discuss the possibility of another “major” round of layoffs: “This is the big one,” read the email to employees.
A spokesperson for SoonShiong declined to comment on specific financial figures for the LA Times but said in an email that company had “a significant gap between revenue and expenses,” even with the layoffs and other cost-saving measures from last year.
She said that his family had invested “tens of millions of dollars” each year since acquiring the LA Times in 2018. “They are committed to continuing to invest,” the spokesperson, Jen Hodson, said in a statement. “But relying on a benevolent owner to cover expenses, year after year, is not a viable long-term plan.”
Bezos hasn’t fared much better at the Post. Like many news organizations, the Post has struggled to hold onto the momentum it gained in the wake of the 2020 election. Sagging subscriptions and advertising revenue led to losses of about $100 million last year. At the end of the year, the company eliminated 240 of its 2,500 jobs through buyouts, including some of its well-regarded journalists.
Patty Stonesifer, who filled in as CEO last year, called the buyouts “difficult” but said they were necessary to “invest in our top growth priorities.” Employees at the Post sent a letter in recent weeks to their top editor, Sally Buzbee, and their new permanent CEO, Will Lewis, expressing concern over the lack of research firepower for their stories in the wake of the buyouts.
Time is facing similar headwinds. The publication lost around $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 spokesperson had no comment on the company’s 2023 finances, citing a note to employees from CEO Jessica Sibley, proclaiming growing audiences and advertising revenue. In a statement, Benioff said that Sibley was making “lots of exciting changes based on an amazing vision.”
There are some bright spots in the firmament of traditional news organizations owned by billionaires. The Boston Globe, purchased by John W. Henry, owner of the Boston Red Sox, 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, has set a target of reaching 1 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.
“These vitally important news publications still find themselves ‘transitioning’ from print to digital — with major ongoing legacy business costs — as they build brick by brick a mainly digital future,” said Ken Doctor, an analyst and media entrepreneur.
Doctor said that the billionaires in the news industry were showing “greater signs of fatigue,” stemming from challenges including “news anxiety and avoidance and fierce advertising competition.”
“The very rich find it very difficult to lose money year over year,” Doctor said, “even if they can afford it.”