Amazon's Bezos pays hefty price for Washington Post

Wed Aug 7, 2013 7:02am EDT
 
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By Jennifer Saba

(Reuters) - Jeff Bezos has just shown how valuable one-of-a-kind newspaper properties can still be in the United States.

The multibillionaire founder of online retailer Amazon.com Inc may have paid more than four times the price that the financial results of the Washington Post suggests it is worth.

In Monday's deal, Bezos agreed to buy the Post and a handful of other newspaper assets from the Washington Post Co for $250 million. Going by the valuations of other newspaper deals and publicly traded media companies, though, the Washington Post would have been worth closer to $60 million.

The average sale of a metro U.S. newspaper has commanded a valuation of 3.5 to 4.5 times earnings before interest, taxes, depreciation and amortization (EBITDA), according to Reed Phillips, managing partner of the media investment bank DeSilva and Phillips.

Morningstar analyst Liang Feng estimated that the Washington Post's newspaper division posted EBITDA of $15 million last year, not including pension liabilities. Washington Post CEO Donald Graham said the newspaper division was profitable last year but declined to give a figure.

Based on those estimates, Bezos paid about 17 times 2012 EBITDA.

Washington Post Co's shares rose more than 4 percent on Tuesday.

Such a large premium, which essentially pays for intangible assets like the brand name, may mean that any future sellers of prestigious newspapers will raise their price expectations. Other major newspapers that are in the sights of potential buyers include the Los Angeles Times and the Chicago Tribune.   Continued...

 
Amazon CEO Jeff Bezos arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort in this July 12, 2013 file photo. REUTERS/Rick Wilking/Files