Amazon.com Inc founder Jeff Bezos will buy the Washington Post newspaper for $250 million in a surprise deal that ends the Graham family's 80-year ownership and hands one of the country's most influential publications to the tech entrepreneur.
Bezos, hailed by many as a visionary who helped transform Internet retail, called his acquisition a personal endeavor and reassured Post employees and readers he will preserve the paper's journalistic tradition, while driving innovation.
The acquisition, the latest in a flurry of recent media deals including the New York Times Co's sale of the Boston Globe for $70 million, is a further indication of the unprecedented challenges newspapers face as advertising revenue and readership decline.
Shares of the Washington Post Co climbed more than 5 percent to $599.85 after hours - their highest level in almost five years.
"I understand the critical role the Post plays in Washington, DC and our nation, and the Post's values will not change," Bezos said in a letter addressed to employees and published on the newspaper's website.
"There will of course be change at the Post over the coming years. That's essential and would have happened with or without new ownership," he added. "We will need to invent, which means we will need to experiment."
Bezos, who has built Seattle-based Amazon.com into a shopping and online technology force over the last two decades, made a small foray into media earlier this year with a small investment in Internet news site Business Insider.
The Washington Post, home to journalists as the "Watergate" team of Bob Woodward and Carl Bernstein, is among the rapidly dwindling number of U.S. newspapers with a profitable business - a function of the rapid migration of readers to Internet and other digital media sources.
Warren Buffett owns a slice of its parent company, Washington Post Co, whose operating income has plummeted almost 40 percent since 2008, to $146.2 million in 2012.
"I doubt it is a financially oriented investment for him as much as a chance to play a more important role as a steward of an important public trust/asset," said James Barksdale, President of Atlanta investment firm Equity Investment Corp.
Barksdale said his firm did not own Washington Post shares because he thought they traded higher than he thought justified, "probably due to the Buffett halo," he added.
Bezos will buy the Post along with other newspaper assets from the Washington Post Co. Amazon.com is to be kept separate from the Post deal, according to the Washington Post.
The deal, which caught many industry watchers by surprise, was arranged in private by Allen & Co. It comes on the heels of near-unprecedented media deal activity this year, with the Globe transaction announced just over the weekend, the Tribune Co hiving off its publishing and broadcasting businesses and the Los Angeles Times reportedly up for sale.
Graham family relinquish their claim
Washington Post Chairman and Chief Executive Donald E. Graham, whose family owns the paper, explained his decision to part ways with the publication, which will continue to be headed on a daily basis by CEO Katharine Weymouth.
"As the newspaper business continued to bring up questions to which we have no answers, Katharine and I began to ask ourselves if our small public company was still the best home for the newspaper. Our revenues had declined seven years in a row," Graham said in his letter to employees.
"Jeff Bezos' proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post."
The transaction covers The Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.
Bezos is the world's 19th richest person with a fortune of $25.2 billion, according to Forbes magazine. His other major personal project is called Blue Origin, which aims to be one of the first non-government funded ventures to send people and cargo into space, potentially winning lucrative contracts that were once fulfilled by NASA.
Bezos has already spent millions of dollars on this project, with millions more in the pipeline.
He did not elaborate in great detail on his motivations behind his latest deal on Monday. But in 2009, when asked at the debut of the Kindle 2 whether the electronic-reader could help print media, Bezos said he thought there were "genuine opportunities" to save journalism.
"And we're excited about helping with that," he added, according to the International Herald Tribune.
Newsmaker: Jeff Bezos, tech pioneer to turn media baron
Jeff Bezos, founder of Amazon.com Inc and soon to be the new owner of the Washington Post, is one of the few chief executives in corporate America who refuse to bow to Wall Street's quarterly profit demands.
Since starting Amazon in 1994, he has frequently upset investors by spending heavily on long-term investments, even if it means missing analysts' financial targets and sending the e-commerce giant's stock price plunging.
Bezos' approach makes him well-suited to own a storied but deeply troubled newspaper business like the Washington Post. Away from the harsh glare of Wall Street, Post employees can expect an intense boss, but one who will likely not demand to see immediate financial returns from his $250 million acquisition.
"The Post has got itself a patient, exacting and imaginative owner which are attributes its journalists should welcome with open arms," Mike Moritz, a partner at Sequoia Capital and a former journalist, said in an email.
Bezos, 49, who is buying the Washington Post as a personal investment for $250 million, has funded an eclectic array of ventures through an entity called Bezos Expeditions, including the business news website Business Insider and Twitter, the messaging service.
He has not previously expressed deep interest in newspapers or journalism, though Amazon's forays into electronic books, tablet computers and television programming have placed it squarely in the media business. By his own description, he is a voracious reader of newspapers.
"He's long valued the written word and authors," said Tom Alberg, a managing director of the Seattle-based Madrona Venture Group and a board member of Amazon.com. "There's a danger of long-form journalism being on the decline. He takes a long-term view."
Bezos' journey, both literal and figurative, from a successful stint on Wall Street to the suburban Seattle garage where he launched Amazon.com is one of the famous founding stories of the dot-com era.
From modest beginnings as an online bookseller, Bezos and Amazon branched out into almost every product category available, ending up taking on established retail giants such as Wal-Mart Stores Inc.
Under Bezos, Amazon launched the Kindle e-reader and revolutionized the way books are distributed and read. The company has also been a pioneer in cloud computing - a trend that has begun to turn the traditional IT business on its head.
More recently the company has moved into grocery delivery and begun experimenting aggressively with same-day delivery services. That experience could come in handy at the Post, given that production and distribution of printed newspapers remain the company's central business.
Despite its success, or perhaps because of it, Amazon has been a target of critics who say it is helping to destroy Main Street retailers and creating a new class of low-wage workers in its rapidly expanding network of distribution centers. In Seattle, locals have complained that the company is stingy with its philanthropy.
Yet an Amazon warehouse in Tennessee was a featured stop last week on President Barack Obama's economic policy tour, with the company announcing that it was hiring 5,000 more workers with pay and benefits that were better than those of most retailers. Amazon has also won over some critics by giving up its long-running opposition to sales taxes on online purchases.
Bezos has described himself as "stubborn" many times and likes to spend heavily on long-term projects while sharing few details with analysts and investors.
In person, the wiry, close-cropped Bezos is an electrifying presence. At Amazon's annual shareholders meeting, one of his rare public appearances, he answers often difficult and confrontational questions with brief intensity.
Politically, he has been mostly low-profile. He made waves with a $2.5 million donation to the campaign for a Washington State ballot measure supporting gay marriage, but otherwise he has given sparingly, and mostly to home-state Democrats.
His personal interests sometimes run to the exotic, such as the Blue Origin private space program and a plan to build a clock that will keep time for the next 10,000 years.
John Battelle, a veteran journalism entrepreneur and chief executive of Federated Media Publishing, ascribed Bezos' purchase of the Post to simple motives.
"I think a guy reaches a certain age, has money, realizes that stuff like what the Washington Post does is important, and figures he has the brains and the money to figure it out," said Battelle. "Not the first, won't be the last."