Reuters: Bezos Didn't Haggle Down Price of WashPost, Paid Four Times Its Market Value
The Reuters news wire has an interesting little piece today that reveals that Amazon.com founder Jeff Bezos not only seems to have agreed to buy the Washington Post for much, much more than its market value, but that agreed to the initial asking price rather than try to haggle it down.
Jennifer Saba has the story:
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 CEO Donald] Graham, whose family plucked the Washington Post out of bankruptcy in 1933, said in an interview on Monday that he based his price expectations partly on what other buyers had offered.
Graham said that the Post's investment bank Allen & Co reached out to no more than a dozen parties at the beginning of the year to gauge interest.
He hatched the deal with Bezos less than a month ago during the annual media mogul fest in Sun Valley, Idaho. The Amazon founder did not haggle over the price.
"I named a price and Jeff agreed to pay it," Graham said.