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The Graham family's burning issue with the Washington Post The Graham family's burning issue with the Washington Post
(2 months later)
The Washington Post Company is going into the furnace business.The Washington Post Company is going into the furnace business.
Late last week, the company announced the acquisition of Texas-based Forney Corp, a unit of United Technologies Corp. The Post described Forney as "a global supplier of products and systems that control and monitor combustion processes in electric utilities and industrial applications". Shareholders of the Post Company, having invested in the future of news or education, the Post's other focus in recent years, along with everybody else curious about the future of media, might reasonably say, "WTF?"Late last week, the company announced the acquisition of Texas-based Forney Corp, a unit of United Technologies Corp. The Post described Forney as "a global supplier of products and systems that control and monitor combustion processes in electric utilities and industrial applications". Shareholders of the Post Company, having invested in the future of news or education, the Post's other focus in recent years, along with everybody else curious about the future of media, might reasonably say, "WTF?"
Let's grant that the Post's newspaper business is in bad, possibly terminal, shape, and that its education business, Kaplan, once the Post's designated salvation, has itself taken a dramatic turn for the worse. But furnaces?Let's grant that the Post's newspaper business is in bad, possibly terminal, shape, and that its education business, Kaplan, once the Post's designated salvation, has itself taken a dramatic turn for the worse. But furnaces?
Donald Graham, the Post Company chairman, who also represents the Graham family, the company's controlling shareholder, described the acquisition as fitting "with our decentralized operating philosophy". In that phrase, Graham rewrites the nature of the Post Company, turning it from a focused enterprise, with two main divisions, into a holding company, in essence an investment vehicle.Donald Graham, the Post Company chairman, who also represents the Graham family, the company's controlling shareholder, described the acquisition as fitting "with our decentralized operating philosophy". In that phrase, Graham rewrites the nature of the Post Company, turning it from a focused enterprise, with two main divisions, into a holding company, in essence an investment vehicle.
In other words, this new view of the company suggests a strategy of converting its current $4bn value into businesses with predictable cash flows and capable management. In that way, the Post Company becomes like a private equity firm, or like Warren Buffet's Berkshire Hathaway.In other words, this new view of the company suggests a strategy of converting its current $4bn value into businesses with predictable cash flows and capable management. In that way, the Post Company becomes like a private equity firm, or like Warren Buffet's Berkshire Hathaway.
Let us forget the fact that nobody at the Post Company has the foggiest notion of how to be a financier and asset manager. It makes more sense to use this bizarre corporate development – a Hail Mary pass if there ever was one – to measure how far the Post has fallen and how bereft it is of any reasonable plans.Let us forget the fact that nobody at the Post Company has the foggiest notion of how to be a financier and asset manager. It makes more sense to use this bizarre corporate development – a Hail Mary pass if there ever was one – to measure how far the Post has fallen and how bereft it is of any reasonable plans.
Of all the troubled newspapers in the country, the Post is the most storied and its situation the most calamitous. The Post, like Newsweek, its long-profitable sister publication, could well end up as scrap.Of all the troubled newspapers in the country, the Post is the most storied and its situation the most calamitous. The Post, like Newsweek, its long-profitable sister publication, could well end up as scrap.
At almost every juncture, the Post seems to have made the wrong decision. Instead of using its vaunted brand to expand nationally, it doubled down locally, exposing itself to significantly greater advertising flight. A 1990s forerunner in digital strategy, it pulled back during the bust and never caught up again. It made drastic staff cuts, effectively ceding its franchise to report on the federal government to new entrants. It came to rely on an auxiliary business, its education services, which would itself be smacked by digital disruption.At almost every juncture, the Post seems to have made the wrong decision. Instead of using its vaunted brand to expand nationally, it doubled down locally, exposing itself to significantly greater advertising flight. A 1990s forerunner in digital strategy, it pulled back during the bust and never caught up again. It made drastic staff cuts, effectively ceding its franchise to report on the federal government to new entrants. It came to rely on an auxiliary business, its education services, which would itself be smacked by digital disruption.
I concede that doing the opposite of what was done would hardly have provided a turnaround solution. But the New York Times did the opposite – and while, once, it was much weaker than the Post, it is now significantly stronger, with a hope and prayer of making it in the new age of information brands.I concede that doing the opposite of what was done would hardly have provided a turnaround solution. But the New York Times did the opposite – and while, once, it was much weaker than the Post, it is now significantly stronger, with a hope and prayer of making it in the new age of information brands.
But beyond the crisis in news, the Post, like many newspapers, including the Times, has its own unique problem: the family that controls it. For many years, this was its unique virtue. Katherine Graham, who inherited the paper and ran it for several decades, is one of the saints of the American newspaper business. Donald, her son, is regarded as one of the truly nice guys and level heads in American business.But beyond the crisis in news, the Post, like many newspapers, including the Times, has its own unique problem: the family that controls it. For many years, this was its unique virtue. Katherine Graham, who inherited the paper and ran it for several decades, is one of the saints of the American newspaper business. Donald, her son, is regarded as one of the truly nice guys and level heads in American business.
In 2008, at the start of the newspaper maelstrom, and just after Graham appointed the daughter of his sister "Lally" Weymouth, Katharine Weymouth, as the publisher of the Post, I interviewed him about the Post's prospects. He managed to convince me that if there was a solution to be found in the newspaper business, the Post had the resources – and he personally had the stamina – to find it.In 2008, at the start of the newspaper maelstrom, and just after Graham appointed the daughter of his sister "Lally" Weymouth, Katharine Weymouth, as the publisher of the Post, I interviewed him about the Post's prospects. He managed to convince me that if there was a solution to be found in the newspaper business, the Post had the resources – and he personally had the stamina – to find it.
But we all have our families. In the article I wrote then, I pointed out that Katharine, with a controversy about paying for access to Post reporters and editors at company events (actually, at dinner parties at her house), was off to a rocky start. And indeed, there was a level of worry in the company about her readiness for the job.But we all have our families. In the article I wrote then, I pointed out that Katharine, with a controversy about paying for access to Post reporters and editors at company events (actually, at dinner parties at her house), was off to a rocky start. And indeed, there was a level of worry in the company about her readiness for the job.
Not too long after, her mother attacked me at a dinner party – I mean, she made a scene, calling me the most insulting names she could think of at the moment. I thought then … Hmm. Yes. Got it.Not too long after, her mother attacked me at a dinner party – I mean, she made a scene, calling me the most insulting names she could think of at the moment. I thought then … Hmm. Yes. Got it.
Like many newspaper scions before her, Katharine Weymouth has been a disaster in a job for which she had, other than her lineage, no qualifications. She has been so artless and tone-deaf and stumbling that the overall crisis in newspapers has actually been to her benefit. It dwarfs her wrongheaded mismanagement.Like many newspaper scions before her, Katharine Weymouth has been a disaster in a job for which she had, other than her lineage, no qualifications. She has been so artless and tone-deaf and stumbling that the overall crisis in newspapers has actually been to her benefit. It dwarfs her wrongheaded mismanagement.
While getting rid of Weymouth would not, in itself, save the Post, it is to almost everyone who has left the Post and those hanging on an obvious step. (Beyond the forced exits, everyone who could leave of their own volition, has done.) An obvious step except for the fact that it is apparently not going to happen. Families are what they are.While getting rid of Weymouth would not, in itself, save the Post, it is to almost everyone who has left the Post and those hanging on an obvious step. (Beyond the forced exits, everyone who could leave of their own volition, has done.) An obvious step except for the fact that it is apparently not going to happen. Families are what they are.
So, furnaces. The Washington Post Company is also the financial motor of the Graham family. Don Graham, however loyal a proprietor he has been at the Post, also needs to protect his family's assets, as well as his shareholders'. A necessary element in doing this is to get his family out of the newspaper business.So, furnaces. The Washington Post Company is also the financial motor of the Graham family. Don Graham, however loyal a proprietor he has been at the Post, also needs to protect his family's assets, as well as his shareholders'. A necessary element in doing this is to get his family out of the newspaper business.
Since people in media families tend to believe they have God-given talents as well as rights to run media businesses, a sensible and even Solomon-like approach is to get out of media. Especially now, when news and media has never been more fraught and complicated.Since people in media families tend to believe they have God-given talents as well as rights to run media businesses, a sensible and even Solomon-like approach is to get out of media. Especially now, when news and media has never been more fraught and complicated.
So, furnaces. Nobody in the Graham family is going to want to be in furnaces.So, furnaces. Nobody in the Graham family is going to want to be in furnaces.
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