Allow Facebook to "faithless"

Summary: Washington Post Company chairman and CEO Donald E Graham Facebook is about to be listed in a few months, the total value is said to be up to 100 billion U.S. dollars, the market is looking forward eagerly. Once the IPO is successful, Zuckerberg and its start-up team and early investors will reap billions of

Washington Post Company chairman and CEO Donald Lee E. Graham

Facebook is about to be listed in a few months, with a total valuation of $100 billion trillion, and the market is looking forward to it. Once the IPO succeeds, Mark Zuckerberg and his start-up team and early investors will reap billions of of billions of dollars in wealth. The head of the Washington Post Company, however, had to sit on the sidelines. Originally, the newspaper many urgent financial problems can be solved with the Facebook listing, but they have missed the opportunity.

Despite the debt, in chairman and CEO Donald Lee Led by E. Graham, The Washington Post has just launched Facebook apps and is trying to catch up with innovative trends such as digitization, and is still sticking to the idea of quality first and groping forward.

Allow Facebook to "faithless"

As early as 2005, The Washington Post Company's chairman and CEO Donald E. Graham asked a daughter at Harvard to vent with Zuckerberg to engage in equity investments. Within days, the two men reached an oral agreement of 6 million dollars in investment. But Zuckerberg changed his mind when Ccelpartners, a Silicon Valley venture capital company, offered to inject a higher price. Graham could have asked Zuckerberg to redeem his verbal contract, or at least make a counter-offer. But he encouraged the 20-year-old to act on his own terms. As a result, Zuckerberg chose Accel.

For those who know Graham, this anecdote is a typical "Tang Greheum style". "He is such an unbelievable good man. "Goli Sheikholeslam I, former vice president of the Washington Post. GOLI2010 has been leading the Post's digital development for years before leaving the post. "He is always willing to offer advice, especially to young entrepreneurs. ”

The 66-Year-old Graham has a reputation as a rare tycoon in the American news industry who put ethics and human feelings before their interests. In the 20 years he took the CEO's title from his mother's ——— legendary Catherine Graham, the Post won 32 Pulitzer Prizes, after the New York Times. When national newspapers slashed wages and even laid off people as a result of reduced readership and advertising, the post was heavily merged. When cost pressures make a rift in the relationship between the management of newspapers and news workers, Graham is a benevolent boss in the minds of his employees, just as he has returned to his early paternalistic style. "It seems to me that he is definitely a model media boss," said Jacob Bu Wesberg, editor-in-chief of the digital distribution division slate group, saying, "Don will never point out to you that he has always been a strong supporter." ”

The Mail group is heavily indebted

But Graham's nice-guy style has led to indebtedness, and has recently focused on the show. The Washington Post's circulation, which has fallen by 40% from 1995 to now only 507,000, has fallen by 30% in five years to $680 million. It's not hard to imagine that The Washington Post is in the doldrums, especially if the entire American newspaper industry is in a slump. But the opportunity to invest in Facebook has been missed, and the consequences of the sale of Newsweek are hard to undo.

In 2010, the Washington Post sold Newsweek to the Harman family at a symbolic price of 1 dollars, on condition that the other party took on Newsweek's debt and retained most of its staff. And the worse omen is that Graham's diversified investments, from educational services to new media, have been muted, or even worse, into heavy baggage.

In the latest quarter, The Washington Post Company, which runs a cable television system and a series of television stations, is "the worst performer in all the newspaper companies," said analyst Ken Been. After a steady rise of more than 10 years, the revenues of the post company fell 10% in the three quarter of 2011, to $3.15 billion. Profits fell 72% to $55 million. The agency downgraded its debt twice last year out of doubt over its profitability. The Post's share price fell to below $400 a share, from $942 a share in the weeks before the decisive dialogue between Graham and Zuckerberg. Its current market capitalisation is 3 billion dollars.

If Graham could have been tougher (or even just letting Mr Zuckerberg respect their agreement or Accel with him), all the difficulties would have gone. What is the value of Facebook's stock that might belong to the post company? PrivCo, which tracks private companies, estimates that up to 7 billion dollars.

Once a unique multiple advantage

Until 2008, the mail company was still the envy of its peers, because of its unique advantages. The first is longtime supporter Warren Buffett. After holding a 11% stake in the post company in 1974, Mr. Buffett has been the biggest shareholder in addition to the Graham family and has served as chief executive director for a long time. From the company's administrative structure to the controversial decision to provide free online newspapers, the Post's workings reflect Buffett's philosophy. At his suggestion, the post set up a permanent pension plan, a costly move to make a large repurchase. Graham will treat Mr. Buffett as a trusted advisor and often listen to his advice, especially when he has asked him to ignore the share price and focus on the company's intrinsic value.

Although Mr. Buffett withdrew from the Post's board of directors a year ago on the basis of no time for a meeting, he promised never to sell his shares. Graham was still largely dependent on his advice. "Despite leaving the board, Buffett's advisory role has not changed," he said, "and I will continue to communicate with him about the important things in the company." ”

Another once unique advantage was the successful operation of the Post's Kaplan education group. The Kaplan Education Group was established in 2000 as a tentative business in which Kaplan Education entered the emerging industries of for-profit higher education. It surpassed the Post's other major profit-making projects in 2004, and by 2010 it contributed 61% of its total revenue to the company, which it described as "an educational media company".

The decline in newspapers, which has long been slipping, became more pronounced in 2008 and 2009, while Kaplan Education Group was the best parachute. Kaplan masked the decline of the post and provided the post with room for manoeuvre, while the New York Times did not. "says Ken Been, an analyst.

But the parachute failed. In the 2009, the for-profit education industry started to get into trouble, blaming the industry for part of the credit crunch as it forced low-income students to apply for loans, but students were unable to repay them. Many of these sharp accusations are directed at Kaplan. Kaplan's growth relied heavily on taxpayers ' money, but its employees were found to have used unethical tactics to lure customers. Under the new federal regulations, the state attorney general and the informant organized the investigation. 2010 Kaplan introduced reforms, including the introduction of a new policy for students to retire for free.

As a result, the latest season of Kaplan's registered freshman sharp drop of 30%. Even if the number of new registrations can rebound, the impact of the event will continue. Although the entire industry has been affected, Kaplan is certainly the hardest hit.

As Kaplan slipped, Cable became the most lucrative sector in the mail company. But its subsidiary cable one also faces "serious long-term problems", including fierce competition leading to price declines, and wireless trends, PAA's analyst Bradsafalow said. In fact, Cable one's operating income fell 9% to $115 million in nine months, 2011 years ago.

Although the huge advertising revenues of the Olympics and the presidential election will be the lifeline of 2012, the future of the post Company's radio and television group is not rosy. "When I looked at the company, I saw that a whole range of assets were in great trouble," Safalow said. "Can the company survive the rally?" From our analysis we don't see this. ”

To break through but never sell the post

It would be wrong if you thought the post shareholders would reduce their shares. Following Buffett's dogma, Graham believes that sooner or later the market will reflect the true value of the Post's assets. "In a word, we will not disband or sell our business," he said.

If stocks rise, that can only be due to the most unlikely business: publishing. But as a former reliable profit point, the post company's publishing business has been losing money for the past four years.

To solve the problem, the company sold Newsweek to the audio equipment manufacturer Sidney Haman in 2010 at a symbolic price of 1 dollars. Newsweek lost 40 million in the first two years of sales. There was a consensus within the post and Newsweek that Graham should have known a few years ago to sell Newsweek, or at least cut costs, but Graham had no action to preserve the family legacy and emotions.

It is inconceivable that Graham should sell or close the post. "Newspapers are the foundation of the whole company and the family. Analyst John Morton said. When readers and advertisers shift from paper media to the Internet, when electronic money replaces the real currency, all newspapers are hit. Large domestic and international newspapers, such as The New York Times and The Wall Street Journal, whose coverage and reputation will attract high-end advertising, and local tabloids focused on the region, attract retail advertising. Mid-sized Metropolitan newspapers, such as The Washington Post, do not account for either of these advantages.

For years, the post has been committed to developing a national newspaper, because what happens in Washington is often about the country. But this has caused the newspaper to locate the crisis. "When I was here, this problem always affected everything we do," he said. Jimbrady said he was responsible for running the Post's website from 2004 to 2008, "there is a barrier between the actual status of the newspaper and its future positioning." ”

In 2006, two post editors, Jim Vande Hei and John Harris, proposed to build a dedicated, political-focused affiliate website. Although Graham accepted the idea, it was late in action, and eventually Aubriton communications company realised the potential of the site and took the initiative to set up Politico. It began to profit in two years and became a national political vane website that began to erode the Post's advantage. And the cost of 40 million of dollars that Graham squandered in Newsweek over the past two years could have easily built the Post's own Politico.

New Hope: Innovation to catch up

This does not mean that the post has been in place for years. The post is one of the first big newspapers to join the web, and in the same way, it has adopted innovative models such as blogs and reader reviews earlier. The post has been the second most visited newspaper site in the United States, after the New York Times. But in some sense the post has lagged behind innovation, especially in the business world, in newspapers and even across the industry. Digital advertising revenue in the last quarter not only failed to make up for the decline in the paper version of reported income, it fell by 14%. As more and more newspapers, including the New York Times, have seen the dawn of a Web page and a mobile version of profits, the post remains firmly convinced that the best strategy is to attract the most readers, whether they pay or not.

In 2009, the Mail company established the China Mail Laboratory (WaPo Labs). So far, the most intriguing achievement in the lab has been the social Reader (Social reader) ——— a Facebook based application that allows users to read newspapers, follow their friends ' preferences and share recommended articles. Other newspapers, including the Wall Street Journal, the Guardian, and their own Facebook versions. and social readers say they are more mature, because it has its own recommendation engine "Trove", which is another achievement of the laboratory.

Social readers are popular, with 9.5 million registered users, nearly two-thirds of whom are active. "We are very happy to attract users." Vijay Ravindran said he was the director of the Digital laboratory. Crucially, most of these users are young consumers who abandon newspapers: more than 80% of users are under the age of 35. In other words, if the reader continues to attract users, such applications will lead the user into a new generation of post readers.

But for now, profitability is unrealistic. The Washington Post does not have any ads in the reader and has no intention of introducing ads for the time being. "Achieving profitability is really an important part of the product," Ravindran said, "but it's not something we're going to do right now, we just focus on delivering the best possible quality products." ”

Sounds familiar? It's possible, if you've seen the movie "Social Networking". The product of unlimited focus and slow profit planning is a typical "Mark Zuckerberg" style. Mr. Zuckerberg had asked Graham how to be a good CEO, but his teacher-student relationship seemed to be starting to look upside-down. Graham's people said Graham had learned a lot from Mark Zuckerberg in the course of the Facebook IPO, in addition to the money they had exchanged. "Graham formed a new perspective on the days when he and his team were on board," he said. Ravindran said, his Silicon Valley view of innovation and business adjustment was impressive. "Now that sounds very useful.