Monday, August 19, 2013
New York Times DealBook: A Trophy Owner Also Familiar With Turmoil, by Vic Fleischer (San Diego):
Jeff Bezos’s purchase of The Washington Post raises the possibility that he acquired the paper as a trophy to celebrate his success as the founder and chief executive of Amazon.com. The acquisition comes after the purchase of The Boston Globe by John W. Henry, the owner of the Boston Red Sox and a trading firm billionaire. The purchases are part of a broader trend toward private ownership of media companies.
A classic economic study by Harold Demsetz and Kenneth Lehn finds that concentrated ownership might be explained by the “amenity potential” of certain companies, including mass media and sports teams. [The Structure of Corporate Ownership: Causes and Consequences, 93 J. Pol. Economy 1155 (1985).] John Henry’s holdings nicely illustrate both. As the authors explain, winning the World Series or “believing that one is systematically influencing public opinion” may provide consumption benefits to the owners even if profits are diminished.