Alliance for Progress Can the Washington Post Co. make Foreign Policy profitable?

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Moisés Naím, editor-in-chief of the bimonthly magazine Foreign Policy, is a sought-after speaker. He speaks at conferences, seminars, world forums, and on TV. All the speaking has endowed Naím with a precious skill. No matter what the situation, he knows exactly what to say.

In spring 2008, for instance, one of his staffers at Foreign Policy was being wooed for a position at the Washington Post. After considering the prospect, the staffer withdrew from consideration, preferring to stay at Foreign Policy. The move pleased Naím. “You have no idea how good a choice you just made,” said Naím, in the source’s recollection. Naím homed in on the Post’s finances, noting that the company wasn’t on a stable footing. “That was the reason I’d dodged the bullet,” says the source.

Months later, Naím issued a different assessment of the Washington Post Co., one that, again, struck all the right chords. A different occasion was at hand: The Post Co. was buying Foreign Policy from the Carnegie Endowment for International Peace. In a Sept. 29, 2008, press release, Naím is quoted as follows:

“Foreign Policy is thrilled to join The Post Company. In an era in which too many newspapers and magazines are retreating from international news, The Washington Post Company is smartly bucking the trend. Serving the expanding market of readers eager to understand how events in other countries affect them is what FP is all about, and that is why we are so excited to have The Washington Post Company as our new home.”

In an interview with Washington City Paper, Naím called his new owner “one of the top media companies in the country.”

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Did Naím contradict himself? Actually, no. The Post Co. is among the country’s elite media companies and also a financial wreck. The two go hand-in-hand these days. Last year, the company’s stock lost more than 50 percent of its value.

What keeps the Washington Post from the fate of many other dailies—bankruptcy, oblivion—are the company’s acquisitions. In 1984, it bought Stanley H. Kaplan Educational Centers Limited; two years later, it gobbled up a bunch of cable systems. Together, Kaplan and Cable ONE supplied nearly 70 percent of the company’s 2008 revenues.

Now comes Foreign Policy,a purchase that, of course, will never get mentioned alongside Kaplan and Cable ONE. But what the transaction lacks in financial upside it more than compensates for in chutzpah. Why would a company in the midst of a tanking media economy snap up a property that has run year-after-year losses in the millions of dollars? And why would it sink more resources into international news and opinion, a segment of the industry known for its resistance to profit-making?

Let Washington Post Co. Chairman and CEO Donald Graham explain: Foreign Policy, he says, has “attracted a very, very remarkable audience—a tremendous number of policy makers and foreign ministers that advertisers want to reach. We know a little bit about selling to such an audience.”

Call it a bellwether. If the Post Co. manages to coax good money out of Foreign Policy, the news business has nothing to worry about.

The Post Co. has a complex set of criteria for deciding which publications to purchase. If they love the stuff, they dive in.

In March 2005, Graham threw a bash celebrating the company’s purchase of Slate. In his remarks, he shed some light on the process. After receiving notice that Microsoft’s online magazine might be on the block, Graham walked into the office of a colleague, who reported, “I love Slate.” Then he checked with another colleague, who reported, “I really love Slate.”

“That’s a good example of deft acquisition work, in case any of you are interested in buying stock,” joked Graham.

Tongue-in-cheek remarks notwithstanding, Slate actually was a deft acquisition. The Post Co. smartly kept the digital magazine’s staff intact, invested in the content, hooked it up with its massive sales infrastructure, and eventually made it the namesake of a corporate cohort: The “Slate Group” of publications includes TheRoot.com, The Big Money, and, now, Foreign Policy.

In many respects, the Post Co. followed the Slate template in approaching Foreign Policy. “It’s a terrific magazine,” responds Graham when asked what motivated the purchase. In an e-mail to Naím last August, Graham wrote, “[W]e are only interested in acquiring publications we think are distinguished and publications on which we can go forward with an unusual degree of long-term committment. This long-term focus is made possible in part by the Post’s unusual stance for a public company: that we are completely uninterested in quarterly earnings results and pay no attention to analysts’ forecasts.”

Inside FP: Click here for a critique of Web and print performance

Our Readers Say

Erik: Great piece that raises all the right questions. The Slate backstory is hilarious, too.

Drop me an email sometime, so we can catch up.

John Mecklin

Editor in Chief
Miller-McCune magazine
Miller-McCune.com
Miller-McCune Center for Research, Media and Public Policy
804 Anacapa Street
Santa Barbara, California 93101
805-899-8620 ex. 228
john.mecklin@miller-mccune.com

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