According to a Reuters report on Wednesday, Amazon.com CEO and co-founder Jeff Bezos may have paid more than four times what The Washington Post’s market value is when he bought the legacy newspaper this week 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,” reads the report from Reuters journalist Jennifer Saba.
While paying four times the value of any big ticket item is likely to frustrate a prospective buyer, other estimates suggest that Bezos paid astronomically more for The Post than he could have.
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.
A financial analyst estimated The Post’s newspaper division’s EBITDA at $15 million in 2012, excluding outstanding pension liabilities. “Based on those estimates, Bezos paid about 17 times 2012 EBITDA,” Saba reports.
Bezos’ net worth is estimated at approximately $25 billion. Saba reports that, when Bezos agreed to purchase the paper last month at the annual media mogul fest in Idaho, he “did not haggle over the price.”
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