Graham Is Not Slowing Down After Sale of The Washington Post
By CHRISTINE HAUGHNEY AUG. 4, 2014
When Donald E. Graham announced a year ago that he was selling The Washington Post to Jeff Bezos for $250 million, it was unclear what Mr. Graham, one of journalism’s most revered executives, would do next. The Post had been a Graham family jewel for 80 years and a giant in the field of journalism; but in a deal forged quickly last summer, it was suddenly under someone else’s control.
Mr. Graham, however, did not simply retire. Instead, he has remained immersed in his business enterprise, the newly named Graham Holdings, a consortium mostly comprising education, television and cable businesses. The company generated $3.48 billion in revenue in 2013 and on Friday reported largely flat revenue of $878.6 million for its most recent quarter.
Mr. Graham, 69, also spent much of the last year extricating himself from The Post. He sold off the company’s Washington headquarters for $158 million, announced he was selling its art collection to raise money for his scholarship fund and was offering voluntary retirement packages to remaining corporate employees through the end of August. This month, he is moving his company into smaller offices in Rosslyn, Va. Public filings also show he plans to sell even more property along the Alexandria, Va., waterfront.
While Mr. Graham declined to be interviewed for this article, business associates and analysts say that he has focused on reshaping his company based on the philosophy of Warren E. Buffett, a longtime friend and former board member of The Post. Even though Mr. Buffett recently sold his $1.1 billion stake in Graham Holdings in exchange for one of the company’s television stations, he still advises Mr. Graham and even hosted Mr. Graham’s top executives in Omaha for their annual meeting in March.
Under Mr. Buffett’s tutelage, Mr. Graham has added several unglamorous but profitable businesses to his portfolio, companies from outside the realms of media and education. They include a screw jack manufacturer in Ohio and a home health care business in Michigan. Some followers of Graham Holdings say that Mr. Graham is so devoted to Mr. Buffett’s investment advice he follows it more rigorously than Mr. Buffett does himself.
Carl Salas, a senior credit officer at Moody’s Investor Service, said this mix of assets reflected a highly specific business approach similar to Berkshire Hathaway. Mr. Graham has chosen investments he can hold onto for a long time and that are largely run by the existing management.
“That’s their strategy, to let their businesses run themselves,” Mr. Salas said. “That would be in contrast to some private equity firms that get entrenched or immersed in the business. That says to me they’re not looking for a quick turnaround.”
At the same time, Mr. Graham has been using his extensive network of contacts to start a scholarship fund for undocumented immigrants. Candy Marshall, president of the fund, called TheDream.US Scholarship, said that Mr. Graham enlisted much of his family to help. His son, William, tapped his film industry contacts to create a video for the fund. His brothers donated money. His wife, Amanda Bennett, has helped organize fund-raising events across the country and Ms. Bennett’s daughter has been working as an intern.
With financing from Mr. Graham’s contacts, including the Bill and Melinda Gates Foundation, Mark Zuckerberg and Priscilla Chan, and Pierre Omidyar, the founder of eBay, TheDream.Us has raised $33 million since September.
“I’ve never seen one move with this sense of purpose and passion,” said Henry Muñoz, national finance committee chairman for the Democratic National Committee, who helped Mr. Graham found TheDream.US. Mr. Muñoz joked that the initiative had an unassuming start when Mr. Graham picked him up in a Chevy Malibu in spring 2013. But he said that after their conversations took off, Mr. Graham used The Post’s boardroom to host the early meetings, flew to Silicon Valley to solicit donations and made trips to meet scholarship candidates in cities like Miami. “He spends a lot of time doing this,” Mr. Muñoz said.
Followers of Mr. Graham say that his first priority remains running Graham Holdings. The sale of The Post now offers more exposure to the Kaplan education division, which once was the company’s cash cow and is still the primary revenue producer. The division generated 62 percent of the company’s revenue in 2013, but continued to watch its profits decline from its higher education and test prep businesses, according to the latest earnings. Analysts say that the worst seems to be behind Kaplan.
The company’s local television station group was the most profitable division for the company in 2013, according to the annual report. There are smaller businesses, too, like a supplier of combustion systems in Texas called the Forney Corporation, but it is still too early to know how profitable they will be for the company.
Mr. Graham has remained involved in media through his ownership of Slate and Foreign Policy magazine, along with social media start-ups like Trove and SocialCode. Even in a struggling media environment, he has pushed these companies to remain focused on profits. In March, Slate announced it offered its readers a $50 annual membership program for special access to Slate writers and events. Jacob Weisberg, chairman of the Slate Group, said that the site was profitable and that it was on track to sell 10,000 subscriptions by the end of the year. He added that Mr. Graham’s involvement with the Slate Group had remained consistent since the sale of The Post.
“He is engaged and supportive and he pushes you hard in your financial goals,” Mr. Weisberg said. “But he doesn’t interfere.”
It remains unclear how successful Mr. Graham’s company can be. The most recent earnings figures, which were released on Friday, showed that after removing several items, like the transaction with Mr. Buffett, income from continuing operations declined slightly to $54.5 million in the second quarter, from $58.7 million from the same time the year before.
But Mr. Graham’s employees and friends notice a difference in him since The Post’s sale.
“I think he has had a big burden lifted off him and he is very focused on looking forward and not back,” Mr. Weisberg said. “It was a very happy resolution to a very difficult problem.”
A version of this article appears in print on August 5, 2014, on page B3 of the New York edition with the headline: Graham Is Not Slowing Down After Sale of The Washington Post.