Buying a Business 55placed in receivership. That summer, the company was sold at auction
to satisfy creditors. Eugene Meyer, a millionaire f inancier, bought the
paper for $825,000. For the next two decades, he supported the opera-
tion until it turned a profit.
Management of the paper passed to Philip Graham, a brilliant
Harvard-educated lawyer who had married Meyer’s daughter Kather-
ine. In 1954, Phil Graham convinced Eugene Meyer to purchase a rival
newspaper, the Times-Herald.Later, Graham purchased Newsweek
magazine and two television stations before his tragic death in 1963. It
is Phil Graham who is credited with transforming the Washington Post
from a single newspaper into a media and communications company.
After Phil Graham’s death, control of the Washington Postpassed
to his wife, Katherine. Although she had no experience managing a
major corporation, she quickly distinguished herself by confronting dif-
f icult business issues.
Katherine Graham realized that to be successful the company would
need a decision maker not a caretaker. “I quickly learned that things
don’t stand still,” she said. “You have to make decisions.”^14 Two deci-
sions that had a pronounced impact on the Washington Postwere hiring
Ben Bradlee as managing editor of the newspaper and then inviting
Warren Buffett to become a director of the company. Bradlee encour-
aged Katherine Graham to publish the Pentagon Papers and to pursue
the Watergate investigation, which earned the Washington Posta repu-
tation for prizewinning journalism. Buffett taught Katherine Graham
how to run a successful business.
Buffett f irst met Katherine Graham in 1971. At that time, Buffett
owned stock in the New Yorker.Hearing that the magazine might be
for sale, he asked Katherine Graham whether the Washington Post
would be interested in purchasing it. Although the sale never materi-
alized, Buffett came away very much impressed with the publisher of
the Washington Post.
That same year, Katherine Graham decided to take the Washington
Postpublic. Two classes of stock were created. Class A common stock
elected a majority of the board of directors, thus effectively controlling
the company. Class A stock was, and still is, held by the Graham family.
Class B stock elected a minority of the board of directors. In June 1971,
the Washington Postissued 1,354,000 shares of class B stock. Remark-
ably, two days later, despite threats from the federal government, Kather-
ine Graham gave Ben Bradlee permission to publish the Pentagon Papers.