A Psychological Boost for a Struggling Industry: Warren Buffett goes on a newspaper buying spree
Didn’t investor extraordinaire Warren Buffett get the memo about newspapers being dying dinosaurs?
It was one thing when he decided to buy his hometown Omaha World-Herald and related properties last year. Sure, he said he was acquiring a well-run company, but clearly civic concerns were part of the equation.
But spending $142 million to buy 63 dailies and weeklies from Media General? Has the Oracle of Omaha lost his mind?
Buffett’s rationale for buying the paper is pretty basic. “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett, chairman of Berkshire Hathaway, said in a statement “The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”
The properties Buffett is buying are medium-size and small papers in medium-size and small markets. The largest paper among his new pickups is the Richmond Times-Dispatch, which has a daily circulation of 115,000 and a Sunday circulation of 165,000. The second biggest is North Carolina’s Winston-Salem Journal, whose comparable numbers are 58,000 and 76,000. The one Media General paper he didn’t buy was its largest, the Tampa Tribune.
For the most part, as newspaper analyst and AJR columnist John Morton has pointed out, even in these challenging times, smaller papers such as the ones Buffett is buying have tended to fare better than their struggling counterparts in major metro markets. There are a number of reasons for this. For one thing, as Morton has written, they were not as dependent on classified advertising, a craigslist casualty, as their big city brethren. Their markets are not nearly as competitive and complex, and often the smaller dailies and weeklies have closer relationships to their communities.
It didn’t hurt that, as Morton says, he got the papers for a “bargain price.”