As most print publications build their digital strategies while their print businesses struggle, why would anyone, much less an American business tycoon and legendary investor, buy a bunch of newspapers?
In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” said Warren Buffett, commenting
on his buy of 63 newspapers from U.S. media company.
Berkshire Hathaway, of which Buffett is chairman, is also extending its loan to Media General and buying a 19.9 percent share in the company and taking a seat on the board, the Washington Post reported last week. Buffett’s Berkshire Hathaway is paying US$142 million on the local newspapers, and its loan to Media General totals $445 million, which will help it solve its debt. Berkshire Hathaway now owns all of Media General’s Newspapers, except for the Tampa Tribune in Florida and other smaller papers in that market. However, those titles will likely be sold to other buyers.
“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,” Buffett said in a statement
However, in 2009, Buffett was pessimistic about the local newspaper industry. He told shareholders that “for most newspapers in the United States, we would not buy them at any price. They have the possibility of going to just unending losses,” MediaGuardian reported.
Buffett shifted his opinions when he discovered the power of local newspapers.
The experience of small towns and counties has been different in terms of the newspaper industry, paidContent pointed out. Lacking print and online competition, local newspapers can still hold onto some of their monopolies. Moreover, comparing to metropolitan newspapers, they have more time to make the transition to digital with more refined approaches.
“In these communities, the local paper is the sole source of everyday news — from high school sports, local events or obituaries,” Gordon Crovitz, former publisher of the Wall Street Journal and founder of digital subscription service, Press+, told paidContent.
While Erik Wemple, the Washington Post blogger, asked whether Buffett is “nuts” to buy newspapers, Jeremy Harris Lipschultz, a professor and director of the University of Nebraska at Omaha’s School of Communication, wrote that “Buffett says he is like a baseball batter with no need to swing until there is a fat pitch. Clearly, his passion and interest in journalism had him looking in the direction of acquisitions at the right price.”
Owning newspapers seems to be a trend among billionaires. For example, Carlos Slim, the Mexican telecoms billionaire, is a major shareholder in The New York Times, MediaGuardian pointed out. Earlier this year Gina Rinehart, billionaire daughter of mining magnate Lang Hancock, became one of the largest shareholders in Australia’s Fairfax Media, publisher of The Age, Sydney Morning Herald and other titles.
Image: Reuters via the Guardian