Buffett to buy newspapers - but says online readers must pay
The Sage of Omaha thinks local papers have a future and pledges to buy up more
REPORTS of the death of the local newspaper may be wide of the mark if the legendary investor Warren Buffett is to be believed. Last week the Sage of Omaha bought up 63 local newspapers, including 26 dailies, in the US in a $142m deal and now he has announced that he intends to buy more of them.
In a letter to the editors of the papers he already owns, 81-year-old Buffett, who started out as a paperboy, affirmed his affection for the print media. "I've loved newspapers all of my life — and always will," he wrote. "Today, I read five newspapers daily. Call me an addict."
Buffett said that his company, Berkshire Hathaway, would "probably purchase more papers in the next few years", and also vowed that he would never interfere with their editorial direction. "I have some strong political views, but Berkshire owns the paper - I don’t. And Berkshire will always be non-political," he explained.
However, observers say that his interest in newspapers is not sentimental. And Buffett, who already owns the Buffalo News and Omaha World-Herald, made it clear that he was only interested in papers that met certain criteria.
The billionaire, who bought the Buffalo News in 1977 and said in 2009 that newspapers have the potential for unending losses, is now betting that papers with a community focus can profit as they change their models.
"Newspapers that intensively cover their communities will have a good future," he wrote. The famed investor admitted that circulations would continue to fall nationally, but said titles that had no local competition and served community-minded neighbourhoods could thrive.
He also sides with Rupert Murdoch when it comes to the role of the internet, insisting that it is "unsustainable" for papers to give away content for free online.
But despite Buffett's efforts to paint his acquisition of Media General as one borne of affection for the industry, observers have been quick to point out it was typically hardnosed.
"Hardly the work of a romantic," wrote Forbes of the deal. It points out that the $400 million loan to MG has a 10.5 per cent rate of interest and adds: "He's also getting a valuable stake in a TV broadcasting company, a considerable amount of real estate and a bevy of modestly profitable newspapers, all for just $142 million."
Media commentator Jack Shafer was even more direct. "[It] doesn't mean that newspapers are back," he said last week. "All it means is that an old cow that's still a milker has been moved to a neighbouring farm's pasture, where it will be squeezed until it can give no more and will then be ground into pet food."