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March 3, 2014, 10 a.m.
LINK: www.berkshirehathaway.com  ➚   |   Posted by: Joshua Benton   |   March 3, 2014

berkshire-hathaway-media-groupWarren Buffett’s Berkshire Hathaway has, over the past few years, bought up dozens of newspapers, with 69 papers and other titles currently part of the BH Media Group, including the Richmond Times-Dispatch, Greensboro News & Record, Omaha World-Herald, and Tulsa World. In the 2012 edition of his legendary annual shareholder letter — seriously, their level of clarity is something most journalists can only aspire to — Buffett went on at some length about the purchases:

Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s going on in your town — whether the news is about the mayor or taxes or high school football — there is no substitute for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational needs of that community will remain indispensable to a significant portion of its residents.

On Friday afternoon, the latest edition of Buffett’s shareholder letter was released, and I went to it quickly to see what new thoughts there might be inside from the Oracle of Omaha about the newspaper business.

The answer: nada.

The only reference of newspapers was a pitch for BH’s “third International Newspaper Tossing Challenge.” Buffett’s got a good newspaper-tossing arm:

Now, there’s certainly no shame in being left out of a Berkshire Hathaway shareholder letter. The reach of Buffett’s empire is so broad and diverse that expecting a newspaper update every year is a bit like expecting the Roman senate to demand the latest from a small town in Mauretania Caesariensis at every meeting.

But the newspaper business can use all the outside business smarts it can get these days. Berkshire Hathaway is of course famous for letting its component businesses run themselves, but I think this year’s absence of attention might be a tiny, tiny piece of evidence that Martin Langeveld was right when he characterized Buffett’s interest in newspapers this way in our year-end Predictions package:

I think Warren Buffett is really pursuing a mop-up strategy. He says otherwise, of course: “Wherever there is a pervasive sense of community, a paper that serves the special informational needs of that community will remain indispensable to a significant portion of its residents.” What else is he going to say? He may actually believe this, and believe that printed newspapers will remain viable for a long time, and may prefer to read news on paper like most people in his generation.

But Buffett’s backup strategy is this: He is buying newspaper assets cheap and not investing much into them, in the expectation that even if they lose all value over the next 6 or 8 years, he will have made a decent return on his investment…

Warren Buffett will continue buying newspapers wherever he can do so very cheaply. No grand strategy, no new business models for news will emerge from Omaha. Ultimately, these papers will be closed or sold. It’s a mop-up.

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The Wall Street Journal website — paywalled from the very beginning — turns 20 years old today
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