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Editorial
Buffett purchase shows real value of newspapers
Wednesday, December 7, 2011
There has been a great deal of doom and gloom spread over the past five years about the future of newspapers. The obituary of the entire print industry has been written numerous times, but the latest round of the end of the print world during the Great Recession seemed to gain some traction.
Among the crowd that kept repeating the print is dead mantra, the comments of billionaire investor Warren Buffett that the industry did not have a sustainable business model were seen as proof positive that extinction was just around the corner.
Buffett, whose Berkshire Hathaway owns 80 companies as diverse as clothing, insurance, furniture, utility, jewelry and corporate jet companies, last week announced a plan to acquire the Omaha World-Herald and its subsidiaries for $150 million, assuming $50 million in debt as well.
Berkshire owns the Buffalo News and it has a sizable investment in the Washington Post Co. Buffett told the employee owners of the World-Herald that "I wouldn't do this if I thought this was doomed to some sort of extinction," adding that the World-Herald "delivers solid profits and is one of the best-run newspapers in America."
The deal includes daily newspapers the World-Herald owns in Grand Island, York, Kearney, North Platte and Scottsbluff, as well as in Council Bluffs, Iowa. The company also owns World Marketing, which provides direct marketing services in Omaha, Chicago, Atlanta, Dallas and Los Angeles.
Buffett promised to stay out of editorial decisions at the World-Herald Co.'s newspapers and Berkshire Hathaway has a history of not making major changes at the companies it buys. Instead, Buffett prefers to buy well-run companies and allow them to continue operating in a similar fashion.
An Associated Press story about the purchase discounted the possibility that the purchase of Buffett's hometown newspaper was driven by sentiment. Andy Kilpatrick, who wrote "Of Permanent Value: The Story of Warren Buffett," says the investor doesn't buy companies if he doesn't believe the deal will be profitable.
Now that the "Oracle of Omaha" has bought more newspapers, who will the cynics point to next as the definitive proof that newspapers are dying?