Warren Buffett Was a Terrible Newspaper Owner
When he purchased 63 local newspapers eight years ago, Berkshire Hathaway CEO Warren Buffett knew this was not going to be one of his legendary investments. “The newspaper business,” he said, “is a declining business, and we will pay a price to be in that. That is not where we will make real money.” This was more of a civic investment. “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” he added. He had acquired his hometown paper, the Omaha World-Herald, a year earlier.
Ultimately, however, Buffett didn’t let sentimentality interfere with his bottom line. Earlier this week, Berkshire Hathaway announced it would be selling the papers to Lee Enterprises, which owns dozens of newspapers, including the St. Louis Post-Dispatch, and has managed Buffett’s papers for years.
The news was taken as yet another sign that the industry is doomed. But it also underscores Buffett’s catastrophic failure as a steward of some of the most important local papers in the country. Buffett was better suited than perhaps anyone to find a sustainable model for small and midsize newspapers. Instead, he did nothing.
Buffett has a long history with newspapers. A mentor to former Washington Post publisher Katherine Graham, Buffett purchased a 12 percent stake in that newspaper in 1974. A year later, he helped Graham beat back a strike, cementing a close relationship that would last until Graham died in 2001. Buffett would remain on the Post’s board until 2011 and retained significant stock before Jeff Bezos bought the paper in 2014.
Although Buffett had purchased the Buffalo News in 1977, newspapers were largely a sideline for him until the 2012 purchase. The investment came after he had made a number of trenchant comments about the dismal state of print media. “For most newspapers in the United States, we would not buy them at any price,” he told investors in 2009. “They have the possibility of nearly unending losses … I do not see anything on the horizon that sees that erosion coming to an end.”
Three years later, he took a different tack. While he acknowledged in 2012 that business was “declining,” he also said he expected his investments to bring returns, rather than losses. “I think the economics will work out OK. It’s nothing like the old days, but I think it will work out OK,” he said. Buffett’s change of heart reflected the status quo at the time: Smaller newspapers had a near-monopoly on local and community news, and people were still willing to subscribe to them.
Buffett’s intervention in the news business could be seen as part of the rise of billionaire-owned media. Boston Red Sox owner John Henry purchased The Boston Globe in 2013, Bezos bought the Post in 2014, and Patrick Soon-Shiong bought the Los Angeles Times in 2018. These owners have, for better or worse, taken a hands-on approach to their papers, experimenting with different approaches to grow revenue, without making drastic cuts. Buffett, in contrast, played a passive role. Management was turned over to Lee Enterprises in 2018.
“He’s an investor,” Dan Kennedy, author of The Return of the Moguls: How Jeff Bezos and John Henry Are Remaking Newspapers for the Twenty-First Century, told me. “He doesn’t run things. He never has. It sounds like there were people who had hoped that because newspapers are special and have a special role in democracy … he would take a more active role than he normally does. But he was just operating the way he always does.”
The thinking behind Buffett’s investment—that these papers’ near-monopoly on local and community news made them better investments than larger papers—appears to have been wrong. Other papers have found a way to grow digital subscriptions by appealing to both a local and national audience. But instead of trying to find new ways to connect with readers and raise revenue, Lee treated the terminal decline of local news as a given and did what it could to manage the decline: It made cuts to preserve profits as revenue fell.
The new crop of newspaper billionaires are not running their papers as charitable efforts. Bezos and Henry, in particular, have made it clear that they do not intend for their papers to lose money. They also have not made the kinds of draconian cuts that other newspapers owners, such as the hedge fund Alden Global Capital, have. Buffett tried to find a middle path: He didn’t invest like Bezos, nor did he cut like Alden. It didn’t work at all.
Buffett’s failure could not have come at a worse time. While the Post and The New York Times have provided a tentative economic model for larger papers, local news remains in precipitous decline. Over the last decade, thousands of journalism jobs have been lost. There is a limited and rapidly shrinking amount of time left to find a model that can sustain meaningful reporting at the local level. Buffett had the opportunity to find that model. He squandered it.