It may be that no one has followed the newspaper business as closely as we have for as long as we have—50 years or more. It’s been interesting to watch newspaper owners and investors resist seeing what’s going on right in front of them. It used to be you couldn’t make a mistake managing a newspaper. It took no management skill—like TV stations. Your nephew could run one.
I’m not especially surprised that newspapers haven’t covered these remarks. (Imagine if Buffett had said such things about, say, the soft-drink business, in which he’s also invested significantly over the years.)
Buffett also said:
Certain newspaper executives are going out and investing on other newspapers. I don’t see it. It’s hard to make money buying a business that’s in permanent decline. If anything, the decline is accelerating. Newspaper readers are heading into the cemetery, while newspaper non-readers are just getting out of college. The old virtuous circle, where big readership draws a lot of ads, which in turn draw more readers, has broken down.
This is a direct shot at MediaNews and McClatchy, the companies making deals right and left over the old Knight Ridder empire. McClatchy is buying KR, but spinning off major properties to MediaNews, including the San Jose Mercury News, my old employer.
The New York Times has a report today, in fact, on the CEO of MediaNews, Dean Singleton. He says he’s going to turn the Mercury News into a laboratory for Internet journalism and make deals with Yahoo and Google, among others.
(I recently proposed that Yahoo buy the Merc and turn it into a journalism laboratory. The suggestion was considered for maybe two minutes inside the Internet company before being discarded as hopelessly retrograde.)
Maybe he’ll figure out how the industry will make it into this century. Or maybe not; I just don’t see how the unraveling business model can be sustained in a way that keeps the journalists employed in sufficient numbers.
Buffett’s been wrong on some of his investments, and I hope that’s the case this time. But I’m having trouble seeing how he’s wrong on this one.
(Disclosure: I’m a Berkshire Hathaway shareholder.)