Inc. on Wednesday struck a deal to buy Omaha World-Herald Co., the
publisher of the Omaha World-Herald and six other daily papers in
Nebraska and Iowa. The transaction was valued at around $200
million and includes about $50 million of the newspaper company's
debt, a person close to the deal said.
Enlarge Image
Associated Press GET REWRITE? While he has spoken
negatively on newspapers' outlook, Warren Buffett, shown speaking
to Omaha World-Herald shareholders on Wednesday, has long held
investments in publishing companies.
Berkshire, where Mr. Buffett is chairman and chief executive,
already owns the Buffalo (N.Y.) News and is a major shareholder in
Washington Post Co., which publishes the fifth-biggest U.S.
paper by daily circulation. In a statement, Mr. Buffett said the
World-Herald 'delivers solid profits.'
Still, the purchase, which comes at a time when Berkshire's
performance and the 81-year-old Mr. Buffett's succession plans are
a focal point on Wall Street, doesn't appear to follow the
company's deal-making template.
Related Video
After stating for years that he is not interested in owning media
entities, Warren Buffett has made his next high-profile purchase:
the Omaha World-Herald Co., publisher of his hometown newspaper.
WSJ's Erik Holm has details on Mean Street. (Photo: AP)
Jeff Matthews, a Berkshire shareholder and author of a book on Mr.
Buffett, said the acquisition didn't meet the investor's usual
criteria. 'He wants enduring franchises, he wants competitive
advantages and he doesn't like newspapers in general,' Mr. Matthews
said. 'It doesn't fit any of the things he says he wants.'
Through an assistant, Mr. Buffett declined to comment beyond his
company's statement.
Mr. Buffett's track record has been built on successful investments
in insurers, financial companies and industrial businesses,
including household names like
Coca-Cola Co. and
American Express Co. And his company's recent acquisitions,
like the $26 billion purchase of Burlington Northern Santa Fe or
the $9 billion deal for Lubrizol Corp., have been large.
Berkshire shares are down 1.6% this year, compared with a 4% gain
in the Dow Jones Industrial Average.
Mr. Buffett's interest in the news stretches back to his childhood.
He began building his fortune as a teenager by delivering the
Washington Post in wealthy neighborhoods around Washington, D.C.
Later, he purchased a now-defunct Omaha weekly that would win a
Pulitzer Prize in 1973 for an exposé on Boys Town, a refuge for
homeless boys. Mr. Buffett had conceived the story and was actively
involved in the reporting, according to Mr. Buffett's biographer
Alice Schroeder. Mr. Buffett also developed a close friendship with
the late Post publisher Katharine Graham.
Mr. Buffett said the deal will continue local ownership of the
company, currently 80%-owned by employees and 20%-owned by the
Pieter Kiewit Foundation, an Omaha-based charitable trust formed by
the estate of a former World-Herald owner.
'It's his hometown paper so he probably wants to see it preserved,'
said Ken Doctor, a news industry analyst and author of the book
Newsonomics. Mr. Buffett grew up primarily in Omaha and continues
to run Berkshire, the eighth-most-valuable U.S.-traded company by
market capitalization, from an office there.
Berkshire at points in the 1970s held shares in Scripps Howard,
Booth Newspapers, Harte-Hanks Communications and Affiliated
Publications, then the owner of the Boston Globe. In 1985, Mr.
Buffett invested $517 million for a 15% stake in Capital Cities to
help it buy ABC, a stake Berkshire kept until Capital Cities sold
itself to Walt Disney Co. in 1996 for $19 billion.
More recently, Mr. Buffett has expressed doubts about the newspaper
business. At Berkshire Hathaway's annual meeting in the spring of
2009, he said, 'For most newspapers in the United States, we would
not buy them at any price.' Referring to economic challenges such
as declining readership and weak advertising revenue, he warned
that eroding readership means many papers face 'the possibility of
nearly unending losses.'
The industry's difficult economics have been evident at times at
the World-Herald. Like many in the industry, the paper—which says
it is the 49th biggest U.S. daily and that it has the
seventh-highest daily penetration among major papers—has struggled
with declining circulation. Weekday circulation has fallen 24%
since 2006 to a recent 135,282, while Sunday circulation has
declined to 170,381, from 228,344 five years ago. In response, the
company has cut staff and slashed costs, including a 5% pay cut in
2009.
'We made some hard choices, like a lot of businesses,' Terry
Kroeger, CEO of the World-Herald, said in an interview Wednesday.
He said Mr. Buffett said at a meeting Wednesday morning that he
'wants us to continue to operate as we have—to keep running a solid
newspaper and doing the work we've been doing.'
Many newspapers have tried to expand their reach with readers and
advertisers by building substantial online presences. But few have
successfully charged for content, a challenge Mr. Buffett seems
likely to take up. He said at Wednesday's meeting announcing his
company's purchase of the World-Herald that newspapers need to quit
giving away their product at no charge.
Printed in The Wall Street Journal, page C1
- December 5, 2011, 4:20 PM ET
Warren Buffett Picks Nostalgia Over Strategy, Fitch Says
http://blogs.wsj.com/deals/2011/12/05/warren-buffett-picks-nostalgia-over-strategy-fitch-says/?mod=google_news_blog
By Erik Holm
Fitch Ratings is out with a commentary on the latest acquisition by
Warren Buffett, calling Berkshire Hathaway’s purchase of the Omaha
World-Herald newspaper “more nostalgic than strategic.”
With questions about who will eventually replace the Oracle of
Omaha, Fitch says it’s been considering trends in Berkshire’s
investments, but says the roughly $200 million deal to buy
Buffett’s hometown newspaper, small by Berkshire standards, shows
“a bit of sentiment” and is “not likely to change [Berkshire's]
overall acquisition strategy.”
Jeff
Bercovici, Forbes Staff
I cover media, technology and the intersection of the two.
http://www.forbes.com/sites/jeffbercovici/2011/11/30/warren-buffett-betting-that-newspapers-have-a-future/
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11/30/2011 @ 4:37下午 |4,188 views
Warren Buffett Is Betting That Newspapers Have a Future
Image via Wikipedia
That thumping sound you just heard? That was the newspaper industry
touching bottom. At least that’s what it sounded like to
uber-investor
Warren Buffett,
who just
bought a newspaper company that publishes his hometown daily,
the
Omaha
World-Herald, along with a basket of other daily and weekly
regional titles.
The
Berkshire
Hathaway CEO has amassed a $39 billion fortune in large part by
recognizing and capitalizing on the hysterical overreaction of
other investors, both positive and negative. His world-famous
formulation: Be fearful when others are greedy and greedy when
others are fearful.
By 2008, the newspaper industry’s long slide hadn’t yet tipped over
into an all-out plummet and many were hopeful it never would,
including
