Wick Communications

What is Buffett thinking?

In journalism, Uncategorized on 24 May 2012 at 1:33 pm

Last minute add: As I was posting this, I stumbled on a rather incredible letter from the man himself. I was going to excerpt it, but the whole darn thing is well worth reading. I certainly hope Buffett’s letter to his new employees is widely read. Clay)

What is the Oracle of Omaha thinking by buying all these newspapers? Before I type another word, allow me to say unequivocally that I don’t really presume to know. Warren Buffet may be the most savvy investor of our time. My investments are largely limited to the food in the pantry and dog-eared baseball cards that aren’t worth a thin dime.

But I can guess, based partly on what he has said in the past.

In 2009, Buffett said he wouldn’t buy most newspapers at any price. The emphasis is mine, but he did use the word, “most.” I think he was referring primarily to large regional dailies that had lost their sense of themselves, that were cookie-cutter operations that didn’t engage their respective communities. Buffett has favored other kinds of newspapers all along. …

He’s owned the Buffalo News for a long time. In December, he bought his hometown Omaha World-Herald. Then, earlier this month, Buffett bought 63 newspapers from Media General. All of them are medium to smaller operations and all of them are deeply engaged in covering community events that you aren’t going to read about in the New York Times.

My guess is that Buffett thinks the losses are already priced into the newspapers that he’s purchased and that the future looks bright. That would be consistent with his view of investing generally. Here’s how he put it in the New York Times opinion piece in 2008:

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.”

He wasn’t talking specifically about newspapers then, but the theory may apply.

I think this is a good sign for all of us. When a man like Warren Buffett bets on newspapers, and not as just another way to suck some money out of dying enterprises, that is reason to rejoice.



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