Warren Buffett, the fourth richest man in the world, is getting out of newspapers – or "giving up" on them, as the Wall Street Journal put it – in a move not unconnected to the rising fortune of the fifth richest man in the world, Facebook founder Mark Zuckerberg.
Buffett's Berkshire Hathaway holding company is selling its BH Media unit, which includes 30 daily newspapers and 47 weekly publications, to Lee Enterprises for $140 million (€127 million) in cash. Such was Buffett's haste to exit the industry, Berkshire lent Lee the money for the purchase.
The sale is not surprising. Buffett last April gave a frank assessment of the future of most print newspapers in the US, branding them “toast”. Advertisements have steadily drained away from the titles to various technology platforms, mostly to ones like Facebook that are unconnected with news publishing. The lost revenues have triggered great swathes of job losses and a vicious cycle of decline.
Indeed, Berkshires's hiring of Lee Enterprises to manage its newspapers, including Buffett's hometown daily the Omaha World-Herald, in 2018 was a clear signal of his growing disenchantment with the industry he once declared he loved.
But the more surprising thing was his enthusiasm for newspapers in the first place. For Buffett’s empire is not the legacy of pre-internet days, but the result of a somewhat contrarian $344 million buying spree in 2012.
The one-time teenage paper boy insisted in 2013 that his investment was no “soft-headed business decision” and that news publishers selling solid local information could deliver a good return. That’s a far cry from his blunt 2019 verdict that advertisements are – or rather they were – “the most important editorial content” for readers, even though “it upsets the people in the newsroom to talk that way”.
There were plenty in the print news industry who felt reassured by Buffett’s late bet on newspapers. That this turned out to be false comfort, and the bet a bad one, will please nobody.
