On Thursday, Warren Buffett announced he will spend $142 million to purchase 63 local and regional newspapers from the Richmond, Virginia-based Media General chain—and the Berkshire Hathaway chairman says he’s ready to buy more. “Any time we can add properties we like, to management we like, at a price we like, we’re ready to go,” Buffett told the Omaha World-Herald, which he also owns. On its face, sinking money into newspapers seems a counterintuitive investment strategy in this era of layoffs, shutdowns, and we-need-a-business-model hysteria. Does Warren Buffett see something the rest of us don’t?
Actually, it’s not hard to understand what Buffett sees in these papers: they are largely entrenched, long-lived dailies and weeklies that draw their advertising from local businesses. The Southern communities they serve are not, by and large, hotbeds of broadband access and online news entrepreneurship; for their older, Internet-ambivalent residents, newspapers remain an important source of news and information. As Erik Wemple put it: “While the big regional and national newspapers have elevated the crisis of newspapering to a countrywide obsession — complete with constant updates on circulation losses, drops in advertising revenues and the like — small weeklies and dailies have been plodding along. Not printing money, mind you, but making a living.”
Casual observers tend to view the news industry as a monolith, when, in reality, it’s comprised of various segments, some quite different than others. The New York Times has relatively little in common with a paper like The Goochland Gazette, one of Buffett’s new acquisitions. Whereas the Times wants to be the paper of record for the English-speaking world, the Gazette serves the 21,717 residents of Goochland County. It’s theoretically easier for a small paper like that to make money, because the circumstances under which it operates are more tightly defined.
Buffett, perhaps the least spectacular billionaire in the history of money, made his fortune investing in boring assets that are nevertheless financially sound. He’s done the same thing with the Media General purchase. The Times might win more awards, but the Gazette might ultimately be a more stable financial bet.