Buffett investment 'vote of confidence' in print media
Published 02/12/2011 | 05:00
THE world's most influential investor, Warren Buffett, has purchased his local newspaper, the 'Omaha World-Herald'.
Mr Buffett paid $150m (€111m) for the newspaper group and will also take on its $50m (€37m) in debts.
The company includes six other daily newspapers and several weekly newspapers across Nebraska and southwest Iowa. He purchased the company from the Peter Kiewit Foundation.
This investment sees Mr Buffett putting aside his doubts about this industry after telling shareholders in 2009 that papers have "potential for unending losses" and that he wouldn't buy most of them "at any price".
Publishers have lost revenue as readers shift to other media, including the internet.
Mr Buffett told employees yesterday that newspapers "have a decent future", according to an report in the 'World-Herald'.
"It won't be like the past, but there are still a lot of things newspapers can do better than any other media," he said.
As for the cost, Mr Buffett said, "It's not a crazy price. It certainly is not a bargain. That's a pretty generous price," said John Morton, a veteran newspaper analyst and president of media consulting firm Morton Research Inc who writes a column for the 'American Journalism Review'.
"That's a price that you would have paid for it five years ago."
"He's rooting for the home team," said Jeff Matthews, a Berkshire shareholder and author of 'Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett'. "But he says it's profitable and well-run."
The 'World-Herald' is 80pc owned by its employees and 20pc held by the Peter Kiewit Foundation, the paper said.
It's the No 49 newspaper in the US, with circulation of 135,282 daily and 170,381 on Sunday, according to the company. CEO Terry Kroeger will stay with the business after the acquisition, a spokesperson for Berkshire said.
Mr Buffett, in his fifth decade as CEO of Berkshire, won a Pulitzer Prize -- the industry's highest honour -- for investigative reporting in 1973 as owner of the 'Omaha Sun'. Berkshire's media holdings include Business Wire, which distributes press releases to the media. Mr Buffett's firm is also the biggest shareholder of the Washington Post Co (WPO) and owner of the 'Buffalo News' of New York.