Despite Warren Buffett’s company, Berkshire Hathaway, purchasing 63 newspaper businesses from Media General on Thursday, the title of “Savior of the Declining Newspaper Industry” should not be added to the American business magnate’s impressive list of credentials quite yet.
Buffett himself acknowledged that the newspaper is a “declining industry” at Berkshire Hathaway’s annual shareholders meeting earlier this month, so there is no reason to think that Buffett’s business acumen can somehow revitalize the financial landscape of print media without reforms to the journalism business model.
If anything, this purchase represents, at best, scooping up a downtrodden industry at a bargain price with the potential for an uptick in business. At worst, this purchase represents a business misfire from Buffett, already the owner of his hometown Omaha World-Herald and a former paper boy, and a man who belongs to one of the few age groups who still regularly read and seem to have an unwavering affinity for print newspapers.
The truth is that newspapers are a fundamental piece of a vital and thriving democratic society, but media companies, such as Media General, are willing (maybe even compelled) to abandon the print ship in favor of other broadcast and digital media in this technologically driven age.
The newspaper business model needs to find a way to attract advertisers back from web advertising to regain one of its primary sources of income. Furthermore, newspapers need to find a way to receive adequate compensation for the content which they produce for consumers, which has been made difficult given the many years of free access to online content.
Perhaps more disturbing than how this 63-paper purchase will affect Berkshire Hathaway’s bottom line is the trend toward media conglomerates owning several media outlets, often through a system of vertical integration (i.e. owning media outlets across a variety of platforms such as television, print, radio, Internet, etc.).
Whether the head of the media conglomerate is Buffett or someone like News Corp.’s Rupert Murdoch, if ownership of the media becomes too homogenous, then the cost incurred will be the lack of diverse viewpoints and coverage the newspapers could offer — exactly what makes the newspaper’s function in democratic society so valuable and what may ultimately be the real value of Buffet’s $142 million purchase.