Over the past few years, we’ve all read countless obituaries mourning the death of newspapers. “What’s black and white and ‘red’ all over?” Jimmy Kimmel joked at this year’s White House Correspondents Dinner. “Nothing anymore.”
Warren Buffett is hoping to do his part to change that. On Thursday, Berkshire Hathaway, the billionaire’s company, announced a deal to buy 63 newspapers from Media General. The company is purchasing most of Media General’s newspapers with $140 million in cash. Separately, Berkshire Hathaway has an agreement with Media General for a $400 million term loan and a $45 million revolving credit line.
Previously, Buffett had noted that the newspaper industry is “declining” — adding, “Generally it pays to stay away from declining businesses. [The] newspaper business is a declining business and we will pay a price to be in that. That is not where we will make real money at Berkshire." (He added that, regarding the industry, “the economics will work out OK.”)
This is Buffett’s first foray into the print world. Last year, his company bought the Omaha World Herald Company, which owns Buffett's local newspaper and six others.
Obviously, even Buffett’s seemingly limitless resources can’t save an industry of this size. The challenges we’ve analyzed from every angle — digital platforms! Death of double-revenue stream model! — aren’t ones that easily be solved (I'll refrain from a J-School lecture here). Though Buffett’s money certainly helps.
The ones who are likely to appreciate these buyouts the most are the local citizens who read these papers. Buffett, a former paperboy, said: “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper. The many locales served by the newspapers we are acquiring fall firmly in this mold, and we are delighted they have found a permanent home with Berkshire Hathaway.”
Many of us (myself included), who live in urban or metropolitan areas, may forget how prominent and important a local daily or weekly can be to communities in other areas. It is those communities that will be glad to see Buffett’s investment, the places where the paper is woven into the everyday. He may not be saving an industry, but many will appreciate the effort.