BECKY: You have bought more IBM shares though, right?
BUFFETT: Yeah, we bought a few, yeah.
JOE: I was just getting back to this media, ’cause I’m trying to understand, I don’t know what the landscape looks like. And Warren probably— doesn’t necessarily.Does it look like the pipes, Warren, eventually become more commoditized, you know, people have been saying content is king for— forever.
And then it’s a creative area and it’s so hard and it’s sospecific to the people running it or the people that you bring in that are creative. I guess that makes it difficult too, if you’re going invest just in content, that’s hard.
JOE: And— and then you don’t even know whether to keep the distribution because of— you— technology is— Andrew always brings up the disintermediation of all these different technologies. So it really is difficult to do, but there’s just such a potential, it seems like, to me.
BUFFETT: Yeah, the— well, distribution was incredibly valuable, for example, when there were three electronic highways, you know, the three big networks. And you could run a test pattern on one of ‘em and get a reasonable audience practically. So when it was limited, when distribution was limited, that distribution was really valuable. And there were a couple of big VHS stations in the big markets.
And the profit margins were fantastic. But as distribution became more ubiquitous in all kinds of forms, then as you say, content, you know, content is where the money is. And— and— and content will always be where the money is. That’s why sports players, you know— they’ll make millions of dollars a year, you can remember when DiMaggio was playing for $25,000 a year, something of this sort.
But content— distribution magnifies the value of content. And— you want to be— unfortunately—(LAUGH) you know, I don’t have any talent, so I can’t cash in on that. And talent usually gets its share of— of the revenues. If you own distribution and there’s very little in the way of competition for your distribution, you can make a lot of money. And that’s what’s shown by what the networks and the TV stations did— in the past.
JOE: All right.
Source: Warren Buffett and Bill Gates on Squawk Box, 8 May 2013