Buffett on Newspaper Industry

[Q – Are you still down on newspapers? Ipad and other e-reading technologies – will it end up with contraction in earnings retained by content provider or by distributor?]

WB: When money at newspapers came from advertising – it was on average about 75%, they used to be only game in town, and what a difference that makes, when you aren’t the only game in town. It is very tempting, without substantial circulation, but the math is tough – printing costs are high and distribution is tough. But I don’t understand it, and I can’t make an affirmative decision. [ABC] puts out Fast Facts, I look at circulation of many papers. In Buffalo we were down less than many places. SF Chronicle was down 20%, Dallas too – many people are dropping the paper. World has changed about the essential value of newspapers. Nothing looked more bullet proof than daily newspapers 40 years ago, and that has melted away. It is a form of news and entertainment that has lost its immediacy, it is not the essential place to get information. You looked for stocks and weather and sports – advertisers were there because it was best and only microphone. The problem is self-reinforcing, subscribers leave and advertisers leave too.

CM: Independent newspapers due to accidents of history became dominant in their towns. The world was better because they were strong, because they kept the government in check – they were called the fourth estate. We are losing something that we have no substitute for. I don’t have the faintest idea what to do about it.