Buffett on World Herald and Newspaper Economics

BECKY: We should point out that we’re here at the Omaha World-Herald because this is Berkshire’s most recent acquisition. Earlier— or last year, I should say— last year you went ahead and you stepped in. And I guess one of the key questions I have is why did you do that? Why don’t we start off talking about that right at the top.

BUFFETT: Well, the World-Herald, is— I should mention one thing. William Jennings Bryan was the editor of the World-Herald, so if you go back to 1894 to ’96, and then, of course, he started running for president and he didn’t have too much luck doing that. He lost three times. The World-Herald— newspapers face three major problems and two of them they can’t do much about but the third they can. The first problem they have is that— you know, the only reason you buy a newspaper is to find out something you want to know that you don’t know. I mean, news is what you don’t know that you want to know. And if you go back many years, if you wanted to know the box score on your favorite baseball team, if you wanted to know the closing prices on stocks, if you wanted to find an apartment, the newspaper was primary for all those things. So it’s lost primariness in certain major areas of news, but it still retains primariness in a number of items that are extremely important to people. And it’s vital that they continue to be primary in those areas. As long as they’re primary in areas that are of interest to you that you can’t find someplace else, you’re going to buy a newspaper.

BECKY: What do you mean? Is that classified, obituaries? What are the…

BUFFETT: Well, it can be— it can— yeah, obituaries are a good thing. I mean, you’re not going to find out whether your friends are alive or dead anyplace else. But just take high school basketball. Take Nebraska football.

BECKY: Right.

BUFFETT: You will learn so much more about Nebraska football if you read the World-Herald than you can get from any other source. Well, that’s important not only to me but everybody in Nebraska.

BECKY: Right.

BUFFETT: So the World-Herald will always be primary in that. They— you will know 10 times as much about Nebraska football if you read the Omaha World-Herald than if you try to get your news from any other source on that. The same thing is true in terms of local politics, and people— when there’s a sense of community, people care about that. Now, if you’re in an area where there isn’t that sense of community, it’s different.

Second problem they have— but they still are primary in plenty of areas, not as many as 30 or 40 years ago. It’s expensive to turn out a paper. I mean, you know, you start with trees up in Canada and you end up with a kid, you know, throwing it on the door. So very expensive. That doesn’t go away, and electronic is not expensive.

But the third thing is that newspapers have been giving away their product at the same time they’re selling it. And that is not a great business model. So when they put papers up on the Internet and you get it free, you’re competing with yourself. And that— you’re seeing throughout the industry— you’re seeing a reaction to that problem and an answer to it, and that’s important for the…

BECKY: And the answer is charging people online?


BECKY: Yeah.

BUFFETT: Yeah, in other words, you shouldn’t— you shouldn’t be giving away a product that you’re trying to sell.

BECKY: So Rupert Murdoch got there a long time ago and had said that this is something we need to be doing. You agree with him on that aspect of it, that this is something that you charge?

BUFFETT: Yeah. Actually, Dow Jones was doing it before Rupert, too.

BECKY: Right. Right.

BUFFETT: I mean— and— whereas The New York Times, you know, held off for a long time, although they’ve instituted it recently. And it’s being instituted in other places in other ways. So that’s key to the future of the newspaper. But newspapers tell you a lot of things that you can’t find out other places. And most citizens are going to find them useful, it’s just you can’t give them away for nothing.

Source: Warren Buffett on Buying Houses and the Next Berkshire CEO, 27 Feb 2012