So, what exactly do you know that we don't, Warren?
Billionaire super investor Warren Buffett has explained why he is buying newspapers by the score - but his reasoning in an interview with the Daily Beast raises more questions than answers.
Warren Buffett . . ."business decision."
“It’s not a soft-headed business decision,” the 81-year-old investor told Howard Kurtz. "It’s not a dumb decision financially.”
Buffett’s company Berkshire Hathaway is buying 63 Media General newspapers for $142 million - challenging the widespread belief, says Kurtz, that the industry is "trapped in a death spiral".
It''s a long dig if you are looking for the holy grail of soaring circulation in the interview. Buffett, talking to Kurtz, dismisses the idea that online and print can exist side-by-side side. He talks of newspaper mistakes made by himself and others:
Mistake No 1: The idea of going to three days a week as the New Orleans Times-Picayune and three other Newhouse papers are doing is a bad one.
“This three-day-a-week stuff really kills you,” Buffett says. “You want people who look at you every day. Once people get used to online, I don’t think they come back.”
Mistake No 2: : As owner of the Buffalo News and a major stockholder in the Washington Post, he says : “I think we made a mistake in newspapers when we offered the same product online. I could sit here in Omaha and pay five dollars for the Sunday New York Times, or just read it online. That is not a sustainable business model.”
If Buffett is right, an awful lot of people have got it wrong.
Buffett is buying papers that serve smaller markets where there is “more of a feeling of community,” he says .
Of younger readers he says : “High school sports will pull them into the paper.” In his state, “they want to know about Nebraska football and care about every player on the team. That means a shot at getting young people in the habit of reading a newspaper.”
A shot? Isn't it a huge part of the problem that young people (below 45) have deserted newspapers entirely for online? I can't imagine they will restart the habit (it they ever had it) without astonishingly clever marketing.
Online advertising revenue “is peanuts compared to what you need to sustain a newspaper.” Print circulation “will decline year after year,” though at a modest rate, Buffett insists. The loss of classified ads is depriving readers of a form of “news,”he says.
Buffet is older (much) wealthier (very much) and wiser (we shall see) than me. I would love to have a peek at his research into how to persuade young people to start reading newspapers again.
I actually believe it can be done - but there's no clue in Buffett's remarks that he has figured out the way.