Warren Buffett: the Business of Newspapers

buy newspapers for self for importance it makes them important if you own a newspaper if you own the Omaha World Herald where I live you know or you own the Fremont Tribune in Fremont Nebraska you are automatically a very Mo important maybe the most important person in town I mean you you you have instant significance prominence and everything that Mere Money might not have given you it's it's like a sports team squared you know you know if you own the Yankees you're going to be very important New York City but if you own the New York Times you'd be even more important uh the Wall Street Journal Wall Street Journal is the second most important property in the world in terms of the significance it gives its owner first is the New York Times yeah uh what do you think of this effort by rert to buy the Wall Street Journal well I think you know it doesn't surprise me at all because he loves newspapers he loves newspapers plus the Wall Street Journal and the New York Times may have a somewhat different future uh in an internet age than the typical Metropolitan da because a brand name and the fact they're National I mean their city if you take Barney kilor came up with this wonderful concept many years ago I think the the journal had a circulation of 20 some thousand at the time he was in the editor or yeah and he he had this idea every other newspaper divined Itself by by town I mean if you're were the alal paper you know you served Omaha Philadelphia paper you sered Philadelphia he conceived of a city that was not defined by geography but was defined by interest so he created a new city and it was National you know in terms of where the location was but it was a city with common interest and he built the Wall Street Journal to serve that City and it was a wonderful City great demographics all kinds of things it was a brilliant brilliant brilliant idea well executed and therefore you have with the journal and you have with the New York Times now too you have a paper that transcends any given geographical area and that may work in some way on the internet a lot better than trying to do it with a paper in in in Omaha or Buffalo or or Philadelphia or Miami or something of the sort the Washington Post which you're on the board has not done that well the Washington Post has done it Washington Post is still basically a local paper I mean overwhelmingly in circulation there but their their website has has gotten real reach Beyond Washington the question is whether you can charge for it whe you know whether you can make the economics good and the problem the reason you make a lot of money with the OM World Herald is that there's no competitor and and automatically now you make less of money with it today and you'll probably make less money in the future because there's new forms of competition but in terms of direct competition there's no direct competitor if you on the internet you know I can click from LA Times New York Times Wall Street Journal Buffalo News alo.com I can go all over and and there's no effort involved in my part I don't want to go out on my doorstep and collect eight papers you know from around the world and sort them all out I'm probably the only guy it does I'd read all eight but nobody else another one me but it's it what gave newspapers their marvelous economics is that they were natural monopolies in in most situations and uh that Monopoly power is decreased and of course the uh technology is just Galloping along there a whole whole generation of people that don't really feel any great need to read a newspaper daily that would have been total addicts back when I was growing up if you were the banro family would you sell that's a that's a that's a decision they've got to make it's it's an interesting thing uh uh because in a sense almost every business is just basically a or brick business or you know whatever bu lemonade stand the value of the business is is the cash it's going to produce in the future now when you get to sports teams movie studios and particularly something like newspaper it's the value of the cash it's going to produce plus the significance that comes with it so it's an A plus b b is Big at the journal in a sense the bankof family doesn't really get the significance they may get an inner significance but but everybody knows who George steinbruner is one he own you know if he owns the Yankees they don't really know the members of the bankr family so they have an asset that's worth a lot of money to somebody else not just rert Murdoch but other people this B factor of significance uh Power call it whatever you want uh and they can sell it but they don't really get the value of it themselves and but they've got the tradition of it that was handed down to them by by parents or grandparents uh they do believe that it's very important it's a very important National Asset and therefore it is not something to simply be sold based on on whether they get X or X Plus $2 or something but there's 35 members or something like that of the family and you get 35 people in a room and they're not going to all all agree some will peel off well a few have peeled off the question is whether more peel off and and we don't know the answer to that yet the have was a betting man would you bet against Rupert Mna well nobody's made a lot of money betting against him so far right he's made a lot of money betting for him yeah no no I mean he is he is a very he's a very smart man to start with and he knows me you know as well as virtually anybody in the world and I met him back in I think 1974 came up to K Graham's apartment just after he bought the New York Post and he hadn't been over here very long and he talked about both the business side and the editorial side of both newspapers and television I I don't know whe they've been in the country six months but he knew that better than virtually anybody I knew in the business and he knew both sides of the game uh you know he was a publisher and an editor or an owner and an editor and and he just it's it's