Famed investor Warren Buffet is shocked at how fast the newspaper industry has declined and isn’t very hopeful on its future.
From the Wall Street Journal
Warren Buffett delivered more doom and gloom news for the state of the newspaper industry.
Asked about his views on the struggling industry, which has seen a rising trend of diminishing revenues and distribution in recent years, the investor said he believes “the math is really tough.”
One reason: About three-fourths of all newspaper’s revenues came from advertisers. Now, with competitors such as Google and online ad sites such as Craigslist (Buffett didn’t actually names these companies), newspapers are seeing their ad base rapidly dwindle.
Buffett knows his newspapers. One of his first jobs was delivering newspapers in Omaha, and even helped deliver a Pulitzer Prize for a local Sun Newspapers of Omaha in the 1970s.
Buffett is also a longtime investor in the Washington Post, and Berkshire Hathaway owns the Buffalo News in New York. When he made the investments decades ago, newspapers had a wide “moat,” in Buffett parlance, meaning that they had little competition (other than rival papers). Newspapers long were “the only game in town” for getting out information, as well as ads, Buffett said. With the rise of the Internet, that is now no longer the case.
“It blows your mind how fast” the newspaper industry is losing ground, Buffett said. To be sure, he still owns the Buffalo News and he hasn’t dumped his Washington Post shares–yet.
Buffett also said he recently considered purchasing the Philadelphia Inquirer, which filed for bankruptcy protection last year.
Charlie Munger lamented the downfall of the newspaper industry. “It’s not good for the country,” he said. “We’re losing something” as local newspapers become more scarce.
The printed page isn’t dead yet but we are moving towards a future of more consolidation that will leave the country with a handful of major newspapers along with some regional papers in economically viable aress while large parts of the country will lose their paper altogether.
Can anyone say internet?