RICHMOND, VA (WWBT) - Warren Buffett is unapologetic about his love for newspapers, but says his recent acquisition of dozens of struggling newspapers from Media General was a sound financial move.
"It's not a soft-headed business decision," Buffett told The Daily Beast's Howard Kurtz. "It's not going to move the needle at Berkshire Hathaway. If it were the widget business, I wouldn't do it. The kind of earnings we'll draw from our newspaper properties will be a very tiny fraction of, say, Burlington Railroad. But it's not a dumb decision financially."
Buffett's Berkshire Hathaway is in the process of purchasing 63 newspapers from Media General, including the Richmond Times-Dispatch, for $142 million. The sale also included $400 million in loans to help Media General deal with massive loans taken out to help stay afloat and gave Buffett a share in the company's ownership.
In the interview, Buffett provides some insight in his newspaper philosophy and possibly the future of the Richmond Times-Dispatch. Management and staff at the paper, which has been owned and run in Richmond by the Bryan Family and others since 1850, applauded Berkshire Hathaway's acquisition with hope that it would breathe new life into the publication. Their hopes may be well-placed, based on Buffett's statement that he thinks "it's crazy to shrink the news hole. You're selling information." Cutting publication to three days a week "really kills you," Buffett also said in the interview.
Buffett made if clear he needs to turn a profit saying, "I don't believe in running them at a permanent loss. I can't do that with the shareholders' money." While the article makes no mention of a paywall, Buffett stated that giving away content online for free was "not a sustainable business model."
Still, Buffett appears committed to the newspaper business, saying he is looking at purchasing more community-oriented publications. He believes it's not too late to get "young people in the habit of reading a newspaper" and sees high school sports as a possible entry point.
He also said he would stay out of the actual management of the day to day business, leaving that to the individual management teams. And, when he's gone he ensured his successor can't walk away from the business by structuring the deals so Berkshire Hathaway will keep the papers.
The Media General deal is set to close June 25.