Buffett: I Wouldn't Buy Newspapers 'At Any Price'

Warren Buffett would not buy newspapers “at any price.” From Paidcontent, he said (according to Fox Business):

The current environment is accentuating problem in newspapers -but it’s not the basic cause. Charlie and I read five a day. We’ll never give them up. We would not buy them at any price. They have the possibility of going to unending losses. They were essential to the public 20 years ago. Their pricing power was essential with customer. They lost the essential nature. The erosion has accelerated dramatically. They were only essential to advertiser as long as essential to reader. No one liked buying ads in the paper - it’s just that they worked. I don’t see anything on the horizon that causes that erosion to end.

This from the owner of the Buffalo News and a board member of the Washington Post Company.

And they call me a doomsayer.

Now add to this what Jeffrey Cole of USC said in his latest valuable report:

We’re clearly now seeing a path to the end of the printed daily newspapers — a trend that is escalating much faster than we had anticipated,” Cole said. “The decline of newspapers is happening at a pace they never could have anticipated. Their cushion is gone, and only those papers that can move decisively to the Web will survive.

I wondered whether Vanishing Newspaper author Philip Meyer — who’s often quoted as predicting the last paper rolling off a press in 2043 (though as you’ll see, that’s not quite right) — had updated his prognostication. Last year, he wrote this:

Judging by the Google alerts the book’s title has accumulated since then, readers took away the wrong message.

This reference from The Economist is typical: “In his book ‘The Vanishing Newspaper,’ Philip Meyer calculates that the first quarter of 2043 will be the moment when newsprint dies in America as the last exhausted reader tosses aside the last crumpled edition.”

That’s a clever image, and it is true that extrapolating the recent linear decline in everyday readership would show a zero point in April 2043. But newspaper publishers are not so relentlessly stubborn that we can expect them to continue churning out papers until there is only one reader left. The industry would lose critical mass and collapse long before then.

Moreover, straight-line trends do not continue indefinitely. Nature throws us curves.

His superb piece was written probably just before last fall’s crash — one helluva curve.

Add this all up and it keeps getting clearer and clearer: It makes less sense every day to try to preserve and protect - to invest in - what is obviously a failing model. Every day that papers keep printing is a day that they haven’t reinvented themselves for a new reality.

The same can be said of the auto industry, retail, banking, education, and many other sectors of society. But those will be the subjects of upcoming posts (and maybe more).

This isn’t doomsaying, though. It is a reality check. It is nothing more than observing what is obviously and inexorably happening in the economy and society. The insane response to this change is to resist it and mourn it. The sane response is to find the opportunity in it.

Don’t bail. Build.

It may be too late for newspapers to find that opportunity. But others will find it. That’s not doomsaying. That’s optimism.

: LATER: I find it interesting - that’s all - that Romenesko’s angle on the Buffett quote was partner Charlie Munger’s lament that the erosion of papers is tragic. For me, that’s the color. For him, Buffett’s tarring of newspaper investment is that addendum.

Comments

[sticktoitiv...:]

Does anyone know a good, I mean horrible, newspaper to short?

May 03 02:09 AM

[cubicleslave:]

every weekend, and almost every day at lunchtime, I sit at a lunch counter and read a newspaper as I eat. I don't care if I got ketchup or gravy on the thing, because it's disposable. When I'm not on my lunch break, I'm hard at work and too busy to surf the web for my news. So, when something can come along and take the place of that newspaper, that's when newspapers become nonessential to me. Until then, I'll keep on feeding my 3 quarters into the newspaper machine every day. Apparently, a lot of other people have the same idea, because often the machine is either sold out, or I got the last paper.

May 03 02:13 AM

[Daniel Herkes:]

I wish I could go to a lunch counter and read a paper. I'm chained to my desk. :)


On May 03 02:13 AM cubicleslave wrote:

> every weekend, and almost every day at lunchtime, I sit at a lunch
> counter and read a newspaper as I eat. I don't care if I got ketchup
> or gravy on the thing, because it's disposable. When I'm not on my
> lunch break, I'm hard at work and too busy to surf the web for my
> news. So, when something can come along and take the place of that
> newspaper, that's when newspapers become nonessential to me. Until
> then, I'll keep on feeding my 3 quarters into the newspaper machine
> every day. Apparently, a lot of other people have the same idea,
> because often the machine is either sold out, or I got the last paper.

May 03 08:45 AM

[fletcher:]

Maybe the machine is sold out or you got the last paper because they are putting less papers in the machine so they don't have to throw the unsold ones away the next morning.


On May 03 08:45 AM Daniel Herkes wrote:

> I wish I could go to a lunch counter and read a paper. I'm chained
> to my desk. :)

May 03 11:08 AM

[jay fredric...:]

Interesting article. Even Warren Buffett, who has made tons of money over time in Buffalo and with Washington Post realizes that most pure play newspaper companies could have zero long term value. MCClatchy, New York Times,Lee, Journal Sentinel all have nearly 90% or more of their revenue tied up in daily papers. Gannett and Washington Post at least have other revenue streams that may keep their heart pumping a little longer.

May 03 01:01 PM

[ubuy2w:]

Most if not all large city dailes will stop publishing within a decade, The demise of the large national publishers will take a little longer, web based versions will try to replace them however the barriers to entry are almost non-existant henceforth the economic returns will be extremely low. Journalists are losing their jobs and turning to blogging as a means of making a living one of the consequences of this however is the interenet has turned into the National Enquirer . The truth can still be found however one has to wade through an ever increasing pile of B.S. to discover it. This website is an excellent example of what the future of electronic news and opinion holds some of it excellent but unfortunately most of it not so much.

May 03 01:22 PM

[1 of 4:]

Just canceled my local paper. Their local coverage had dwindled to nothing. They got rid of their guy who covered fishing and he was replaced by some pudgy surfer chick. All the front page articles have been on-line the day before. They cut their business section to 2 pages and include that at the back of the front section. The only remaining use I had for the paper was to cover spills while doing oil changes on the cars.

May 03 01:51 PM

[yellowhoard:]

Isn't it ironic that we're discussing, in real time, the demise of newspapers.

Seeking Alpha and other web sites like Drudge have made newspapers obsolete.

And, because of this, opinion has become more democratic.

I bet I'm not the only one here that has submitted editorial responses to the NYT, and others, only to be rejected by their biased editorial boards.

May 03 04:39 PM

[iel76:]

Newspapers are getting what they deserve. Most no longer convey "news" but instead the editorial opinions of their "reporters". Local news consists of murders and auto accidents; local business coverage is de minimis. I'll find my news on the web thank you.

Newspapers are going?? Good riddance!

May 03 05:47 PM

[Bobby Rifle:]

Here's my question: why can't critics see their own biases? You don't want "news," you want something that tells you you're right, that confirms your biases.

Why else are Fox and MSNBC now 1-2 in prime time?


On May 03 05:47 PM iel76 wrote:

> Newspapers are getting what they deserve. Most no longer convey "news"
> but instead the editorial opinions of their "reporters". Local news
> consists of murders and auto accidents; local business coverage is
> de minimis. I'll find my news on the web thank you.
>
> Newspapers are going?? Good riddance!

May 03 08:10 PM

[cubicleslave:]

Well that is an interesting theory, and may have some merit. But sometimes when I get the paper, the machine is full too. So maybe they stock it with more papers on big news days? I don't know. But out of all these posts after mine, nobody has come up with something for me to read while my hands are covered with burger grease, taco juice, or fried chicken grease. As long as there are people like me around, I think there will be some market for a newspaper. Maybe we don't make up enough of a market to support a newspaper, so if they go under, it will be a sad day. Kind of like typewriters disappearing.


On May 03 11:08 AM fletcher wrote:

> Maybe the machine is sold out or you got the last paper because they
> are putting less papers in the machine so they don't have to throw
> the unsold ones away the next morning.

May 03 08:29 PM

[Richter Scale:]

I think there's still a market for newsprint, alongside electronic "news". Bottom line: create compelling content and the readers will come. Problem is: newspaper companies are not populated with visionaries ready to take real, creative chances to wow over the customer. They think they're trying something new but, to be honest, they still employ old-school thinking. By cutting and cutting more, they've decimated the content.

May 03 10:02 PM

[naidle:]

This would have been a compelling statement if he had said it 10 years ago. Now it is just showing his age.

May 03 10:07 PM

[Did U Think...:]

Buffet has lost his touch. Anything he says is wrong anymore. Newspapers are rallying as he spoke. Time for the old man to hang up his trading hat.

May 03 11:24 PM

[MikeOz:]

I think my 18 year old son has read a newspaper about twice in his life. Demographics is going to play a huge part in the future viability of daily papers.
I have to admit that I find it easier and more convenient to catch up with the news via Google News (eg just before I leave work) than to read the paper when I get home (or by watching TV for that matter.)
But currently we are in a strange transition period.
Via Google, I am reading news prepared (in the main) by newspaper journalists situated all over the world - and the only benefit those newspapers and their employees receive may be a few scraps of the advertising revenue earned by Google.
I don't have access to the Newspaper's own advertisements, and I don't pay anything to the newspaper.
The newspapers are working for nothing in my case; when they go out of business, as financial logic would dictate they should, where will Google News get its news ?

May 03 11:54 PM

[Market Sniper:]

Newspapers now have the same problem that the railroads did. They do not know what business they are really in. Newspapers are not in the newspaper business, they are in the information business. Railroads thought they were in the railroad business. They weren't, they were in the transportation business. Because they did not really know what business they were really in, you never heard of Union Pacific Airlines, did you?

May 04 12:47 AM

[Zoltan L. K...:]

Some will try to be ad financed only, and ask no money from readers. But with this model there is room for a few papers with most likely low quality. So interestingly quality will move to the net.

May 04 01:28 AM

[TCK:]

Somewhat amusing that NYT is trying to survive by "union busting". I wonder if they had the same position when Reagan fired the air traffic controllers ?

May 04 06:10 AM

[Daniel Herkes:]

The Union Pacific pioneered the inter modal air/truck/rail concept back during the thirties. They knew what business they were in, they just were too far ahead of their time. Read Maury Klein's excellent 2 volume history of the UP.


On May 04 12:47 AM Market Sniper wrote:

> Newspapers now have the same problem that the railroads did. They
> do not know what business they are really in. Newspapers are not
> in the newspaper business, they are in the information business.
> Railroads thought they were in the railroad business. They weren't,
> they were in the transportation business. Because they did not really
> know what business they were really in, you never heard of Union
> Pacific Airlines, did you?

May 04 06:23 AM

[iknoknot:]

The nice thing about the web-for-news, is I can vote with my bookmarks, and am wise enough to do so. The local rag in this town is a useless AP/UPI spew. Seeking Alpha and most of the sites I frequent have a great mix of bias that makes them discussions, not propaganda.

I subscribe for pay to a few sites, and when redirected to the NYT, I enjoy the idea that my ad-filters continue to help me contribute what I think they're worth :^)

--ikk

May 04 06:44 AM

[R. Richard ...:]

Missing from consideration :

Much of the information regarded as "news," no longer has much significance or "use" to the individual member of the U S public.

Much of the content presented in the print media (and in much of the TV network media) is no longer information (observed facts) . The content has become "contructs" to influence audience conduct (holding viewer or listener attention, e.g.).

The evolution and declines of periodicals (magazines) has tracked the demographics of American "reading patterns."

Printing by "printers" (who originated "papers" from "broadsides") will continue in geographic, economic and social areas where the audiences (such as a school campus) provide reception. However, "printers" will be expanded to include other modes of making words and pictures available to those for whom they may have some use.

Others can probably expand on these observations with examples from radio (oral information), Email exchanges, etc.

May 04 07:25 AM

[yank:]

TCK:
Great comment. The editorial hypocrisy of the NY Times is on full display. The chickens are coming home to roost. And my prediction is that by the time of the next Presidential election (one in which fewer will be left to meddle in) three out of the big 4 newspapers will go bankrupt. I believe the Boston Globe, NY Times, and LA Times will all be gone by then . I say "Good riddance" as the piper must be paid. The November 2008 election will be the watershed event which exposed these papers for what they are; shills for the left-wing liberal establishment. Now they will pay the price for their arrogance and deceit. And I will dance on their grave. Bye-bye Times! You are toast.


On May 04 06:10 AM TCK wrote:

> Somewhat amusing that NYT is trying to survive by "union busting".
> I wonder if they had the same position when Reagan fired the air
> traffic controllers ?
>

May 04 09:13 AM

[stats:]

Oh, and the truth was easily found in your daily newspaper? Please, they had a stranglehold on information publishing, but it never guaranteed that you were getting the "truth." Let me decide on who I trust and don't trust. I'm quite happy that an individual publisher isn't dictating the type of news and information that I receive now. For the same reasons, network and local news broadcasts will soon be a thing of the past. Will not die as fast as newspapers, but are on their way.


On May 03 01:22 PM ubuy2w wrote:

> Most if not all large city dailes will stop publishing within a decade,
> The demise of the large national publishers will take a little longer,
> web based versions will try to replace them however the barriers
> to entry are almost non-existant henceforth the economic returns
> will be extremely low. Journalists are losing their jobs and turning
> to blogging as a means of making a living one of the consequences
> of this however is the interenet has turned into the National Enquirer
> . The truth can still be found however one has to wade through an
> ever increasing pile of B.S. to discover it. This website is an excellent
> example of what the future of electronic news and opinion holds some
> of it excellent but unfortunately most of it not so much.

May 04 09:26 AM

[wobatus:]

I think there will still be some newspapaers. I like reading some stuff on line, but it can be a bit of a pain in the ass.

Not all will survive. Some will morph. I don't read the NY Times as much. Sometimes on Sunday or if someone points out an article. Not so much due to the bias, although there is some of that. I read the NY Post sports page, although you can get that free on the mobiloe device. :)

The WSJ in the 40s and after had to face down radio, tv news, etc. It had circulation in the 30-40,000 range. You evolve or die.

Movies didn't die. We still have radio. We will have newspapers. It'll just be fewer and different.

May 04 11:48 AM

[Living4Divi...:]

I agree with what others have said.

Many of the large dailies will run into trouble. There still is and will continue to be big market for the PennySavers and tiny local newspapers of the world. Printed media is not going out style despite the rumours of its demise since the advent of the internet. The large dailies (WSJ, USAToday) will still be around.

May 04 11:51 AM

[ubuy2w:]

market sniper I get your point but not being in the airline business is a bad thing ? Perhaps they understood it all too well. I suspect Thompson Reuters understands better than most what business they are in which is information and news distribution Thompson sold almost all of their papers almost a decade ago and have stayed ahead of the curve.


On May 04 12:47 AM Market Sniper wrote:

> Newspapers now have the same problem that the railroads did. They
> do not know what business they are really in. Newspapers are not
> in the newspaper business, they are in the information business.
> Railroads thought they were in the railroad business. They weren't,
> they were in the transportation business. Because they did not really
> know what business they were really in, you never heard of Union
> Pacific Airlines, did you?

May 04 12:51 PM

[User 407065:]

WARREN BUFFETT AND YAHOO ????????

May 04 01:09 PM