Investors keep an eye on what Warren Buffet (BRK.B) does to get an idea of the value of certain investments. When the "Oracle of Omaha" took a pass on the purchase of the Washington Post (WPO), they began to wonder what factors might have influenced his decision to let the notable newspaper pass to Amazon's CEO Jeff Bezos.
Buffet already owns 31 newspapers that operate in small and mid-size cities. It would not be unreasonable for him to consider taking on a paper of the reputation and popularity of the Post. He also has a number of personal ties to the paper, having delivered it to households when he was a youngster and ultimately having a close friendship with the previous owner, the late Virginia Graham, and her son, Don.
Even though Buffet's own company, Berkshire Hathaway (BRK.A), is already one of the largest shareholders in the Washington Post, Buffett still declined taking on ownership of it. Given the many factors that would have made him a natural choice for ownership of the paper, the opportunity was declined. So why is this most notable of investors reluctant to move on such a notable deal?
Buffett himself gives a glimpse of his thinking and motivation in passing on the deal. He said at his age, currently 83, he must consider how his successor at Berkshire would manage the complex process of dealing with a major newspaper subject to a variety of economic pressures in the future. He is concerned how his family would be able to carry such a heavy responsibility when he is not there to help guide them. With this statement, Buffet appears to be showing his usual forethought and measured analysis that his characteristic of his record of financial success.
As CEO of the online shopping giant Amazon (AMZN), Bezos has the experience with new technologies required to thrive in today's media industry. At 49 years old, he can look forward to many years of productive effort to re-fashion the Post to suit the current media market. With a strong reverence for the written word, Bezos is the perfect choice to position the Washington Post for the future.
Though Buffet's Berkshire still holds stakes in as many as 70 different weekly and daily papers, the company holds a broad range of other industries. He feels that small papers that focus on local matters are better able to maintain a profitable status. National news is likely to go through a number of changes as it transitions to online delivery. Sometimes the things that Buffett doesn't buy ultimately makes his shareholders richer.