Warren Buffett – The New ‘King of All Media
Warren is on the loose…again, and he brought his check book. What does the Oracle of Omaha know that the result of us don’t. For one thing he knows a great investment, and that means something he can own for a long time. That habit is not in vogue in todays fast trading world. Warren is looking to own assets that will appreciate over time, while bringing in some great cash flow, year in and year out. I remember those days, but then my idea of long range planning is “what are we going to do after lunch?” Warren is worried about the next decade, not what’s for lunch!
Warren, really Berkshire Hathaway, bought most of the print units of Media General, sans the Tampa Tribune, which will stand on its own for Media General, or until they find a way to sell it off as well. Media General got some great cash and a chance to stay alive for awhile, something many major media companies are trying to do. Warren got all of these holdings at a good price along with the real estate. The price is significantly lower than the multiples paid in the past decade when all of these media companies sold or recapitalized, and then the bust hit. Media companies can still make money, if they are not mired in debt – that is what Warren knows.
With our transition to a digital media world, in progress as we speak, there is still room for print media in local markets. I should qualify that and say ‘print’ is not really the operative word going forward, but news media leader in a local market with a print product is more to the point. As the ‘voice’ of the community – their earned mantle – they can be important and profitable businesses. Kind of like having gone through a takeover by a venture capital company. Make it leaner, and meaner and you can still make a buck. Lots of jobs will be shed, but then that is better than oblivion.
With this deal Mr. Buffett and Berkshire have seats at the table with Media General, as well as with The Washington Post Company, as well as a stake in The Buffalo News. He is quickly gaining influence throughout the industry by his unabashed belief in the continuing role of the newspaper in the community. He provides both financial and moral support to an industry in need of both, and at a very critical time. The biggest players like the New York Times, Washington Post and Wall St. Journal exist on a different plane. They are national papers of record that large audiences look to, their issues are different. Local and regional papers have different needs and Warren understands. With his purchases, not only does he have a seat at the table, but now he sits at the head of the table, and all eyes are on him.
Facebook is launching today what could be one of the truly huge IPOs with a value over $100B. FB is one of the contributing factors to the demise of newspaper readership. No they are not the main culprit, but more of a symptom of the decline of newspaper subscriptions. The newspaper was the watercolor content provider for social currency up through the last 10 years. If you wanted to be able to join the conversation at work, you read the newspaper. TV was also a source of conversation with your friends and co-workers. Now you keep in touch by digital means, texting and emailing…and the Facebook. Newspapers, in this new age, have lost a lot of their relevance of social currency. By the way it opened at $38 and has moved across $40 where it is as of this post. Oh for the days when newspaper sales attracted half of the attention of the FB IPO.
Warren understands that the local market is the last great place to have a real chance to still have an open forum in the community. There is still a chance in our ever growing social world that the local paper can have a real chance to drive that social discussion. As in the past, this is not about altruism, it is about having a good earning business. Newspapers will never command the high multiples when they are sold, because they will never be the monopolies of the past. With low debt and reduced operating costs newspapers can deliver a return that a ‘buy and hold’ kind of guy like Warren can appreciate. This strategy can be the one that can save local papers, and I don’t see much else that will.
Good luck Warren! We are all pulling for you and your strategy for the sake of our industry, and our communities. We’ll be waiting for more good news in the future. By the way how about some love for Orange County – The Register is available, and I hear the price is too good to pass up.
