Warren Buffett's Berkshire Hathaway Buys Omaha Newspaper Despite Industry's 'Terrible' Future
Warren Buffett's Berkshire Hathaway is buying the owner of Omaha's daily newspaper, the World-Herald.
In a news release, Buffett is quoted as saying the World-Herald "delivers solid profits and is one of the best-run newspapers in America."
The release also notes that Buffett sees the purchase as "consistent" with a past owner's "vision for local ownership."
The purchase is somewhat surprising, as Buffett has often conceded that while he loves newspapers, the industry doesn't have a very bright future.
In a live interview in November, 2009 on CNBC's Squawk Box, Buffett told Becky Quick that newspapers have a "terrible" future as people increasingly turn to online sources of news.
At the 2009 Berkshire shareholders meeting, Buffett said the changing media environment now means newspapers "have the possibility of unending losses" and he didn't "see anything on the horizon that causes that erosion to end."
As a result, he said then that Berkshire would not buy most of the newspapers in the U.S. "at any price."
But he also promised shareholders that Berkshire would not sell the Buffalo News. "On an economic basis you should sell this business. I agree 100 percent, but I am not going to do it."
Buffett's love of newspapers goes back decades. Berkshire has held a the largest institutional stake in the Washington Post Company since the 1970s. He only recently retired from that company's board after 37 years. At the time, he told the Wall Street Journal he would never sell a share of the Post because "it has all kinds of meaning to me."
He fondly recalls delivering almost 500,000 copies of the Post while he was growing up in Washington.
Buffett also had a long-running friendship with Katherine Graham starting in the 70s when she was publisher of the Post. Graham died in 2001.
In today's release on the World-Herald purchase, Buffett says he's "delighted to report that the editorial independence that Nebraskans and Iowans have come to expect from the World-Herald will continue."
The release has Buffett noting the purchase is "consistent with Peter Kiewit's vision for local ownership" of the newspaper, a vision that prompted Kiewit to buy the company in 1962.
Terry Kroeger, CEO of the Omaha World-Herald Company, says its employee-ownership structure was "restrictive and limited the ability to raise capital from non-employees." There's also the "ongoing need to repurchase stock from existing employees."
In the release, Kroeger says, "We have repurchased the Company about seven times since the employee ownership plan was put in place."
Buffett's offer, he says, "presented a unique opportunity to address our long-term capital needs and continue local ownership of the Omaha World-Herald, which is consistent with the legacy left to us by Mr. Kiewit."
In its article on the deal, the World-Herald details the history of its local ownership going back to its founding in 1885.
The deal is expected to close in December and still needs to be approved by regulators.
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