Warren Buffett reaffirmed Thursday that he will take a “hands-off” approach to the 26 daily newspapers, including the Winston-Salem Journal, that a Berkshire Hathaway subsidiary is buying from Media General Inc.
In a letter to publishers and editors, the billionaire investor said he believes “newspapers that intensively cover their communities will have a good future.”
“It’s your job to make your paper indispensable to anyone who cares about what is going on in your city or town,” Buffett wrote. “Our job is to reign supreme in matters of local importance.”
Buffett sent his letter a week after BH Media Group announced it is paying $142 million to buy 63 Media General properties. The deal is expected to close June 25. He has said he plans to buy more newspapers in the small- to medium-size range “in long-established communities” over the next few years.
Although Buffett expects the newspapers to be self-sustaining financially, he wants them to maintain their space for local content.
Buffett’s stance “is a break” from newspaper chains’ strategies, said Rick Edmonds, a media business analyst for the nonprofit Poynter Institute, which trains journalists and examines media issues.
As newspapers’ subscriber numbers and advertising revenue have declined over the past six years, whether because of competition from free online news sources or the increased cost of daily and Sunday editions, many chains reduced news space to save on newsprint costs.
“A newspaper that reduces its coverage of the news important to its community is certain to reduce its readership,” Buffett said. He said he encourages “thoroughly covering all aspects of area life, particularly local sports.”
“No one has ever stopped reading when halfway through a story that was about them or their neighbors.”
Edmonds said Buffett recognizes “the risk to the reduced news-hole strategy in that newspapers can become small enough to lose the interest of their readers.”
Buffett said the newspapers are being bought with the intention that they become permanent parts of Berkshire Hathaway. “Our only exception to permanent ownership is when a business faces unending losses, a remote prospect for virtually all of our dailies,” he said.
Buffett said the newspapers “will operate from a position of financial strength. We shun levels of debt that could ever impose problems. Therefore, you will determine your paper’s destiny; outsiders will never dictate it.”
To put Buffett’s pledge into perspective in terms of industry reality, The Times-Picayune of New Orleans said Thursday it will only publish three daily issues a week beginning in the fall. The Newhouse family group said it is doing the same with its Alabama newspapers in Birmingham, Huntsville and Mobile.
Buffett urged the newspapers’ communities to support them for their mutual benefit. He said the newspapers will charge for online content since providing it for free, as has been the case for years, “is an unsustainable model.”