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August 16, 2007 / Toby Dayton

More From Warren Buffett On The Dailies

It’s slightly outdated (May, 2007), but the other day I came across some comments by Warren Buffett on the daily newspaper industry. They were taken from his annual meeting earlier this year.

Q: Dow Jones, Murdoch, what advice to give to long-suffering New York Times

WB: I think the long-suffering shareholder has probably made a mistake —
we’ve said for a good many years that newspapers were overpriced as
valuation was based on a rear-view mirror, not a window. The woes of the
newspaper business are not connected to the difference in how they structure
the equity at the New York Times or other places. Assume that Gutenberg,
instead of inventing movable type decided to run a hedge fund to really make
something of himself. If his descendant, Gutenberg the 28th, came along
today with an idea to build expensive presses that run all night to deliver
pieces of paper so they can read about what happened yesterday, I don’t
think we’d back him. The position of newspapers today still reflects past
inertia and momentum. I don’t care how smart you are, the forces you’re
going against are inexorable. Not much any genius can do about that. Used to
sell 300,000 sets of World Book per year, they now sell about 22,000 sets —
not through any fault of World Book. Companies with no dual-share structures
have suffered too — look at Buffalo News, earnings are about 40% off the
peak, and we have tremendous penetration and great management.

[tags]Daily Newspapers, Online Classifieds, Warren Buffett, Berkshire Hathaway, Buffalo News, Gutenberg, Outdated Business Models[/tags]