Berkshire Hathaway’s BH Media is in the process of buying our local newspaper, The Tulsa World. The deal is to close on Friday, March 8th. Warren Buffett and Company seems to be buying a lot of newspapers throughout the United States, including the one it now owns in Berkshire’s hometown of Omaha, Neb. Do you, like me, ever wonder what he has in mind?
Most publishers can’t seem to make newspapers profitable, and thus they are selling out, at prices that, compared to years ago, seem a steal. Mr. Buffett has indicated that there is no substitute for the local press. And he’s right — where else can you get local team sports results, school and weather information and social news?
My thought is that, if one could get rid of the printing presses and the expensive delivery process, there is money to be made in local news. I once calculated that it might be cheaper in the long run to give every subscriber an electronic tablet every three or four years — maybe not anything as grand as an iPad, but something like the $89 wireless Kindle I own — and deliver the paper electronically. Or maybe you can target only people who already own electronic tablets. The local TV networks already know this — most have robust presences on computers and tablets. I don’t know how much it costs to print and distribute a newspaper, but I’d bet that the $89 tablet for subscribers every few years would be cheaper and would probably require a deposit.
You can be certain of one thing: Mr. Buffett has figured out something that others haven’t, at least not yet. I make it a habit not to bet against him, and I note that Berkshire profits are up hugely and that, last Friday, the A shares were nudging $153,000. And some analysts still think the shares are a good buy. (The B shares, which I thought a buy at around $75, were, last Friday, at $102.05.)
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Have a great week and let me know if you have thoughts about why Berkshire is buying so many local newspapers, okay?