Despite owning the Buffalo News, Warren Buffett has been critical of the newspaper business in recent years, once telling shareholders of his Berkshire Hathaway holding company that there were many newspapers he wouldn’t buy “at any price.” So it was quite a surprise when Buffett announced that Berkshire Hathaway was buying his hometown newspaper, the Omaha World-Herald, for $200 million.
“I wouldn’t do this if I thought this was doomed to some sort of extinction,” Buffett told staffers at the employee-owned newspaper. He said the newspaper was delivering solid profits and should continue to do so.
Despite being profitable, the World-Herald faced financial problems because of its employee-ownership structure. Employees nearing retirement hold large blocks of stock that have to be cashed out, while younger staffers haven’t been buying stock fast enough to cover that obligation. That led Publisher, President and CEO Terry Kroeger and the board to explore bringing in outside capital.
The acquisition, which still requires World-Herald shareholder approval, includes daily newspapers in Council Bluffs, Iowa, and Grand Island, York, Kearney, North Platte and Scottsbluff in Nebraska.
In addition to owning the Buffalo News, Berkshire Hathaway is a major shareholder of The Washington Post Company.
RBR-TVBR observation: What is it about owning the local fish-wrapper that makes billionaires all weak in the knees? Do you think Buffett would have given this proposal even a once-over if it had been a newspaper in another city?
