7 ms·

Warren Buffett on newspapers [pdf]

59 points by ValentineC 14y ago

mfieldhouse 14y ago
I think in a way he's talking about newspapers getting back to their real roots as being genuine 'NEWS' papers. That's instead of the trashy gossip magazines that so many of them have turned in to.
- rdtsc 14y ago
  In general trashy gossip magazines sell, that is why there are so many of them. There is a feedback mechanism there perhaps... But that is in general. It seems Buffet here is a focusing on specific areas with a population that will be very likely to be interested in a local newspaper. Small, well established towns, with a strong sense of community. The problem is see with that is that local communities that used to be established and strong can be destroyed pretty quickly according to how the local employment landscape changes (say a GM plant closes).
- eli 14y ago
  No, I don't think that's it. Well, ok, yes I'm sure he would agree in that papers shouldn't print trash, but I think his point was that the Omaha World-Herald should stop pretending it can cover news out of Washington without a Washington bureau. Local papers are wasting money buying wire stories on national news that is not especially valuable to its readers.
- digitalengineer 14y ago
  I think he feels newspapers should return to their original function of writing their own (local) news and doing their own investigations. NOT 'copy/paste' all the Reuters-news. We've got the web for that kind of news.
  - greedo 14y ago
    The problem is that the cost of generating and distributing that local news is not sustainable in the face of internet technologies. Witness this: I'm at a graduation celebration in Wisconsin this weekend, and all the parents attending throughout the day are very involved in student athletics. One of the kids was running in a track competition out of town with the rest of the school. The results were texted immediately throughout this small town. Another parent was tweeting the play by play of the track meet. These are tech savvy 40 year olds, completely bypassing the print world. What can print offer them? Maybe a pic or two? They've got those instantly via FB. If this crowd is doing it, it's over for print papers. And since online papers either need a paywall or higher revenue for ads, they just can't compete.
    - adestefan 14y ago
      You were witnessing the people who are directly connected to the event, either through a member of the team or through the school. What about the other 500, 5,000, or 20,000 people in the town that didn't care enough to have instant notification, but still want the information even if it's a day later? That's where you make money.
      - greedo 14y ago
        Are they willing to pay? It appears (based on subscription numbers) that the number of people willing to pay are decreasing. A lot of the people I work with rely upon FB to serve as their "news." And I in turn use HN as a kind of news service. I rely upon FB, HN, twitter, and RSS for the majority of my news intake. The problem will arise when all that's left are either blog posts that have variable reliability and wire services that have variable depth.
      - CamperBob2 14y ago
        What about the other 500, 5,000, or 20,000 people in the town that didn't care enough to have instant notification, but still want the information even if it's a day later? How many events in that class tend to happen? Anybody who cares about a high school track meet is either there, or connected via Twitter/FB/whatever with the people who are. Larger scale events are bipolar: they're either not of immediate interest (new highway construction announced), ignored entirely by most people (the President is in town), or people want to know what's happening now (chemical spill, bomb threat, school shooting...) The one thing that can be said about local print newspapers is that they aren't the best vehicle for disseminating any of the above news topics except possibly the big-but-not-of-immediate-interest kind. Finally, the ultimate fate of the newspaper cannot possibly be understood by anyone who, as in Buffett's case, admits he doesn't understand tech.
- adestefan 14y ago
  Most local news is trashy gossip.
  - lrs 14y ago
    Not sure why you're getting downvoted here. Isn't this the same effect Buffett is talking about in the letter when he describes the local paper's advantage in coverage of "local sports?" People will pay to read about their kid's soccer goal; people will pay to peruse the list of people who got picked up for DUIs last week and look for anyone they know. Am I misunderstanding Buffett's position here?
    - adestefan 14y ago
      That was my point. Everyday the first page my mother reads in her local paper are the obituaries. Next stop is the community pages to see who filed for marriage certificates and divorces, followed by the high school sports and maybe the front news section if she has time. I get phone calls from her because so and so that was in my high school class had a baby or was picked up by the cops. It's never to discus the latest city council meeting.
corry 14y ago
Interesting strategy. Focus on the only advantage local papers have -- the deep local connection -- and build the strategy around that. Might be a leaner newspaper with a smaller readership... but that will happen anyways. Coupling this 'deep local' focus with a better social media strategy could help them survive. If you become THE source for all local news + provide an easy way for things to be shared / discussed via FB / Twitter, etc you can bring your competitive advantage to the digital realm.
- middus 14y ago
  I think local-centric newspapers could generally gain a lot from developing a community of customers, be it via FB/Twitter or their own website.
- vailripper 14y ago
  The question I have is - with low readership numbers how do you support a news room that can provide in depth local coverage?
  - chc 14y ago
    By focusing your reporters just on the more in-depth stuff and running rewritten press releases for everything else, essentially.
seanalltogether 14y ago
The only newspapers I read anymore are local newspapers that are free to read. I still feel like online resources are a terrible way of finding out whats happening around you. I read news online, but I read about shows and events in local papers.
- lukejduncan 14y ago
  I'm curious your thoughts on Patch. Personally, any local news I read I get from twitter of facebook via Patch
sparknlaunch 14y ago
There has been a strange trajectory of print and online media. You had print businesses that dominated the news market (now suffering). Suddenly the Internet came around and people's main source of news was via the web (now booming). Large print and online establishments do not personalized and local content. People now want quality and relevant content. Therefore local print newspapers may be a lucrative place to be. Utilise the benefits of online, with the relevant content of local. Build a community. Buffett is a smart investor. If he sees some value in newspapers then there has to be something there.
loumf 14y ago
Although he doesn't mention it here, Berkshire also owns about 18% of the Washington Post: http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshi... Not sure if this is related at all, but Adrian Holovaty (co-creator of Django, founder of EveryBlock) also worked at the Washington Post -- he has been a big proponent of the hyper-local strategy for Newspapers (the original reason why Django was developed). Probably a coincidence, but maybe there's some latent hyper-local vibe in the halls of the Washington Post.
- adestefan 14y ago
  Berkshire bought into the Washington Post Company because of Kaplan, not the newspaper division.
- VonGuard 14y ago
  Yer absolutely right. Hyper local is the only way to win as a newspaper. Sure, you can just reprint the AP stories on the big international news of each day, but a better tactic is to post pictures of locals on the front page, and to let them voice their opinions in the op-eds and column sections. An Ohio paper did this just right a number of years ago, though I forget which city it was. It wasn't the Cox News towns, so not Dayton... Anyway, this local Ohio paper's tactic was to replace its business section with a "Mothers" section, with info for local mothers, like day-care news, preschool listings, parenting tips, and info on places to take toddlers during the day. It worked extremely well, and the paper then opened an online forum for these Mothers, who then became the most common users of their Website. I'm a journalist, as some of you may know. The thing that really makes a printed outlet work is its readers. They should be able to be a community, in the physical sense, rather than the social network sense. It's tough for magazines to make meatspace reader conncetions, as they are national. But local newspapers, they're a perfect place to build local communities.
  - loumf 14y ago
    In "Made to Stick", they profile a newspaper called "The Daily Record" in Dunn, North Carolina. Their penetration into their local area is 112%. Quote from the owner: "The fact is, a local newspaper can never get enough local names. I'd happily hire two more typesetters and add two more pages in every edition of each paper if we had the names to fill them up." Look at the front page http://www.mydailyrecord.com http://www.mydailyrecord.com All local stories (and a pay wall -- perhaps the future of Berkshire owned papers)
pstinnett 14y ago
To give a little more context - this letter was sent after an announcement that Berkshire Hathaway was purchasing all of the newspapers owned by Media General. http://www.mediageneral.com/press/2012/may17_12.html http://www.mediageneral.com/press/2012/may17_12.html
bradfa 14y ago
Our Rochester, NY USA paper just raised rates 50% for subscribers and are backing that with an online version of the paper that looks exactly like the print version. I canceled my subscription. I want local news. I want to pay a reasonable rate (was $12 / month for 5 day delivery, now $18 / month). I don't care for an online version that looks just like the printed paper. I would sign up for a reduced (like $6 / month) version delivered to my iPad (or similar) that just had the local stuff (no AP, stocks outside upstate NY, no national sports, etc) because I do care about what's going on locally. I get the national stuff for free online lots of places, I can't get the local stuff easily. Buffett seems to agree with my take, it'll be interesting to see where Birkshire takes their papers wrt the internet.
- adestefan 14y ago
  Why do you think a version delivered to your iPad should be cheaper than the print version? Do you not receive the same value in both cases?
  - nodata 14y ago
    How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?
    - freyr 14y ago
      To play the devil's advocate, a product that is cheaper to produce, doesn't necessarily sell for a lower price to consumers. The pricing could relate to consumer demand for the product, competitors' prices, etc., rather than being a simple function of the price of production. I'm not an economist, and I might be wrong.
      - TeMPOraL 14y ago
        I'm not an economist either, but what you say is - for what I understand - the consequence of the whole supply/demand concept. There is no global "value" of things, in the end the only real value is what people are willing to pay for it.
tubbo 14y ago
"I have some strong political views, but Berkshire owns the paper - I don't." Why can't all CEOs think this way?
- muhfuhkuh 14y ago
  Buffett is notoriously liberal in both his political views and the way he runs Berkshire Hathaway. He's given alot of leeway to his direct reports (CEOs of the companies they own), not because he's some prescient slacker with a time machine, but because he invests and owns companies that a) he can understand clearly the business model (i.e., few-to-no pure technology plays, no internet/social) b) are profitable but maybe not growing gangbusters as time goes on (or because the particular industry is slow-growth) It's a sound strategy. It won't get you big scores like investing in facebook (wokka-wokka!), but it just feels right and lends itself to safer returns. Messing with the flow like a corporate raider (a la Carl Icahn) is just not in Berkshire DNA.
  - jallmann 14y ago
    Above all, Buffett invests in companies that have a solid management team in place. Otherwise his hands-off approach would never work.
NDizzle 14y ago
I love how Warren Buffett uses plain language in everything he releases. It's easy and pleasant to read for simple folk like me.
- nazbot 14y ago
  I consider it a sign of intelligence to be able to speak about complex issues in a plain and straightforward manner.
spenrose 14y ago
Clay Shirky does not agree with Buffet's reasoning: http://www.shirky.com/weblog/2012/05/warren-buffetts-newspaper-purchase/ http://www.shirky.com/weblog/2012/05/warren-buffetts-newspap...
lukejduncan 14y ago
It seems to me that Patch beats a local paper any day. The argument that making a paper hyper local somehow saves it from having to compete with the Internet just seems off to me.
- loumf 14y ago
  I just took a quick look at Patch and it looked like very superficial robo-generated news from public sources (police blotter, HS sports schedule, stock photography). It doesn't look very readable. Here's an article that puts words around a calendar http://chelmsford.patch.com/articles/softball-team-to-face-newton-in-miaa-tournament http://chelmsford.patch.com/articles/softball-team-to-face-n... This article is probably just auto-generated for town (it's about the view of Venus we are getting right now). http://chelmsford.patch.com/articles/chelmsford-look-up-venus-is-in-transit http://chelmsford.patch.com/articles/chelmsford-look-up-venu... There are some articles better than these, but not much -- perhaps it's better for other towns. Here's what a hyperlocal newspaper looks like: http://www.mydailyrecord.com http://www.mydailyrecord.com Real names and faces of people the residents know. The articles aren't Pulitzer prize winning, but they're not just autogenerated. You can't compete with auto-generated on price, but it doesn't seem hard to write better articles.
  - meatsock 14y ago
    patch isn't entirely auto-generated, there are reporters and editors working for them
    - loumf 14y ago
      I'm sure -- I clicked around randomly and my impression was that the articles were generic and auto-generated. Sadly, it might be able to compete with what passes for local news some places, but my local paper is much better. The key to local news is local names and faces -- stock photography and localized generic news isn't going to cut it.

59 points by ValentineC 14y ago

I think in a way he's talking about newspapers getting back to their real roots as being genuine 'NEWS' papers. That's instead of the trashy gossip magazines that so many of them have turned in to.

rdtsc 14y ago
In general trashy gossip magazines sell, that is why there are so many of them. There is a feedback mechanism there perhaps... But that is in general. It seems Buffet here is a focusing on specific areas with a population that will be very likely to be interested in a local newspaper. Small, well established towns, with a strong sense of community. The problem is see with that is that local communities that used to be established and strong can be destroyed pretty quickly according to how the local employment landscape changes (say a GM plant closes).
eli 14y ago
No, I don't think that's it. Well, ok, yes I'm sure he would agree in that papers shouldn't print trash, but I think his point was that the Omaha World-Herald should stop pretending it can cover news out of Washington without a Washington bureau. Local papers are wasting money buying wire stories on national news that is not especially valuable to its readers.
digitalengineer 14y ago
I think he feels newspapers should return to their original function of writing their own (local) news and doing their own investigations. NOT 'copy/paste' all the Reuters-news. We've got the web for that kind of news.
- greedo 14y ago
  The problem is that the cost of generating and distributing that local news is not sustainable in the face of internet technologies. Witness this: I'm at a graduation celebration in Wisconsin this weekend, and all the parents attending throughout the day are very involved in student athletics. One of the kids was running in a track competition out of town with the rest of the school. The results were texted immediately throughout this small town. Another parent was tweeting the play by play of the track meet. These are tech savvy 40 year olds, completely bypassing the print world. What can print offer them? Maybe a pic or two? They've got those instantly via FB. If this crowd is doing it, it's over for print papers. And since online papers either need a paywall or higher revenue for ads, they just can't compete.
  - adestefan 14y ago
    You were witnessing the people who are directly connected to the event, either through a member of the team or through the school. What about the other 500, 5,000, or 20,000 people in the town that didn't care enough to have instant notification, but still want the information even if it's a day later? That's where you make money.
    - greedo 14y ago
      Are they willing to pay? It appears (based on subscription numbers) that the number of people willing to pay are decreasing. A lot of the people I work with rely upon FB to serve as their "news." And I in turn use HN as a kind of news service. I rely upon FB, HN, twitter, and RSS for the majority of my news intake. The problem will arise when all that's left are either blog posts that have variable reliability and wire services that have variable depth.
    - CamperBob2 14y ago
      What about the other 500, 5,000, or 20,000 people in the town that didn't care enough to have instant notification, but still want the information even if it's a day later? How many events in that class tend to happen? Anybody who cares about a high school track meet is either there, or connected via Twitter/FB/whatever with the people who are. Larger scale events are bipolar: they're either not of immediate interest (new highway construction announced), ignored entirely by most people (the President is in town), or people want to know what's happening now (chemical spill, bomb threat, school shooting...) The one thing that can be said about local print newspapers is that they aren't the best vehicle for disseminating any of the above news topics except possibly the big-but-not-of-immediate-interest kind. Finally, the ultimate fate of the newspaper cannot possibly be understood by anyone who, as in Buffett's case, admits he doesn't understand tech.
adestefan 14y ago
Most local news is trashy gossip.
- lrs 14y ago
  Not sure why you're getting downvoted here. Isn't this the same effect Buffett is talking about in the letter when he describes the local paper's advantage in coverage of "local sports?" People will pay to read about their kid's soccer goal; people will pay to peruse the list of people who got picked up for DUIs last week and look for anyone they know. Am I misunderstanding Buffett's position here?
  - adestefan 14y ago
    That was my point. Everyday the first page my mother reads in her local paper are the obituaries. Next stop is the community pages to see who filed for marriage certificates and divorces, followed by the high school sports and maybe the front news section if she has time. I get phone calls from her because so and so that was in my high school class had a baby or was picked up by the cops. It's never to discus the latest city council meeting.

corry 14y ago

Interesting strategy. Focus on the only advantage local papers have -- the deep local connection -- and build the strategy around that. Might be a leaner newspaper with a smaller readership... but that will happen anyways. Coupling this 'deep local' focus with a better social media strategy could help them survive. If you become THE source for all local news + provide an easy way for things to be shared / discussed via FB / Twitter, etc you can bring your competitive advantage to the digital realm.

middus 14y ago
I think local-centric newspapers could generally gain a lot from developing a community of customers, be it via FB/Twitter or their own website.
vailripper 14y ago
The question I have is - with low readership numbers how do you support a news room that can provide in depth local coverage?
- chc 14y ago
  By focusing your reporters just on the more in-depth stuff and running rewritten press releases for everything else, essentially.

seanalltogether 14y ago

The only newspapers I read anymore are local newspapers that are free to read. I still feel like online resources are a terrible way of finding out whats happening around you. I read news online, but I read about shows and events in local papers.

lukejduncan 14y ago
I'm curious your thoughts on Patch. Personally, any local news I read I get from twitter of facebook via Patch

sparknlaunch 14y ago

There has been a strange trajectory of print and online media. You had print businesses that dominated the news market (now suffering). Suddenly the Internet came around and people's main source of news was via the web (now booming). Large print and online establishments do not personalized and local content. People now want quality and relevant content. Therefore local print newspapers may be a lucrative place to be. Utilise the benefits of online, with the relevant content of local. Build a community. Buffett is a smart investor. If he sees some value in newspapers then there has to be something there.

loumf 14y ago

Although he doesn't mention it here, Berkshire also owns about 18% of the Washington Post: http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshi... Not sure if this is related at all, but Adrian Holovaty (co-creator of Django, founder of EveryBlock) also worked at the Washington Post -- he has been a big proponent of the hyper-local strategy for Newspapers (the original reason why Django was developed). Probably a coincidence, but maybe there's some latent hyper-local vibe in the halls of the Washington Post.

adestefan 14y ago
Berkshire bought into the Washington Post Company because of Kaplan, not the newspaper division.
VonGuard 14y ago
Yer absolutely right. Hyper local is the only way to win as a newspaper. Sure, you can just reprint the AP stories on the big international news of each day, but a better tactic is to post pictures of locals on the front page, and to let them voice their opinions in the op-eds and column sections. An Ohio paper did this just right a number of years ago, though I forget which city it was. It wasn't the Cox News towns, so not Dayton... Anyway, this local Ohio paper's tactic was to replace its business section with a "Mothers" section, with info for local mothers, like day-care news, preschool listings, parenting tips, and info on places to take toddlers during the day. It worked extremely well, and the paper then opened an online forum for these Mothers, who then became the most common users of their Website. I'm a journalist, as some of you may know. The thing that really makes a printed outlet work is its readers. They should be able to be a community, in the physical sense, rather than the social network sense. It's tough for magazines to make meatspace reader conncetions, as they are national. But local newspapers, they're a perfect place to build local communities.
- loumf 14y ago
  In "Made to Stick", they profile a newspaper called "The Daily Record" in Dunn, North Carolina. Their penetration into their local area is 112%. Quote from the owner: "The fact is, a local newspaper can never get enough local names. I'd happily hire two more typesetters and add two more pages in every edition of each paper if we had the names to fill them up." Look at the front page http://www.mydailyrecord.com http://www.mydailyrecord.com All local stories (and a pay wall -- perhaps the future of Berkshire owned papers)

pstinnett 14y ago

To give a little more context - this letter was sent after an announcement that Berkshire Hathaway was purchasing all of the newspapers owned by Media General. http://www.mediageneral.com/press/2012/may17_12.html http://www.mediageneral.com/press/2012/may17_12.html

bradfa 14y ago

Our Rochester, NY USA paper just raised rates 50% for subscribers and are backing that with an online version of the paper that looks exactly like the print version. I canceled my subscription. I want local news. I want to pay a reasonable rate (was $12 / month for 5 day delivery, now $18 / month). I don't care for an online version that looks just like the printed paper. I would sign up for a reduced (like $6 / month) version delivered to my iPad (or similar) that just had the local stuff (no AP, stocks outside upstate NY, no national sports, etc) because I do care about what's going on locally. I get the national stuff for free online lots of places, I can't get the local stuff easily. Buffett seems to agree with my take, it'll be interesting to see where Birkshire takes their papers wrt the internet.

adestefan 14y ago
Why do you think a version delivered to your iPad should be cheaper than the print version? Do you not receive the same value in both cases?
- nodata 14y ago
  How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?
  - freyr 14y ago
    To play the devil's advocate, a product that is cheaper to produce, doesn't necessarily sell for a lower price to consumers. The pricing could relate to consumer demand for the product, competitors' prices, etc., rather than being a simple function of the price of production. I'm not an economist, and I might be wrong.
    - TeMPOraL 14y ago
      I'm not an economist either, but what you say is - for what I understand - the consequence of the whole supply/demand concept. There is no global "value" of things, in the end the only real value is what people are willing to pay for it.

tubbo 14y ago

"I have some strong political views, but Berkshire owns the paper - I don't." Why can't all CEOs think this way?

muhfuhkuh 14y ago
Buffett is notoriously liberal in both his political views and the way he runs Berkshire Hathaway. He's given alot of leeway to his direct reports (CEOs of the companies they own), not because he's some prescient slacker with a time machine, but because he invests and owns companies that a) he can understand clearly the business model (i.e., few-to-no pure technology plays, no internet/social) b) are profitable but maybe not growing gangbusters as time goes on (or because the particular industry is slow-growth) It's a sound strategy. It won't get you big scores like investing in facebook (wokka-wokka!), but it just feels right and lends itself to safer returns. Messing with the flow like a corporate raider (a la Carl Icahn) is just not in Berkshire DNA.
- jallmann 14y ago
  Above all, Buffett invests in companies that have a solid management team in place. Otherwise his hands-off approach would never work.

NDizzle 14y ago

I love how Warren Buffett uses plain language in everything he releases. It's easy and pleasant to read for simple folk like me.

nazbot 14y ago
I consider it a sign of intelligence to be able to speak about complex issues in a plain and straightforward manner.

spenrose 14y ago

Clay Shirky does not agree with Buffet's reasoning: http://www.shirky.com/weblog/2012/05/warren-buffetts-newspaper-purchase/ http://www.shirky.com/weblog/2012/05/warren-buffetts-newspap...

lukejduncan 14y ago

It seems to me that Patch beats a local paper any day. The argument that making a paper hyper local somehow saves it from having to compete with the Internet just seems off to me.

loumf 14y ago
I just took a quick look at Patch and it looked like very superficial robo-generated news from public sources (police blotter, HS sports schedule, stock photography). It doesn't look very readable. Here's an article that puts words around a calendar http://chelmsford.patch.com/articles/softball-team-to-face-newton-in-miaa-tournament http://chelmsford.patch.com/articles/softball-team-to-face-n... This article is probably just auto-generated for town (it's about the view of Venus we are getting right now). http://chelmsford.patch.com/articles/chelmsford-look-up-venus-is-in-transit http://chelmsford.patch.com/articles/chelmsford-look-up-venu... There are some articles better than these, but not much -- perhaps it's better for other towns. Here's what a hyperlocal newspaper looks like: http://www.mydailyrecord.com http://www.mydailyrecord.com Real names and faces of people the residents know. The articles aren't Pulitzer prize winning, but they're not just autogenerated. You can't compete with auto-generated on price, but it doesn't seem hard to write better articles.
- meatsock 14y ago
  patch isn't entirely auto-generated, there are reporters and editors working for them
  - loumf 14y ago
    I'm sure -- I clicked around randomly and my impression was that the articles were generic and auto-generated. Sadly, it might be able to compete with what passes for local news some places, but my local paper is much better. The key to local news is local names and faces -- stock photography and localized generic news isn't going to cut it.