Warren Buffett on newspapers [pdf]

http://online.wsj.com/public/resources/documents/LettertoPublisherandEditors.pdf

by ValentineC • 14 years ago

59 52 14 years ago

online.wsj.com

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• 14 years 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).

eli4• 14 years 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• 14 years 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.

greedo2• 14 years 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.

adestefan6• 14 years ago

Most local news is trashy gossip.

lrs• 14 years 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?

corry• 14 years 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• 14 years 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• 14 years 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• 14 years ago

By focusing your reporters just on the more in-depth stuff and running rewritten press releases for everything else, essentially.

seanalltogether• 14 years 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.

lukejduncan2• 14 years ago

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

sparknlaunch• 14 years 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.

loumf4• 14 years 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_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.

adestefan6• 14 years ago

Berkshire bought into the Washington Post Company because of Kaplan, not the newspaper division.

VonGuard• 14 years 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.

loumf4• 14 years 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

All local stories (and a pay wall -- perhaps the future of Berkshire owned papers)

eli4• 14 years ago

Here's a length how-the-sausage-is-made article about the Washington Post and their struggle with being a national vs local paper. I think the tl;dr is that they're trying to refocus on the Washington, DC area but IMHO as a DC resident, I don't think they are yet succeeding.

http://www.vanityfair.com/business/2012/04/washington-post-w...

pstinnett• 14 years 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

bradfa2• 14 years 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.

adestefan6• 14 years 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• 14 years ago

How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?

brandnewlow2• 14 years ago

Just want to point out how insane is is that none of us would price even the most basic SaaS product at less than $30/month, but people balk at paying $18/month to have a professionally edited newspaper printed and DELIVERED TO THEIR DOOR.

Newspapers are so hosed.

makomk• 14 years ago

SaaS products have support costs. Newspapers are media - they're produced, replicated a bunch of times, then consumed.

bradfa2• 14 years ago

Consumers don't buy SaaS products that cost more than $10 / month. Businesses regularly pay $30+ / month for things, it's way cheaper for them. But in the consumer land, cost is king 99% of the time.

Consumers buy Netflix for $9 / month, or Dropbox for $10 / month. Consumers don't buy $30 / month SaaS Internet services. Heck, the only "service" most consumers pay for that costs more than that is cable TV / high speed internet. They're entrenched with high prices, everyone accepts them. Newspapers have always been cheap, making them expensive now is not acceptable unless I'm really getting more of what I want.

tubbo• 14 years ago

"I have some strong political views, but Berkshire owns the paper - I don't."

Why can't all CEOs think this way?

muhfuhkuh• 14 years 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• 14 years ago

Above all, Buffett invests in companies that have a solid management team in place. Otherwise his hands-off approach would never work.

NDizzle• 14 years 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• 14 years ago

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

spenrose• 14 years ago

Clay Shirky does not agree with Buffet's reasoning:

http://www.shirky.com/weblog/2012/05/warren-buffetts-newspap...

lukejduncan2• 14 years 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.

loumf4• 14 years 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-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-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

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• 14 years ago

patch isn't entirely auto-generated, there are reporters and editors working for them

Warren Buffett on newspapers [pdf]

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