Warren Buffett’s thirst for newspapers was not quenched by his recent decision to buy 63 papers owned by Media General (MEG). A memo obtained by media site Romenesko shows the Oracle of Omaha may just be getting started on his media binge.
Berkshire Hathaway (BRKB) will likely buy more small and midsized papers, Buffett wrote in his letter, first published on the website of the Omaha World-Herald, which Berkshire owns.
“Berkshire will probably purchase more papers in the next few years. We will favor towns and cities with a strong sense of community, comparable to the 26 in which we will soon operate. If a citizenry cares little about its community, it will eventually care little about its newspaper. In a very general way, strong interest in community affairs varies inversely with population size and directly with the number of years a community�s population has been in residence. Therefore, we will focus on small and mid-sized papers in long-established communities.”
What Buffett doesn’t mention is that smaller papers often have monopoly power in their communities, making them the most important print advertising vehicles in the area. In bigger cities, competition in print and online has sapped newspaper profits. Just today, the New Orleans Times-Picayune announced it would start publishing three times a week.
Buffett also wrote that newspapers need to stop giving away their content for free on the Internet.
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