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(Yahoo)   Warren Buffet's Bershire-Hathaway is buying into another dying business. Buggy whip manufacturers rejoice   (finance.yahoo.com) divider line 29
    More: Strange, Warren Buffett, Berkshire Hathaway, Media General, Richmond Times-Dispatch, Sam Zell, Winston-Salem Journal, Burlington Northern Santa Fe, World-Herald  
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2491 clicks; posted to Business » on 17 May 2012 at 12:51 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-17 12:59:02 PM
Buffett has defended newspapers, saying that they will have a decent future if they continue delivering information that can't be found elsewhere. They also need to stop offering news free online, he has said.

I know he's usually a bright man, but get over the idea of selling newspapers to make a profit and realize it's always been about the ads.

Maybe he'll be bright enough to shut down most of the printing plants and replace the physical paper subscriptions with free Kindle's for a two year subscription.
 
2012-05-17 01:13:33 PM

wildcardjack: Buffett has defended newspapers, saying that they will have a decent future if they continue delivering information that can't be found elsewhere. They also need to stop offering news free online, he has said.

I know he's usually a bright man, but get over the idea of selling newspapers to make a profit and realize it's always been about the ads.

Maybe he'll be bright enough to shut down most of the printing plants and replace the physical paper subscriptions with free Kindle's for a two year subscription.


The problem is that on-line ads sell for too cheap, and there are too few of them. If you open up a physcial paper, over half the printed pages are advertising of some sort. In the past, that was big bucks. Now that fewer people actually buy physcial papers, that money tree is gone, and little banner ads aren't enough to make up the loss.

There's no solution here. Newspapers in general are going to be a money losing business from now on. Putting them all behind pay walls won't work, because those pay walls will have so many cracks (like the "copy/paste the headline into Google for the NY Times" bit) and competitors for them to be effective.

Unless the newspapers he bought are actually profitable (I dunno) and he bought them for real cheap (possibly), this is a bad deal. Maybe this deal was actually more about the loan and the 19.9% stake in the rest of the business (18 TV stations and some websites) than the purchase of the papers.
 
2012-05-17 01:29:15 PM

Geotpf: The problem is that on-line ads sell for too cheap, and there are too few of them. If you open up a physcial paper, over half the printed pages are advertising of some sort. In the past, that was big bucks. Now that fewer people actually buy physcial papers, that money tree is gone, and little banner ads aren't enough to make up the loss.


Excellent point. Those half page ads for department stores in the main section just don't work online. There's also no revenue from classified ads in the age of Craigslist. People have traditionally paid for newspapers for the content, but that content is now available elsewhere at no cost with greater immediacy and they are unable to deliver paying ads at the same time.

I do think the free online news model isn't ultimately sustainable, but there just isn't a great way to replace it with a pay model just yet... not without truly delivering something one can absolutely not get anywhere else. The news business has definitely changed, but there's no way it is done changing. It can't be... if it stays like this it's likely to go out of business.
 
2012-05-17 01:35:27 PM
I wonder if ol' Warren is investing in whale oil futures, too.
 
2012-05-17 01:39:52 PM
Old men buy old things.

Go figure.

But I think he can afford it.
 
2012-05-17 02:09:24 PM
I used to work for a Media General newspaper. They were the stingiest farkers on the planet--just another top-heavy corporation full of MBAs who did nothing but make money sucking the life out of an already sick institution. Good riddance.
 
2012-05-17 02:30:11 PM

Geotpf: There's no solution here. Newspapers in general are going to be a money losing business from now on. Putting them all behind pay walls won't work, because those pay walls will have so many cracks (like the "copy/paste the headline into Google for the NY Times" bit) and competitors for them to be effective.


I know a solution...keep printing the paper and shut down the online site. What's the point of having it if it's obviously unsustainable and destroying your business?

I know that if I had the choice between a bunch of online blogs and having to buy a paper with high-quality articles, I'd buy the paper every time.
 
2012-05-17 02:42:08 PM
Warren Buffet's Bershire-Hathaway?

What a weird coincidence! I know of a guy named Warren Buffett who owns a company called Berkshire Hathaway. Weird!
 
2012-05-17 02:44:56 PM
People questioned when he bought BNSF too.

It's certainly a move I wouldn't make, but I understand his reasoning. The papers he's after are mainly ones in smaller communities with a pretty stable subscriber base. Sure those subscribers will likely die off in the next few decades (and I'm hard pressed to believe that the next generation, even in small towns, aren't getting their news online nowadays), but it might not be such a bad investment in the interim.
 
2012-05-17 02:56:52 PM
He purchased a fish wrapping company. Seems reasonable to me.
 
2012-05-17 03:02:54 PM

Uzzah: Warren Buffet's Bershire-Hathaway?

What a weird coincidence! I know of a guy named Warren Buffett who owns a company called Berkshire Hathaway. Weird!


I think subby was trying to find naked pictures of Anne Hathaway on BearShare.

But seriously, this is the dude whose company also owns Dairy Queen and Fruit of the Loom.
 
2012-05-17 03:25:45 PM
This means we all should invest in newspaper companies. Apparently he has inside information that the federal government is going to start subsidizing the newspaper industry.
 
2012-05-17 03:28:13 PM

Big_Fat_Liar: This means we all should invest in newspaper companies. Apparently he has inside information that the federal government is going to start subsidizing the newspaper industry.


They're gonna carry tar sand oil in newspapers! Damn you, Obama!
 
2012-05-17 03:57:27 PM
We got a free subscription trial to the globe and mail a few months ago. I was just horrified by the waste generated by the paper, and I grew up reading one daily.

They're dead. Dead dead dead. Warren is getting too old for this world it seems.
 
2012-05-17 03:59:35 PM

The Bestest: People questioned when he bought BNSF too.


That one made more sense. One way or the other, goods must be brought to market, and as oil prices continue to increase, it is more cost effective to ship long distances by rail than by truck. Moreover, in the midst of a recession transportation stocks are generally rather low; when goods aren't moving those who move them make less money. Buying BNSF positions Berkshire to make a fair amount of money as the economy improves (and if trucking is made less attractive than rail for fuel or environmental reasons, it's a double win).
 
2012-05-17 04:04:42 PM
Today I was walking through a parking lot and saw a penny someone had dropped. It was dirty so I left i lay there, I'm sure many people did the same.

To Warren Buffet, the $143 million that is being paid for these papers is equivalent to the value I put on that penny. That kind of money is nothing to him.
 
2012-05-17 04:49:38 PM

The Bestest: People questioned when he bought BNSF too.

It's certainly a move I wouldn't make, but I understand his reasoning. The papers he's after are mainly ones in smaller communities with a pretty stable subscriber base. Sure those subscribers will likely die off in the next few decades (and I'm hard pressed to believe that the next generation, even in small towns, aren't getting their news online nowadays), but it might not be such a bad investment in the interim.


He doesn't have to make money forever on the scheme. He just needs to make a few hundred million dollars. I'd be more worried about his mental state if he annoumced he was going to be buying shares of Facebook.
 
2012-05-17 05:18:22 PM
As a lifelong journalist (and a person who started his own weekly newspaper and sold it 4 years later for a nice profit), I laugh at people who say newspapers are a dying business. Mr. Buffett realizes that if done right - keeping it local, not giving your product away for free on the 'Net - you can make a decent profit.

Newspapers can still make a 9- or 10-percent profit. That's not close to the 33-percent profit that newspaper chains used to demand, but it's not that bad of a return.

Oh - and as a current Media General employee, I welcome my new corporate overlord.
 
2012-05-17 05:30:53 PM

akula: Geotpf: The problem is that on-line ads sell for too cheap, and there are too few of them. If you open up a physcial paper, over half the printed pages are advertising of some sort. In the past, that was big bucks. Now that fewer people actually buy physcial papers, that money tree is gone, and little banner ads aren't enough to make up the loss.

Excellent point. Those half page ads for department stores in the main section just don't work online. There's also no revenue from classified ads in the age of Craigslist. People have traditionally paid for newspapers for the content, but that content is now available elsewhere at no cost with greater immediacy and they are unable to deliver paying ads at the same time.

I do think the free online news model isn't ultimately sustainable, but there just isn't a great way to replace it with a pay model just yet... not without truly delivering something one can absolutely not get anywhere else. The news business has definitely changed, but there's no way it is done changing. It can't be... if it stays like this it's likely to go out of business.


I think if you can get a reliable community newspapers work and are fairly effective. I think of my college newspaper. A whole lot of people read it daily and despite the fact that it was generally shiatty quality you could strike a conversation with most people about pretty much any article by noon. The paper was independent from the university and actually self-sufficient.

You actually have to make it a community that delivers news specific to a small local area and only charge for bulk delivery.
 
2012-05-17 06:02:04 PM
I can see how there is potential profit in a hyper-local newspaper. Maybe. But not on national and international news.
 
2012-05-17 07:47:26 PM
There's enough obscure local news in my newspaper to keep me subscribed...

/ I wouldn't have found out about the monthly "Science Pub" meetings in my town if it wasn't mentioned in the paper...
// the daily crime report makes for some amusing reading as well...
 
2012-05-17 08:02:59 PM

Phil Moskowitz: They're dead. Dead dead dead. Warren is getting too old for this world it seems.


You are confusing the medium in which the content is delivered and the content itself. The media that the content is delivered on is dying. Not the creation and the value of the content itself. Same goes for physical books.
 
NFA [TotalFark]
2012-05-17 09:17:04 PM
I remember back in early 2009 when the investment experts were literally telling people to stay out of the stock market. UBS and FOX News were telling people the market was just too risky.

At that time

Citibank was $1 per share Today $26

Ford Motor Corp was $2 per share Today $10

GE was $6 per share Today $19

CBS was $3 per share Today $30

No I didn't listen to the "investment expert" idiots and I spent all I could afford on the above stocks.

Berkshire isn't the giant it is today because they have poor judgment. Screw the "experts" and follow the people actually making the money.
 
2012-05-17 09:18:16 PM

Geotpf: The problem is that on-line ads sell for too cheap, and there are too few of them. If you open up a physcial paper, over half the printed pages are advertising of some sort. In the past, that was big bucks. Now that fewer people actually buy physcial papers, that money tree is gone, and little banner ads aren't enough to make up the loss.


Google. Revenue $38bn. 85%+ from little ads.
 
2012-05-17 09:23:53 PM

sendtodave: 85%+ from little ads.


Oops, I meant 95%+. That was a typo.

Actually, 99%.
 
2012-05-17 10:19:10 PM
Once newspapers figure out how to get you to tell them every little thing about your life, they'll sell it and they'll never need a pay wall.

Facebook already figured it out after all.
 
2012-05-17 11:36:44 PM

wildcardjack: Buffett has defended newspapers, saying that they will have a decent future if they continue delivering information that can't be found elsewhere. They also need to stop offering news free online, he has said.

I know he's usually a bright man, but get over the idea of selling newspapers to make a profit and realize it's always been about the ads.

Maybe he'll be bright enough to shut down most of the printing plants and replace the physical paper subscriptions with free Kindle's for a two year subscription.


He's right though. I read blogs, but none of them would even have shiat to discuss without real reporters.
 
2012-05-17 11:45:45 PM

akula: The Bestest: People questioned when he bought BNSF too.

That one made more sense. One way or the other, goods must be brought to market, and as oil prices continue to increase, it is more cost effective to ship long distances by rail than by truck. Moreover, in the midst of a recession transportation stocks are generally rather low; when goods aren't moving those who move them make less money. Buying BNSF positions Berkshire to make a fair amount of money as the economy improves (and if trucking is made less attractive than rail for fuel or environmental reasons, it's a double win).


I believe the scuttlebutt that Mr Buffet is very interested in the land-use rights that came along with those miles of tracks.
 
2012-05-18 03:56:58 AM
Citibank was $1 per share Today $26

Citi was a 10:1 reverse split.

/just sayin'
 
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