Dave Boden: Warren Buffett writes newspaper industry obit, but we won't bite

Dave Boden

According to the Wall Street Journal online, at a Berkshire Hathaway Inc. shareholder meeting last weekend, one of the world’s richest men, Warren Buffett, who also seemingly considers himself to be one of the smartest, surprised many when he made the following statement: “For most newspapers in the United States, we (the Berkshire Hathaway Inc.) would not buy them at any price,” the world’s second richest man was quoted as saying.

“They (newspapers) have the possibility of going to just unending losses,” said Buffet, who has long considered himself to be a newspaperman.

Some newspaperman. The employees of his papers, which includes the Omaha-based Sun Newspapers and the Buffalo News as well as the Washington Post Company in which Berkshire Hathaway Inc. has a significant investment, had to have been disappointed when Buffett went on to say: “As long as newspapers were essential to readers, they were essential to advertisers. But now news is available in many other venues.”

Needless to say, Internet sites, television newscasts and radio stations grabbed these quotes and ran with them. Quite frankly, as a newspaperman, Mr. Buffett should have known better, because each time a metropolitan newspaper goes bankrupt, changes distribution, reduces their workforce or, more importantly, a respected newspaperman or journalist writes their own obituary or puts up a white flag like the one Mr. Buffett did, it is a sure bet that all of the other news mediums will take this handoff and head for the goal line … as they would like nothing better than to see newspapers cease to exist.

Perhaps the thing that galled me most about Buffett’s statements was that somehow he nominated himself to speak on behalf of an entire industry, in lieu of just addressing the woes of his, the Berkshire Hathaway Inc. papers.

Perhaps what Buffett should have said was that the metropolitan and larger newspapers in our nation are in a real tough spot right now as the current economic conditions are hitting these papers much, much harder than smaller community daily newspapers found all over our country.

Instead he chose to blanket the entire industry with his statement. Why? Maybe he just does not know any better -- or maybe he just doesn’t realize the vast differences between papers like the Washington Post and the Mineral Daily News-Tribune in Keyser, W.Va. (a GateHouse Media newspaper). The truth is, community newspapers are immensely different than our big-city cousins not only in news coverage but also in our revenue streams.

To no fault of his own, Mr. Buffett does not seem to understand that there is a very large difference between the revenue streams that are present at metro papers and those found at community newspapers. The big papers have always relied heavily on advertisements from Realtors, automakers and auto dealers, large employers, large banks and department stores, while small dailies like ours rely on small local businesses, many of which are run by “mom and pop.”

When the economy took a hard turn south last year, real estate sales plummeted, cars sales hit all-time lows, big companies quit hiring, the big banks were looking for bail-outs and folks weren’t spending big money in department stores. It’s no wonder that the metro papers have taken these financial beatings and are now in a struggle for their own survival. I would suggest that even Mr. Buffett would agree that these losses had nothing to do with the availability of unique, essential and relevant news content, but rather the results of the economic recession.

While I concur with Buffett that there is a correlation between a publication’s ability to provide “essential and relevant news” to their readers and increasing their revenue streams, that is only part of this story. By their very nature, metropolitan papers have always provided very good, regional, statewide, national and even worldwide news, but on the other hand, they have always struggled with covering true local community news events and stories.

In stark contrast, small community papers are the exact opposite, as their strength is their ability to publish the current news and events of their hometowns and counties to their readers. The larger papers are simply going to have to find a way to be like their country cousins in order to become “essential and relevant” once again, because as Buffet stated, “Now news is available in many other venues.” Which is to say that the news content the metropolitan papers provide is readily available on television, radio or online.

Ironically, newspapers are responsible for not only the availability but also the creation of much of this news content. Not only are internet sites like Google, Yahoo, Topix, among many others hijacking news content from free, as well as paid, newspaper Web sites, but the largest media co-op in America (if not the world), The Associated Press (AP), is providing the bulk of the content to Internet portals like Yahoo News and MSNBC. So why did AP ever enter into contractual agreements with these Internet companies, as they appear to have lost much more than they have gained from this partnership? While I can only speculate, perhaps AP was enamored with the fact that their brand would be all over Yahoo News. This post found on Wikipedia seems to back this thought up: “The AP's multi-topic structure has lent itself well to web portals, such as Yahoo!, MSN and so forth all have news sites which constantly need to be updated.”

With all that said, maybe it’s time to let Bill Gates and Mr. Yahoo hire their own newsrooms and see just how local they can get. I seriously doubt that a member of our news staff will be bumping into a MSNBC or Washington Post reporter at an event in our county in the near future -- and that is why our news content will remain both “essential and relevant.”

Unlike Warren Buffett, I believe the future is bright for the newspaper industry, provided newspapers stay true to their core values and remain committed to news content that is not only local but also protected.

News-Tribune