I spent 10 years at the Omaha World-Herald, so I was interested and surprised at today’s news that Warren Buffett is buying the newspaper company.
Buffett’s company, Berkshire Hathaway, is going to pay $150 million in cash and take on $50 million of World-Herald debt, taking ownership of my former newspaper and several other Midwestern newspapers and a direct-mail company. This ends more than 30 years of ownership by employees and the Peter Kiewit Foundation.
I may have greater insight later than I do today, but here are some initial observations:
- This doesn’t say anything about Buffett’s optimism, or lack of optimism, for newspapers. As Jim Romenesko noted today, just two years ago, Buffett told his shareholders: “for most newspapers in the United States, we would not buy them at any price” because “they have the possibility of going to just unending losses.” Buffett is worth $39 billion, according to Forbes. This purchase cost about half of 1 percent of his net worth. He’s using the change he found in his sofa cushions to buy his hometown paper, a newspaper he has long expressed affection for. He also owns two other iconic Omaha businesses: Borsheim’s Jewelry and Nebraska Furniture Mart. As the Washington Post’s Steven Pearlstein told Romenesko: “It’s an emotional, personal buy.”
- Politically, it’s going to be an interesting mix. Unless things have changed since I left, the World-Herald has a conservative editorial page on all matters except abortion. Buffett has stirred conservative ire with his support for President Barack Obama and his call for higher taxes on the rich. I’m not suggesting that he’s going to dictate editorial policy, but it would be interesting if he did. And just his position as the owner might cause some rethinking of the knee-jerk right-wing editorials the World-Herald has long been known for.
- I visited the Buffalo News, the other newspaper owned by Buffett, about five years ago. As I recall, the editors and staff there described him as interested and engaged, but not directing with a heavy hand. The News is not known for being particularly outstanding either for its journalism or its business innovation. Berkshire Hathaway is also the largest investor in the Washington Post Co. and Buffett this year resigned from the Post board of directors after serving nearly 26 years.
- I covered Buffett only a time or two during my days as a World-Herald reporter. I found him cooperative and friendly, but I have no notable personal stories or remembrances.
- Buffett has actually won a Pulitzer in Omaha more recently than the World-Herald, which won its last in 1944 for Buddy Bunker’s classic Homecoming photo. Buffett earlier owned the Omaha Sun, a weekly newspaper which won the 1973 Pulitzer Prize for its investigation of Boys Town’s finances and fund-raising.
- Buffett has not made his billions because of his savvy in the digital marketplace. The World-Herald has largely resisted innovation. I remember working from home frequently in 1998 because reporters didn’t have email or web access at our desks. When I returned in 2000 after two years at the Des Moines Register, I insisted on full Internet access at my desk and was one of the first reporters to get it. I continue to hear stories of slow progress in the digital market from frustrated current and former staff members. (I won’t go into details or use names because all my conversations about the World-Herald have been chats with friends, not for publication. But the World-Herald has announced a paywall, which often is an indication that the company is more interested in protecting print than in seeking digital solutions.) Alan Mutter ripped the World-Herald in his Newsosaur blog after a 2007 story exposed its digital deficiencies. I don’t expect the change in ownership to result in a significant change of direction. But if Buffett’s golden touch is going to work here, it needs a significant change of direction.
- The World-Herald supposedly protected itself from ever being sold with some involved stock provisions that meant any stockholder profits in a sale would go to a local charity. (I was a stockholder, but never studied that fine print.) I always viewed that notion skeptically, saying that I heard that the Des Moines Register’s ownership by the Cowles family was similarly protected by some sort of trust — until an insider started the process that led to its sale to Gannett. I don’t know whether that clause always allowed an out for a local sale, or whether the lawyers were able to dismantle those provisions, or whether the plunge in newspaper values makes the question of stockholder profit moot. But this reinforces my skepticism when people tell me provisions ensure that something would “never” happen.
- I noticed in the clip linked above that the 1985 purchase price of the Des Moines Register and a few other papers was also $200 million. The fact that the World-Herald, a similar-sized paper, would be sold along with some smaller papers for $200 million 26 years later tells you a lot about what’s happened to the value of newspapers. Curious, I used an inflation calculator, and $200 in 1985 would be worth $421 today.
My final observation: I have fond memories of my two hitches at the World-Herald (1993-1998 and 2000-2005) and still have many friends there. I hope Buffett’s ownership is a great development for the company and its employees.
Update: My friends and former colleagues Henry Cordes and Steve Jordon, as I’d expect, wrote a strong analysis of the Buffett deal. An interesting detail that explains why the deal happened: With a large number of employees approaching retirement, the company was faced with the obligation to buy their stock (you have to sell back to the company when you leave), and fewer younger staff members have been investing in the company.