What Does Buffett Know About Newspapers?

By Jack Limpert

Warren Buffett is back to believing in newspapers. Last year he spent $344 million buying 28 newspapers, including his hometown paper, the Omaha World-Herald, and he’s about to buy the Tulsa World.

He did quickly shoot down any suggestions that he buy the Chicago Tribune, LA Times, or any other big metropolitan paper, maybe because he knows too much about what’s happening at the Washington Post. He started buying Post Company stock in 1973 and his gains total about $700 million, but he’s now getting off the board of the Post Company to focus on his Berkshire Hathaway investments.

So what’s his newspaper strategy? It’s pretty clearly smaller, or at least medium-sized, is better, and don’t be too close to a metro area (Tulsa is 100 miles from Oklahoma City). Be big enough to put out a good paper and make a profit, small enough that there’s a real sense of community. Above all, don’t spend a lot reporting local news and then give it away on the Internet.

What’s local news? For many years Ken DeCell’s family owned the Deer Creek Pilot, a weekly in Rolling Fork, Mississippi. Ken, a longtime senior editor at The Washingtonian, grew up listening to a Linotype machine and a newspaper press. I asked him why people read and loved the Deer Creek Pilot.

“Deaths, marriages, high-school sports, and other truly local coverage is what made (and makes) most local residents read the Deer Creek Pilot. Most people weren’t just looking for news—they already knew who was engaged or who had won the ball games. They were looking for validation, confirmation, official recognition of what had happened. Many just wanted to see their—or their sons’, daughters’, mothers’, neighbors’, friends’, rivals’, whatever—names and/or pictures in print.

“I think in larger communities, the local papers do provide actual news that people feel they need, some of it social, some civic. This is especially true in Mississippi towns like Greenville, Vicksburg, Tupelo, and Columbus, where there aren’t many competing news outlets. The newspapers there often operate the only news websites covering their communities, some to better effect than others. Some charge for complete editorial access online, others don’t; the latter, I think, are likely to put themselves out of business.”

He adds this story: “From 1964 to 1967, the local Klan outfit—it called itself the Sharkey Underground (Rolling Fork is in Sharkey County)—organized an advertising boycott against the Pilot that almost put my folks out of business. Yet almost every Wednesday afternoon, when the paper was published, the leader of the racist group would walk brusquely into the Pilot office, plunk down a quarter, pick up a copy of the paper, and stomp out. It wasn’t that he wanted to see what liberal/commie claptrap my parents were publishing that week—it’s that his kids played basketball and were active in other high-school activities, and he wanted to see their names and accounts of their deeds in print. That’s the secret of small-town newspapers.”

Warren Buffett seems to think that delivering local news is what newspapers do best, and that includes doing  what the Deer Creek Pilot has been doing all these years.

My hometown of Appleton, Wisconsin, has a population of 75,000 with another 100,000 or so in nearby towns. Appleton has five high schools with another five in nearby towns. The Appleton Post-Crescent should be able to do a great job covering 10 high schools and the births, marriages, obits, tax rates, elections, and other local news in its territory.

It’s what the Washington Post doesn’t do. The Post tries to cover local sports but how do you cover more than 150 high schools in a few pages a week? It has a little weekly feature on two marriages to show they know there is such a thing as local news, but they put more effort into gossip about Hollywood marriages and divorces. They run obits so haphazardly that you wonder why they bother—some days none, some days a few national or world figures, some days 20 local obits. You may find out that the dentist you once went to died, but then you notice that he died three weeks ago. That’s news?

My guess is that before Warren Buffett buys a newspaper, he wants to know if it can deliver real local news—the Deer Creek Pilot or Appleton Post- Crescent kind of news, not the Washington Post kind of news. I’ll bet he wants to know how many high schools are in its circulation area.

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