Warren Buffett’s Annual Letter Is Always Worth Reading. But No Mention of Newspapers This Year.

Warren Buffett’s long annual letter to the stockholders of Berkshire Hathaway is always interesting—but this year it has no mention of newspapers.

In March 2013, an About Editing and Writing  post that started this way:

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.

Warren Buffett.

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.

Fast forward to January 19, 2020, and a Washington Post story:

Warren Buffett is getting out of the newspaper business.

Berkshire Hathaway announced Wednesday that it is selling its newspaper operations to publisher Lee Enterprises for $140 million. The deal allows Lee to take ownership of 31 newspapers it has managed since 2018 and expands its portfolio to 81, including the Omaha World-Herald in Nebraska, Tulsa World in Oklahoma and Buffalo News, which Berkshire owned separately from the BH Media Group….

Though a lifelong fan of newspapers, Buffett has soured on the industry, which has been in steady decline for more than a decade. Print papers relied on ad revenue for survival, and few have figured out how to navigate a digital landscape where Google and Facebook command 75 percent of advertising revenue. Surviving papers are left fighting over crumbs as the industry takes in $30 billion a year less in ad revenue than it did in 2005.

A graf from Buffett’s 2020 letter that shows how coldly and the insurance business see the future:

Mistakes in assessing insurance risks can be huge and can take many years–even decades–to surface and ripen. (Think asbestos.) A major catastrophe that will dwarf hurricanes Katrina and Michael will occur–perhaps tomorrow, perhaps many decades from now. “The Big One” may come from a traditional source, such as wind or earthquake, or it may be a total surprise involving, say, a cyber attack having disastrous consequences beyond anything insurers now contemplate. When such a mega-catastrophe strikes, Berkshire will get its share of the losses and they will be big–very big…..

And here’s Buffet on the ability of some people to invest money—but be aware that many fine citizens are not good at it:

Here, a pause is due: I’d like you to know that almost all of the directors I have met over the years have been decent, likable and intelligent. They dressed well, made good neighbors and were fine citizens. I’ve enjoyed their company. Among the group are some men and women that I would not have met except for our mutual board service and who have become close friends.

Nevertheless, many of these good souls are people whom I would never have chosen to handle money or business matters. It simply was not their game.

They, in turn, would never have asked me for help in removing a tooth, decorating their home or improving their golf swing. Moreover, if I were ever scheduled to appear on Dancing With the Stars, I would immediately seek refuge in the Witness Protection Program. We are all duds at one thing or another. For most of us, the list is long. The important point to recognize is that if you are Bobby Fischer, you must play only chess for money.

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