Buffett: Newspaper Owners Face Long-Term Challenges

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Warren Buffett said he believes newspaper ownership may shift from public companies interested in profits to owners driven by motives like public service or ego. But whoever runs newspapers will face long-term challenges, he said.

The $5 billion takeover bid by Rupert Murdoch’s News Corp. for Dow Jones may not be the final offer for the owner of The Wall Street Journal, said Buffett, a board member of The Washington Post Co.

Buffett said Dow Jones carries an extra cachet because of The Journal’s reputation and broad international reach, and this could lure higher bids.

The billionaire doesn’t want to give up the throne at his holding company anytime soon, but the 76-year-old is preparing for that day.

And Buffett said Sunday he wants to buy a “huge” business for his Berkshire Hathaway conglomerate and would unload other holdings to do so.

“We have plenty of things to sell if we needed to, but the cash is coming in faster than the ideas,” Buffett told a news conference in Omaha, site of Berkshire’s annual shareholders meeting Saturday.

The company ended March with $46 billion in cash and nearly $90 billion in cash and fixed-income securities.

Many details remain secret about Buffett’s succession plan, but the question of who might become Berkshire Hathaway’s chief investment officer is getting a lot of attention. Buffett said in March he planned to hire one or more candidates for that job soon on a trial basis.

Sunday, he said whoever he hires should expect to be paid based on how well their investments perform.

“I would give them a small salary and then pay them a percentage based on how they outperformed the S&P on a five-year average,” Buffett said.

When he returns to the office today, Buffett will encounter the 600 to 700 applications he’s already received for that post.

Buffett said the investment managers he hires won’t necessarily have to live in Omaha, where the company’s 19-person headquarters is based.

“My notion would be to let them live wherever they feel best about life,” Buffett said.

Of the three or four investment managers Buffett plans to hire, he has said one, maybe two, would eventually become the chief investment officer.

Buffett is dividing his duties into three jobs as part of his succession plan.

The only part spelled out is the job of chairman. Buffett has said that when he dies, his son Howard, a board member, will take the job to ensure Berkshire’s culture is preserved.

Buffett said he and the board have already picked three managers of companies Berkshire owns who could succeed him as chief executive tomorrow, if the need arose.

Four Berkshire managers who keep coming up as possible successors are: Ajit Jain, who runs Berkshire’s reinsurance unit; Tony Nicely, chief executive of Berkshire subsidiary Geico; Richard Santulli of NetJets; and David Sokol, CEO of MidAmerican Energy.

But Buffett said again Sunday that he still loves what he does and is in good health.

On other topics, Buffett elaborated on Berkshire’s surprise move this year to become the biggest shareholder in Burlington Northern Sante Fe and his company’s purchase of stakes in two unnamed North American railroads.

Buffett may have hinted at the identity of one of the two railroads when answering a question about Canadian businesses he likes. “The guy at Canadian National has done the best job of anybody in the railroad industry,” he said.

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