If you’ve been paying attention to the world of publishing, the announcement in late January that billionaire Warren Buffett was selling his 31 newspapers to Lee Enterprises for $140 million wasn’t a surprise.
As Nieman Lab reported, newspapers had long been riding in the backseat of Buffett’s business investments at Berkshire Hathaway. For example, his annual shareholder’s letter in 2014 and 2015 had no mentions of his newspaper properties. Then, in 2018, Lee Enterprises joined BH Media Group, Inc. in an agreement to manage Berkshire Hathaway’s newspaper and digital operations. So, by the time Buffett was reported in 2019 of calling most newspapers “toast,” the writing was pretty much on the wall.
He wasn’t going to be the one to save the newspaper industry.
Although Buffett had already been a longtime newspaper owner, his buying spree of local newspapers over the last decade caused him to be grouped together with a new crop of billionaires buying newspapers. Billionaires like Jeff Bezos at the Washington Post, John Henry at the Boston Globe, Glen Taylor at the Minneapolis Star-Tribune and Patrick Soon-Shiong at the Los Angeles Times who have deep pockets.
Now that Buffett has left the playing field, which one of these billionaires is now tasked with saving the industry? Or will there ever come a day when Bezos will also leave the publishing business? If that is the case, I don’t think news publishers should worry.
At least one publisher agrees with me.
Joey Young is the owner of Kansas Publishing Ventures, a company that publishes six weekly newspapers: The Clarion, Newton Now, Harvey County Independent, Hesston Record, McPherson News-Ledger and Hillsboro Free Press. E&P publisher Mike Blinder recently interviewed him for an E&P Reports podcast.
Young also maintains a blog called the Newspaper Disruptor, and a day after the sale announcement of Buffett’s papers, he shared his thoughts in a column titled “Why Buffett Selling His Papers Doesn’t Bother Me.” Obviously, that caught my interest.
“While I had hopes that Buffett would figure out how big public companies like Berkshire-Hathaway could make national newspaper chains work in a public investment environment, I was dubious it would work when he got into the business. Newspapers aren’t textile mills, Coke, or insurance companies,” Young wrote. “Everything I know about newspapers is that when investors are involved at a national level, with no connection to the communities the newspapers serve, there isn’t a lot of hope for success.”
Young pointed out that when big newspaper public companies had to look for cost savings they cut—which is unfortunately what Buffett ended up doing to make things work for his company.
“There was no cure-all for the publicly traded companies, at least not one Buffett and Berkshire-Hathaway would figure out,” Young concluded.
It’s not publishers who should be worried, Young said, but big public chains who should be.
That could be the case. News Matters, a News Guild project for Digital First Media workers, recently reported Alden Global Digital, “the New York vulture hedge fund gutting Digital First Media newspapers” has acquired a $9.2 million stake in Lee Enterprises (representing a 5.9 percent stake in Lee).
“Some media observers expect Alden to quickly increase its stake in Lee,” wrote Julie Reynolds. “Alden had similarly bought a relatively small stake in Tribune Publishing last year before taking the plunge and acquiring nearly a third of the company. Alden now appears poised to attempt a takeover of Tribune next summer, when a contract prohibiting the hedge fund from acquiring more shares expires on June 30.”
With GateHouse merging with Gannett last year, the reality of Alden taking over Lee and/or Tribune now seems plausible. Given Alden’s track record, we most certainly will see more “gutting.”
So, what are some ways we can save ourselves? First, don’t give up. Next, check out our 10 News Publishers That Do It Right.