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Warren Buffett Buys 63 Community Newspapers

Warren Buffett surprised the market last week by announcing he will be investing US$142 million to purchase 63 community newspapers from Virginia-based Media General.

Dubbed the “Oddest Investment Ever” by Forbes, the deal adds 63 community newspapers from the Eastern Seaboard to Berkshire Hathaway’s (Buffett’s company) media portfolio, a portfolio which includes a 23 percent stake in Washington Post Co. Buffett also spent US$200 million to acquire the Omaha World Herald last November. 

“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement yesterday. “The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

The statement is a departure from Buffett’s previous announced views on printed news. In 2009, he famously said, “For most newspapers in the United States, we would not buy them at any price. They have the possibility of nearly unending losses. I do not see anything on the horizon that sees that erosion coming to an end.”

Media General posted a US$83 million loss last year and has failed to turn a profit since 2007. The deal includes a $400 million loan and a $45 million line of credit to Media General and will give Berkshire Hathaway an almost 20 percent stake in the company.

Reuter’s Jack Shafer commented on the purchase, concluding: “Buffett’s recent newspaper acquisitions don’t indicate the industry has returned to health. But if he starts selling, you’ll know that it’s dead.”