Billionaire investor Warren Buffett devoted several pages of his annual letter to Berkshire Hathaway Inc. shareholders to explaining why he’s been investing in newspapers lately.
Buffett, the chairman of Berkshire Hathaway, said the company has bought 28 daily newspapers over the past 15 months for $344 million. He prefers papers to be locally oriented and likes them even better if they are monopolies, he said.
“If you want to know what’s going on in your town – whether the news is about the mayor or taxes or high school football – there is no substitute for a local newspaper that is doing its job,’’ Buffett wrote in the letter released Friday.
The key will be who figures out how to successfully charge online for their content, Buffett said. He cited the Wall Street Journal as having adopted a pay model early on. Among local newspapers, he said the Arkansas Democrat-Gazette, published by Walter Hussman, Jr., has been successful at getting subscribers to pay for access online.
“Whatever works best – and the answer is not yet clear – will be copied widely,’’ Buffett said.
The two largest papers Berkshire owns -- The Buffalo News and the Omaha World-Herald -- saw their revenues slide 3 percent last year, Buffett said, better than some peers. The company shut down another paper it owned, The News and Messenger in Manassas, Va.,
Buffett said each paper he owns will be independent and responsible for their own news coverage and editorial opinions. “I voted for Obama,” he wrote. “Of our 12 dailies that endorsed a presidential candidate, 10 opted for Romney.”
Buffett said he expects newspapers with strong followings and a “sensible Internet strategy” to remain viable for a long time. Success won’t come from cutting news content or frequency of publication, he said. “Indeed, skimpy news coverage will almost certainly lead to skimpy readership.”