You own a bunch of newspapers -- little, local newspapers, that you bought from Media General just before it disintegrated completely, finally selling its TV holdings to Nexstar. When you made that buy, I wondered: WHY?!
It was ironically the president of Nexstar, Perry Sook, when they bought the TV station I worked for around the same time, who dismissed newspapers as a dying medium as he spoke to us, his new employees. Nexstar, I was to learn, also wasn't so much interested in traditional broadcast TV either. The folks from corporate arrived with their eyes primarily on what our web presence was ... and of course sales and reducing expenses, especially human ones. But that rant is for another day.
It is a truism (and thus nothing particularly novel or wise when Sook said it) that print is dying, eclipsed by free internet content. So why would one of the richest men in America, the Oracle of Omaha, want a dying industry?
Fortune had a theory they posited last February: "In effect, Buffett appears to own newspapers not because he believes they have a future, but because he believes that they can produce cash flow—albeit declining amounts—while they are dying, and that this can be used for other investments. Berkshire Hathaway owns a number of investments of this kind, like Dairy Queen and See’s Candies."
And, when I have asked people, a range of theories have been offered, from classified advertising to selling assets and real estate.
But this is all in contrast to the other big-name newspaper buy: Jeff Bezos' purchase of The Washington Post. That buy seemed obvious to me, and The New York Times quoted him explaining it at a conference in June: "Mr. Bezos said he bought the newspaper because he wanted to make it into a more powerful national — and even global — publication, and that The Post was well situated to be a watchdog over the leaders of the world’s most powerful country. 'If it had been a financially upside-down salty snack food company, I would not have bought it,' he said."
Two thoughts are there, I think, when that quote is translated (from last to first):
1. He bought a media company because he wanted a media company, not because he wanted assets or real estate or whatever.
2. He bought a media company because he wanted media, or rather the product that makes it a media company rather than a salty snack food company. He wants -- he needs content.
(And, by the way, what's with all this hating on snack treats? Dairy Queen is dying? Another of life's little treats evaporating? But that's neither here nor there.)
Bezos has a massive technology operation geared at delivering mostly stuff: books, then CDs, and now just about anything, including digital print, audio, and video. Amazon is producing its own TV shows and movies, and unashamedly trolling for more. Unlike many other internet-centric information companies, Bezos has started making his own stuff. (And this trend of being a content deliverer without producing content is indeed something that's bothered me for a while.)
So Where's It All Going?
As CNN's Brian Stelter reported (in what rates right up there as a lazy, year-end review), there's been a lot of change just in 2017. And that's just the tail end of this years-long series of changes. Is there a traceable line that we can use to see where it's going?
Apparently, no. Take, for example, this graphically lively but oh so wrong series of predictions from Nieman Lab. "My prediction is not solely that media leadership will be feminized, but that news itself will take on a new, more feminine, tone," says one. Nice, but irrelevant. How about: "In way too many stories, the idea that tens of millions of people could lose health insurance amounted to a throwaway line. Those are real people, people like my sister, who will literally die if she can’t afford her medicine." Undoubtedly important, but what exactly does that have to do with the future of journalism? Or the idea that media will go into merchandising, if the haven't already.
Even when they get on subject, they've arrived at the station too late for the train. "Not only is there a lot more investment into video journalism, television’s business models, broadcast or cable, are also dominating: from video ads before or in the middle of a clip, product placement, and monthly subscriptions. This is while digital or analogue ads for text-based media are plummeting," says a predictor. No one's happier than I, a laborer in the field of video, to hear video's the future. But then why are broadcasters seeing audiences shrink while they pay consultants tons of money to find those wandering eyeballs?
So, it's the internet, right? Well, one review after another, time and again, very rationally argues that the current news aggregator models, despite a shift to videos, just aren't working. In the end, as with any business, you have to ask where the money is coming from.
So Why Newspapers?
But here's the thing, Mr. Buffett. Did you really buy newspapers just because they would produce some paltry profits as their orbits slowly decayed and they burned up in the new media star? Is the fact that they are, in their way, creative endeavors produced by people (people, as in real people) making stories and pictures out of ephemeral life and experience not in any way part of the equation? Well, hell, you might as well have bought them for the real estate.
In the internet age, the information economy, I can't believe that this information product has no value. As I said in my old posting: Sooner or later, you have to have a source. You can't just spend your time repackaging other work ... if you don't have that other work.
“Newspapers continue to reign supreme in the delivery of local news,” you said when you bought them, according to Fortune. “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.”
That's the key. Bezos bought the Post and is now actually expanding staff because he was buying the content, not the package. Buying newspapers for the newspaper is like buying Coca-Cola for the two-liter bottle.
Now, the Post is this message writ large. It does have a market, one others -- probably less successfully because they live only in New York and LA -- are trying to tap into. But you, Mr. Buffett, have always had the advantage of the perspective from flyover country. The Post isn't going to tell you about what's going on in Omaha, and you had a sense of that in that quote just above, that thing you said when you first bought the papers. Now you need to take the next step and understand you didn't buy local papers, you bought local news and the reporters and photographers who gather it and turn it into a salable commodity. The newspaper is just what it's wrapped in.