Wednesday, May 23, 2012
The 142 million dollar question!
The 142 million dollar question--"Why did Warren Buffet spend 142 million dollars on a bunch of newspapers when everyone knows that print is dead?" Perhaps the answer is that Warren Buffet is not "everyone," in fact he is one of the smartest business people in American history. The secret of Buffet's success is his knack for seeing value that less astute observers miss. While most investors were listening to the "experts" he took a look at the financials of the publishing industry. In his typical understated manner, Buffet said "I think the economics (of newspapers) will work out OK. It's nothing like the old days, but I think it will work out OK." One of the keystones of Buffet's investing strategy is his belief in buying businesses that provide good value to their customers and fill a marlet need. On this subject he said "Newspapers are still primary in many areas. They still tell me something primary that I can't find elsewhere." Warren Buffet takes a long-term view, buying firms that are positioned for consistent earnings and incremental growth. This is why he chose to prchase a firm heavily weighted toward community newspapers. Here's what the "sage of Omaha" said about our industry "In towns and cities where there is a strong sense of community, there is no more important institution than the local paper." The next time someone tells you that "print is dead", tell them that the most successful business person in the US strongly disagrees.