Why Warren Buffett Thinks Most Newspapers Are “Toast”
Forgive the Oracle of Omaha for sounding more like Captain Obvious here, but readers won’t be surprised to learn that the octogenarian billionaire investor doesn’t have the rosiest outlook for the long-suffering newspaper industry.
Buffett, who through his Berkshire Hathaway BH Media subsidiary owns a veritable print-media empire, said during an interview with Yahoo Finance (which will carry the live stream of Berkshire’s annual shareholder meeting on May 4) released on Tuesday that the newspaper industry is “toast”, and that most print papers (including, presumably, the 30 daily newspapers and 47 weeklies owned by BH) will soon cease to exist as they lose more vital advertising revenue to Internet powerhouses like Google and Facebook.
Fortunately for Berkshire, the decline of the industry won’t have much of an impact on its bottom line because BH bought its newspapers at a “reasonable” price, Buffett said.
As Buffett sees it, the problem with trying to shift to a subscription-based model is two-fold: Consumers once sought out print newspapers not just for the news content, but for the ads. The classifieds included vital information about job opportunities and housing, while supermarkets ran fliers about what products were on special that week. That functionality has largely been subsumed by Craigslist.
“It upsets the people in the newsroom to talk that way, but the ads were the most important editorial content from the standpoint of the reader,” Buffett said.
Between 2006 and 2016, the newspaper industry’s advertising revenue had fallen to nearly a third of what it once was, with newspapers bringing in $18 billion in ad revenue, compared with $49 billion ten years prior.
Today, consumers don’t have much use for local papers because they get their national political news and their national sports news online. What’s left, the local news, just isn’t compelling enough to warrant a subscription for many.
Of course, there are some exceptions. The New York Times, the Washington Post and the Wall Street Journal will survive thanks to their national prominence and a successful shift to digital.
But for most mid-sized regional papers, their fate has already been sealed.
Watch the full interview below: