Buffett says free news isn't sustainable
Warren Buffett, whose Berkshire Hathaway fund struck a deal this month to acquire 63 newspapers, said he may buy more publications as the industry rethinks whether to offer free content on the Internet.
"This is an unsustainable model and certain of our papers are already making progress in moving to something that makes more sense," the legendary investor wrote in a letter to editors and publishers of Berkshire’s daily newspapers.
"We want your best thinking as we work out the blend of digital and print that will attract both the audience and the revenue we need."
Buffett is adding to Berkshire’s newspaper holdings with the $142 million deal announced on May 17th for Media General publications including the Richmond Times-Dispatch of Virginia.
The billionaire, who bought the Buffalo News in 1977 and said in 2009 that newspapers have the potential for unending losses, is now betting that papers with a community focus can profit as they change their models.
While circulation may slip, papers only fail when there are dailies competing in the same town, a publication forfeits its position as the primary source of locally important information or the market doesn’t have a sense of identity, he said.
"We don’t face those problems," Buffett, 81, wrote in the letter dated yesterday and posted on the website of Berkshire’s Omaha World-Herald, which is in the Nebraska town where Buffett’s company is based. "Berkshire will probably purchase more papers in the next few years. We will favour towns and cities with a strong sense of community.”
The newspaper industry, suffering drops in print advertising, has recently embraced digital subscription plans. The New York Times Media Group began charging readers to access its news stories online last year, attracting about 454,000 paying subscribers as of March. The so-called paywall is estimated to bring in $125 million next year for Times Co., according to Douglas Arthur, an analyst at Evercore Partners.
Gannett Co, owner of 82 daily newspapers, said this year it would begin charging readers to access news content online, except for flagship USA Today.
Buffett, a supporter of President Barack Obama and an advocate of higher taxes on the wealthy, said the newspapers would remain independent in their coverage of public policy.
“I have some strong political views, but Berkshire owns the paper - I don’t,” Buffett wrote in the letter. “And Berkshire will always be non-political.”
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