It’s not often that we see the “Oracle of Omaha” stumped. It seems that trends in the newspaper world finally got him though, as Warren Buffett finally had to concede that the industry isn’t what it once was.
“Newspapers are going to go downhill… the transition to the internet so far hasn’t worked in digital. Local newspapers continue to decline at a very significant rate. Even with the economy improving, circulation goes down, advertising goes down, and it goes down in prosperous cities, it goes down in small towns— that’s what amazes me… Where there’s no local TV station obviously, and there’s nothing on the internet that tells you what’s going on in a town like that, but the circulation just goes down every month.”
This is kind of a big deal for Buffett to say, as when the octogenarian began investing in local newspapers his basis was that newspapers would continue to be supreme in small towns.
There are a couple of reasons that Buffett thinks that newspapers are in decline, one of which being a lack of news. He commented that quality has consistently gotten worse, and the paper doesn’t tell you nearly as much now as it did 3 years ago. Buffett also credits some of the newspapers lack of success to the decision to start giving away digital content for free.
This is as close as you’ll probably get to Warren Buffett admitting defeat with the newspaper industry, as he plans on keeping all of these investments intact. Most of the papers owned by Berkshire Hathaway are small to mid-sized markets, and the company owns 32 daily papers and 47 weekly papers.
“We would never sell a newspaper… I want to be the last guy standing,” Buffett insists.