Within 72 hours, the Boston Globe ($70 million) and the Washington Post ($250 million) were sold for $320 million, each representing a small fraction of its value as recently as 10 years ago. Meanwhile, during the past year and a half, Warren Buffett’s Berkshire Hathaway has invested a similar sum, $344 million, in purchasing 28 relatively small, local daily newspapers.
As a result of the Internet providing free coverage of both national and international news, newspapers serving large metropolitan areas such as Washington, D.C., and Boston have experienced rapid declines in circulation, advertising and profits. But newspapers serving small communities have been fairly stable financially, because, newspapers — despite the Internet — remain the primary source of local news to these communities about such subjects as high school football, the mayor, or taxes.
Buffett believes that newspapers delivering comprehensive and reliable information to tightly bound communities and having a pay format Internet strategy will remain viable for a long time. At appropriate prices (very low multiple to current earnings), Berkshire Hathaway plans to purchase additional newspapers and expects to earn acceptable rates of return on its investment.