In 1969, Warren Buffett wrote a now famous letter to his investment partners telling them that he could find no value in the marketplace and wanted to dissolve the partnership and return their money.
He concluded there were only two businesses with relative value, one of which was Berkshire Hathaway. As an option to his liquidation he offered participants the choice of owning a pro-rata share of these two companies.
Mr. Buffett’s enormous personal wealth is a testament to the providence of those who also stayed the course. As the antithesis of perceived Wall Street greed, he has pledged some $30 billion to the Bill and Melinda Gates Foundation.
Throughout the ensuing 50-plus years Buffett has arguably been the nation’s most famous investor and certainly one of the most successful. He even eschewed technology company investments, ostensibly because he did not understand them, and deftly avoided the pitfall of the dot-com bust.
Of course, he never has invested in stocks and has never paid attention to the emotions of the market. He has bought companies when he perceived value.
In recent years he has been buying newspapers. You know, yesterday’s media, but interestingly, only small-market companies. So what does he know that the rest of us do not?
In 1986, the Atlanta Journal-Constitution hired Bill Kovach, Washington bureau chief of the New York Times, to be its new editor.
The appointment led to a stormy two years during which some superb investigative reporting eventually netted two Pulitzers and nominations for more, not an everyday occurrence for that newspaper.
The reporting was ramped up, with more coverage of national and international issues and some critical stories on Atlanta businesses; even picking on mighty Coca-Cola. As a result, many in the community were proud of what they perceived as a vastly improved newspaper.
Then, in November 1988, Kovach was fired.
His dismissal ignited a storm of indignation among the cognescenti in the city. There was a protest march down Marietta Street, in front of the newspaper’s offices, in which luminaries such as author Pat Conroy and leading intellectual and Morehouse professor Michael Lomax participated.
The firing and the vilification of the paper’s owners, Cox Enterprises, by leading journalists made national news, and the commentary overwhelmingly favored Kovach.
Cox was insistent on returning to its sphere in journalism, not as a competitor to the New York Times or USA Today, and Kovach was out. Furman Bisher, one of the more prominent sports writers of the period, said at the time: “Maybe now we can get back to covering Dixie like the dew” — the newspaper’s tag line.
Therein is the message: local news still sells, and a newspaper must serve its market in order to survive.
Newspaper editors know we will get our national and international news analysis from a host of different media sources, but there is steady demand for comprehensive coverage of local sports, local business, lifestyle and even St. Patrick’s Day festivities.
The in-depth coverage and reporting by the Savannah Morning News on the 2012 brouhaha over the former city manager says it all. You won’t get that from TV video clips and sound bites.
At the empirical level it is pretty straightforward: the life blood of any newspaper is advertising revenue, and in order to give advertisers their money’s worth it must reach their target market. In order to do that, the paper must appeal to local readers.
To Mr. Buffett’s way of thinking, that will continue to be a profitable business.
So the media is writing the obituary of print, and the national newspapers and newsmagazines are struggling in the new era to find their footing and relevance in the Internet Age.
Time Warner has done the unthinkable and is spinning-off Time Inc., the magazine portfolio, into a stand-alone company.
Meanwhile, Mr. Buffet has once again shrewdly found value in an investment largely ignored by the rest of Wall Street. At last count he was up to 28 newspapers in the Berkshire Hathaway fold, and it would not surprise me at all if he is not the only one who sees opportunity where the many others see only a threat.
Russ Wigh is a professor of business. Email him at rdwigh@bellsouth.net.