Warren Buffett is leaving the Washington Post Co. (NYSE: WPO) board when his current term expires in May. He first served on the board from 1974 to 1986 and returned in 1996, but his connection with the company goes back even further to his days delivering the paper. The Berkshire Hathaway chairman was one of Katharine Graham’s top advisers and has played the same role for her son Don, the current chairman and CEO.
The news instantly sent the stock down sharply although it has been climbing back. Not only has Buffett, 80, been considered a linchpin of the board, Berkshire Hathaway is the company’s largest institutional shareholder with 1.7 million shares, nearly 24 percent of the shares as of Sept. 30, 2010 and his departure could signal a change. Buffett doesn’t own any shares directly.
Buffett has been a staunch supporter of newspapers — Berkshire Hathaway also owns the Buffalo News — and a firm realist at the same time. At the 2009 Berkshire Hathaway annual meeting, he said he would not give up newspapers personally but “we would not buy them at any price. They have the possibility of going to unending losses.” He encouraged the Grahams’ diversification.
The other members of the 11-director board include Graham, his niece Katharine Weymouth, publisher of the Washington Post; Barry Diller, chairmen of IAC; (NSDQ: IACI) and Lee Bollinger, president of Columbia. The board met today.
In today’s announcement, which dovetailed with an increase in the WaPo dividend, Graham and Buffett each stressed that the flow of advice doesn’t have to stop because he’s retiring from the board. That’s undoubtedly true. (I’ve confirmed that Buffett will act as an informal adviser, not a paid consultant.)
But the news unleashed an instant flood of speculation, including a suggestion that Buiffett is trying to distance himself from regulatory investigations of the company’s Kaplan division over its student loans. But Buffett isn’t leaving until May — and there’s no real way for even a former director to distance himself from decisions made during his tenure, particularly when he has been on hand for the last 15 years.