The newspaper industry is savoring some good news with the announcement that Berkshire Hathaway is taking over the Omaha World-Herald Company for $150 million. The deal represents a further expansion of newspaper holdings by Warren Buffett’s legendary company.
Berkshire Hathaway released a statement on Wednesday that it is in the process of acquiring the flagship Omaha World-Herald as well as six other Nebraska daily papers and several weeklies.
“The World-Herald delivers solid profits and is one of the best-run newspapers in America,” said Buffett whose company also owns the Buffalo News and is the largest holder of Washington Post (NYSE: WPO) stock.
Buffett explained his view of the purchase and the industry to the World-Herald:
“It’s not a crazy price. It certainly is not a bargain price,” he said. “I was willing to pay more than I would have for some papers I don’t feel have as good of a future.”
He said that the newspaper industry has obviously been going through many challenges in the digital age. But he said the Buffalo News has dealt with its problems and is profitable, as is the World-Herald.
“I think newspapers . . . have a decent future. It won’t be like the past. But there are still a lot of things newspapers can do better than any other media. They not only can be sustained, but are important.”
Buffett has in the past questioned the direction of the newspaper industry, including its decision to give away content. He has also called the Buffalo News holding “not totally rational” and told a shareholder meeting in 2009 that he wouldn’t buy most US newspapers “at any price.”
But he seems to have overcome these misgivings as Berkshire Hathaway will pay $150 million in cash and take on another $50 million to acquire the Nebraska papers. According to the CEO of the Omaha World-Herald Company, the acquisition will allow it to escape a restrictive ownership structure which has forced the company to continually reacquire controlling share interests from outgoing employees.
The World-Herald story added that the financial wizard still reads five newspapers a day and that he has a sentimental attachment to them. Buffett says his parents met at a Nebraska student newspaper and that the $5,000 he earned as a paper boy formed the basis of the investment that eventually grew into Berkshire Hathaway.