That thumping sound you just heard? That was the newspaper industry touching bottom. At least that's what it sounded like to uber-investor Warren Buffett, who just bought a newspaper company that publishes his hometown daily, the Omaha World-Herald, along with a basket of other daily and weekly regional titles.
The Berkshire Hathaway CEO has amassed a $39 billion fortune in large part by recognizing and capitalizing on the hysterical overreaction of other investors, both positive and negative. His world-famous formulation: Be fearful when others are greedy and greedy when others are fearful.
By 2008, the newspaper industry's long slide hadn't yet tipped over into an all-out plummet and many were hopeful it never would, including Rupert Murdoch, who had just bought The Wall Street Journal for $5 billion. Buffett, however, was already plenty fearful.
Though Berkshire held investments in newspapers including the Washington Post Co. and the Buffalo News, he cautioned others to keep their distance, saying most companies "have the possibility of going to just unending losses."
So what's changed? Well, plenty. For one thing, paywall experiments like the one at The New York Times Co. have started to bear fruit, showing that there might be a workable economic model for papers in the age of digital distribution. Moreover, not to put too fine a point on it, newspaper stocks have just gotten an awful lot cheaper. While the price of the World-Herald was not disclosed, Berkshire shareholder and Buffett chronicler Jeff Matthews says it "probably cost next to nothing." And it "delivers solid profits and is one of the best-run papers in America," according to Berkshire.
Be that as it may, it's clear there were considerations at play here beyond cold-eyed capitalism. Buying the World-Herald allows Buffett to perform a civic service for the city he's lived in his entire life by ensuring it will continue to have a locally-owned, editorially-independent newspaper for the foreseeable future. At a time when even big cities are contemplating a newspaper-less future, that's a big gift to give. Leave it to Buffett to find a way to give back while getting richer.