Debate about the future of newspapers and the impact of online information continues, sparked by Berkshire Hathaway Inc.'s purchase of 63 Media General newspapers in a deal that closes later this month.
Specifically, writers are reacting to CEO Warren Buffett's view that community-invested newspapers can succeed.
Under the headline “What Buffett Doesn't Get About Newspapers” on dailyfinance.com, Jeremy Bowman of the Motley Fool wrote:
“Unlike national papers, local news covers events in which volunteers could easily substitute for trained journalists. Do you really need a cub reporter at a high school sports game scribbling notes and snapping pictures when plenty of parents would likely be happy to post a few pictures on Facebook or another website and summarize the game in a paragraph or two? Couldn't a concerned citizen sitting in on a school board accomplish the same thing?”
He said smaller cities and towns may have tighter communities than big cities, but news in small towns often travels simply through gossip, and the need for a local newspaper just isn't as urgent as the need for media on a large scale.
Separately, Simon Kelner, former editor of the British daily The Independent, wrote that although he's never bought a share of stock in his life, he's hoping Buffett, at 81, “hasn't reached an age where his heart is overruling his head.”
“Whether the economics stack up is one thing, but he is surely right about the central role a paper plays in a community, both as town crier and as an overseer of local politics. In Britain, we have lost untold numbers of local papers and we are undoubtedly worse off as a result. ...
“In an age where we lead complicated, individualistic lives full of choice and distraction, the desire to connect with those around us assumes greater importance. This may be the seam that Warren Buffett is mining. I hope that — not for the first time — he's proved right.”
From New York University professor Clay Shirky: “Buffett doesn't understand that business. ... It is disruptive competition for ad dollars, not changing reader engagement, that has sent the industry into a tailspin.
“Without understanding what's in it for advertisers, (Buffett's) exhortation to ‘reign supreme in matters of local importance' has no more strategic value than a halftime cheer; if all it took to run a profitable paper was good local coverage, newspapers would not be in this bind in the first place. ...
“These mistakes don't mean Berkshire Hathaway will lose money on the deal, of course; given the fire-sale price, every one of those papers could close in the next 10 years and Buffett's firm would still make money on interest paid and the underlying real estate.”
He predicted: “Long before the Berkshire Hathaway warrants expire, many of the papers Buffett has invested in will have reduced both print days and their newsroom staff, and journalists will be writing the ‘What went wrong with the Media General deal?' story.”
Margaret Sullivan, news editor of the Berkshire-owned Buffalo (N.Y.) News, of which Buffett is chairman, wrote that Shirky has a “more dour point of view” about newspapers than Buffett.
“Shirky is a seminal thinker, and a well-respected one, on how technology affects media. He's always provocative and often right,” Sullivan wrote. “Then again, Buffett is known as the Oracle of Omaha. We have here a case of dueling crystal balls.
“I don't know whose point of view will prevail when the full story is told. But, in this case, I know who I'm rooting for.”
3 days a week
On a related matter, Buffett said last week that he thinks publishing a newspaper three days a week “is simply unsustainable over the longer term. Either a publication is a newspaper or a periodical, and I think three days a week crosses the line.”
The New Orleans Times-Picayune and newspapers in Mobile, Huntsville and Birmingham, Ala., all owned by the Newhouse family's Advance Publications, announced last month that starting in the fall they would publish print editions three days a week, cut their news staffs and boost online coverage.
Buffett's recent comments about newspapers led New Orleans musician Evan Christopher to post an open letter to Buffett on NolaVie, a website on New Orleans' life and culture.
In a response to Christopher, Buffett wrote that he has been “following the Times-Pic situation with interest. I don't know any of the facts on their profitability but was really surprised when they made the announcement. . . .
“New Orleans seems to me to be a very strongly defined community, and I believe the Times-Pic has high penetration. Therefore, I'm puzzled as to why the economics don't work on a seven-day basis. But I would have to have the detailed figures to make an analysis.
“The one thing I'm quite sure of: It would not work to start a competing paper. I have no insight as to whether the Newhouse family would sell the Times-Pic to a local group. They do not have a history of selling anything. That's something a member of the community should explore. Let me know if you learn more.”
He signed the letter, “Warren Buffett (non-musician)”
BYD Co., the Chinese automaker that is 10 percent owned by Berkshire, is defending the safety of its e6 electric car after a crash and fire killed a taxi driver and two passengers in the southern city of Shenzhen.
The Los Angeles Times reported that BYD issued a statement saying the e6 passed all government tests and, during the two years the cars have been used as taxis, 18 were involved in rear-end collisions with no injuries, fatalities or fires.
The fatal crash occurred when a drunken driver of a Nissan sports car crashed into taxi at 112 miles an hour.
The story quoted auto consultant Michael Dunne, from Indonesia, as saying investors are skittish about BYD's performance.
“When it comes to the technology itself and the reliability and safety of their cars, BYD has not been totally forthcoming with investors,” Dunne said. “They say, ‘Trust us. We know what we're doing, and Warren Buffett wouldn't invest in us unless we were the real deal.'”
But the company has not produced an affordable electric car or introduced one to the United States, even though it opened a U.S. office in Los Angeles. Its gasoline-powered cars have a 3.2 percent share of the Chinese market.
Bidding for a “power lunch” with Buffett begins at 9:30 p.m. Monday and ends at 9:30 p.m. Friday on eBay, with the proceeds to benefit the Glide Foundation of San Francisco.
Over the past 12 years, the annual auction has brought in more than $11.5 million for the anti-poverty charity, which was favored by Buffett's late wife, Susan Thompson Buffett.
Ted Weschler won the last two auctions for a total of $5,252,722, and then Buffett hired him to manage some of Berkshire's investments.
Bidding starts at $25,000. You must be pre-approved to bid. The Smith & Wollensky steak house in New York City is to host the lunch.
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