Warren Buffett, the investor famous for betting on aging industries like railroads and insurance, is now trying to pull off something other billionaires have tried and failed to do: save the newspaper business.
His company, Berkshire Hathaway Inc., has spent more than $342 million on 80 newspapers -- including its hometown paper, the Omaha World-Herald -- and used them to build a new business unit. And Buffett isn’t done. Though the division announced plans to close an underperforming newspaper in Virginia last month, he’s said that more acquisitions may be in store.
Terry Kroeger, the newly installed chief of Buffett’s newspaper empire, runs the operation from a 15th-floor office overlooking the expanse of wide streets that make up Omaha, Nebraska. The goal, Kroeger says, is to reintroduce newspapers to what they do best: delivering urgent, local information that readers can’t get elsewhere -- and coaxing people into paying for it. He’s also creating offshoot websites with corporate sponsors and branching out into Internet video.
“We’ve got to evolve with what people are looking for, and I think our industry has done kind of a crappy job with that,” Kroeger, 50, said in an interview.
Kroeger, who started working at the World-Herald 27 years ago, once kept a pair of sneakers under his desk to mow the lawn whenever the grass around the office building got unsightly. Just like in those early days, it’s essential to charge readers for the reporting that journalists provide, he said. The World- Herald erected a so-called pay wall last year, and Kroeger aims to roll out the same approach across his other newspapers.
No Giveaways
“You can’t spend millions of dollars assembling something and then give it away,” he said, endorsing a strategy adopted by the New York Times, News Corp.’s Wall Street Journal and most of Gannett Co.’s papers.
The World-Herald, Buffett’s flagship paper, will see its revenue decline this year as circulation shrinks, Kroeger said. It generates about $100 million annually and remains profitable, said Kroeger, who declined to elaborate on its finances.
Buffett’s acquisition of 63 newspapers from Media General Inc. earlier this year accounts for most of the newspaper unit. Based on Media General statements, those newspapers generated $299.6 million last year, a 50 percent decline from 2006.
Kroeger said that Buffett’s total newspaper division is in the black and should remain so, despite the shrinking revenue.