The broader question is whether newspapers can evolve quickly enough to revive a decaying business. They’re confronting shrinking demand for print advertising, declining circulation, and encroachment from Internet companies such as Google Inc. and Facebook Inc. The industry’s ad dollars dropped 6.6 percent in the first six months of 2012 from a year earlier, according to the Newspaper Association of America.
While community papers have an edge over publications in crowded media markets, no one has found a way out of the slump, said Ken Doctor, a media analyst with Outsell Inc. in Burlingame, California.
‘Silver Bullet’
“There’s no silver bullet,” he said. Newspapers in many places had enjoyed a near-monopoly pricing on print advertising, Doctor said. “That’s not coming back -- for anybody.”
Kroeger said last month the company will shutter the Virginia-based Manassas News & Messenger, one of Buffett’s most recent acquisitions, and cut 105 jobs in the process. The newspaper faced too much direct competition from other papers in the area, which includes Washington, and was continuing to lose money, Kroeger said in the World-Herald.
“We didn’t see any way to really turn it back into a profitable enterprise, reliably, so what made the most sense was to just cease publication,” he said.
Other billionaires have tried and failed to turn around the newspaper business. Tribune Co., the owner of the Los Angeles Times and Chicago Tribune, filed for bankruptcy in 2008, one year after a buyout led by real-estate magnate Sam Zell.
Small Bet
Buffett’s gamble is less ambitious. His recent spending spree on newspapers amounted to less than two-tenths of 1 percent of Berkshire’s total market value.
He also may have more success than others, said Don Graham, chairman and chief executive officer of Washington Post Co. Part of Berkshire’s strategy is focusing on smaller market papers that don’t have to compete with other media, Graham said.