Buffett's sale of newspapers a bad sign for local journalism; owners must maintain quality and credibility to survive

By Al Cross

Director, Institute for Rural Journalism and Community Issues

In 2012, when billionaire investor Warren Buffett's Berkshire Hathaway started a spree of buying newspapers, most of them community weeklies, those of us who look after local journalism were heartened. Here was the Oracle of Omaha, putting his money (and BH shareholders' money) where his mouth had long been. He said at the time:

I believe newspapers that intensively cover their communities will have a good future. It’s your job to make your paper indispensable to anyone who cares about what is going on in your city or town. That will mean both maintaining your news hole; a newspaper that reduces its coverage of the news important to its community is certain to reduce its readership as well and thoroughly covering all aspects of area life, particularly local sports. No one has ever stopped reading when half-way through a story that was about them or their neighbors.

Warren Buffett on May 5, 2019 (Associated Press photo by Nati Harnik)

In other words, maintain quality journalism, and you can stay in business and still render public service. But Buffett apparently did not anticipate how much local advertising would shift from newspapers to the digital space. Last year, he told Sam Ro of Yahoo Finance that the newspaper business had evolved "from monopoly to franchise to competitive to — toast. They're going to disappear,” except papers that have national audiences.

So now he is selling his remaining 31 newspapers for $140 million to Lee Enterprises of Davenport, Iowa, which has managed BH Media for the last year and a half and will now borrow money from Berkshire Hathaway, which will keep the papers' real estate — their main asset. It has to be a bad sign for local journalism when a major newspaper owner loses confidence in the industry, but it shouldn't be taken as a signal of doom, Poynter Institute media analyst Rick Edmonds wrote:

For those who may not follow the industry closely, Buffett’s exit will probably be read as a high-profile vote of no confidence. However, there is no reason to think any of the papers will shut down — though they may well shrink further and eliminate print editions some days of the week over the next several years. Buffett was well aware of the digital transformation in progress. But given his age (89) I suspect he had a particular affection for print. And he was not alone in thinking that daily print remains a key to brand identity and community influence. So I do take his exit as one more marker of big changes in the works and of falling investor confidence. One of my industry sources summarized the news as “take my newspapers … please.”

Walter Hussman Jr.

The future of the newspaper industry is not on paper, as Arkansas Democrat-Gazette Publisher Walter Hussman Jr. is trying to persuade his readers, offering them free iPads to shift to the digital version of the Democrat-Gazette. He and other publishers know that with advertisers fleeing, they must get more of their revenue from the audience. But to do that, newspapers must maintain the trust of their audiences; and to maintain trust and the credibility that goes with it, they must maintain the sort of quality that Buffett talked about. And in a time when the news media are under attack, impartiality is essential to their credibility. Hussman wrote in an op-ed in The Wall Street Journal a few months ago:

We seem to be reverting to 19th-century ideas about news and partisanship. While cable-news networks have all done good journalism, they also feature highly opinionated commentators and shows. The problem is that there isn’t a sharp delineation between news and opinion, creating the perception that CNN, MSNBC and Fox News each have their own agenda. If community journalism in America doesn’t survive its economic challenges and we end up with three national newspapers, it is important that the public’s perception of those newspapers not mirror their perception of the cable networks. The solution is for reporters, editors and news executives to look inward, and not only to recommit ourselves to being fair, objective and impartial in our reporting, but to convince the public we are doing it. We also need to separate and clearly label news and opinion.

Hussman's papers keep posted on their home and editorial pages their core values, which begin with impartiality and close with a quote from Hussman's father: "A newspaper has five constituencies, including first its readers, then advertisers, then employees, then creditors, then shareholders. As long as the newspaper keeps those constituencies in that order, especially its readers first, all constituencies will be well served."

A newspaper needs to remind readers, and potential readers, what it stands for and how it works. And everyone in journalism and the news business needs to keep reminding their audiences (and potential audiences, via social media) how they are supposed to work. Here's a "How we work" elevator speech or page blurb I published almost a year ago:

We practice journalism, which reports facts. To do that, we verify information, or we attribute it to someone else. That is called the discipline of verification, and it is the essence of the news media. There are two other types of information media: social media, which have no discipline, much less verification; and strategic media, which try to sell you something: goods, services, ideas, politicians, causes, beliefs, etc.

Newspapers once relied on one form of strategic media, advertising, for most of their income. Today, social media get more of the ad money, so newspapers must get more income from the only other reliable place they can get it: their readers, in the form of subscriptions or single-copy sales. As you might guess, we prefer subscribers, so we hope to earn your respect and loyalty.

How do we do that? By being honest and straightforward about our business.

That means we must separate fact from opinion, reserving our own views for the editorial page. Of course, our views have some influence over what news we choose to cover, so if you think we’re not covering what should be covered, or have failed to separate fact from opinion, or make another mistake, we want you to tell us.

Every newspaper in America needs to trumpet how it works, and the values that guide it; and to remind readers and potential readers that newspapers are the primary fact-finders in democracy, from Washington to the smallest places. Please join us in doing that.