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Warren Buffett is ready to buy more newspapers, and he said Thursday his Berkshire Hathaway Inc. is the preferred buyer for owners who care about their newspapers.
Buffett, who is attending a Microsoft summit meeting in Washington, told The World-Herald by phone that he has no other purchases pending beyond the $142 million purchase of 63 newspapers from Media General Inc., a deal announced Thursday morning.
“I wouldn't be surprised if, over time, more things come up,” he said. “There aren't a lot of buyers in the field whose checks will clear. ... Any time we can add properties we like, to management we like, at a price we like, we're ready to go.”
Some potential buyers may buy newspapers and try to sell them at a profit later, he said, but newspaper owners know Berkshire isn't like that. “If they care about the paper, they know it's going to a place where it's going to be permanent.”
Other potential buyers showed interest in the Media General newspapers, Buffett said, but that didn't lead to a bidding war, partly because Berkshire also offered to refinance Media General's debt with a $400 million loan.
“We were totally the right one,” he said. “They're all done now in terms of what they have to do. ... We came up with a solution to all of their problems, and they knew we were good for it.”
Buffett he said he is familiar with the 17 daily newspapers he is buying from Media General but not specifically the dozens of weeklies, shoppers and other publications that are part of the deal.
“I know the dailies,” Buffett said. “They're all doing OK, to varying degrees, and I think they'll do even better when we get our people in there. They're keepers.”
He said Berkshire's purchase of The Omaha World-Herald Co. in December was the “starting point” for Berkshire to add more newspapers. (Berkshire already owns the Buffalo News and owns shares of the Washington Post.)
Of the newest additions, Buffett said: “We wouldn't have bought them without knowing we have the management to put in there. The fact that we bought the World-Herald is a material fact in doing this. The World-Herald led to this, in effect.
“You need a management team, and you've got to have confidence in their ability and trust, and we've got it here. That was a real factor, and that will be a factor in future acquisitions, if we make any.”
Since Berkshire bought The World-Herald, Buffett said, Marc Hamburg, Berkshire's chief financial officer, and Ted Weschler, one of Berkshire's investment managers, have worked with World-Herald managers “and feel terrific about them,” Buffett said. “We're enormously pleased with the group we've got at the World-Herald and management.”
Buffett said the $142 million price for the Media General newspapers reflects the market price for the newspapers according to their circulation, which in turn determines advertising rates. Berkshire paid $200 million for The World-Herald chain, which has a smaller circulation than the combined Media General newspapers.
Buffett said The World-Herald price was based on a formula that the newspaper company used to determine the price of shares owned by its employees. “I wasn't going to buy it below the formula price,” a move he said might not have been “feasible.”
Even though The World-Herald price probably was higher than the market price, he said, “the difference wasn't that big.” The Media General purchase price also reflected Berkshire's ability to resolve Media General's debt problems, he said.
Buffett said the newspapers he is buying have something in common with The World-Herald.
“They're in good communities,” he said, and it's important that their potential readers care about their communities. “People buy papers to learn something that they don't know that they want to know.”
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