Billionaire taps inner newsman
Researching deals a little like journalism, Buffett says
Warren Buffett has a soft spot for the news business. He delivered The Washington Post as a teenager, and his Berkshire Hathaway owns more than two dozen papers. He also approaches investing like a reporter would chase a story.
“I consider myself a journalist to some extent,” the 84-year-old billionaire said in a video interview premiering last week as part of the “Iconic Voices” series at Arizona State University. “I say, ‘Is The Washington Post Co. worth $22 a share?’ in 1973. I say, ‘Is the BNSF railroad worth us paying $34 billion?’ I assign myself the story. It’s my working hypothesis that it is. But then I go and look for the facts.”
Over the past five decades, Buffett built Omaha, Neb.based Berkshire into one of the most valuable companies in the world through stock picks and takeovers. Its operations now include insurers, electric utilities, manufacturers, retailers and one of the largest U.S. railroads. It also has a stock portfolio valued at more than $100 billion.
Last week, Buffett held on to his place at No. 3 on Forbes magazine’s 2015 list of richest people in the world with a worth of $72.7 billion. He was also the biggest gainer on the list with $14.5 billion added to his wealth.
While newspapers have long been part of the Berkshire stable, they’ve become a smaller portion. Three decades ago, the Buffalo News was one of the largest units and worthy of its own section in the company’s annual report. These days, Berkshire doesn’t provide detailed results for its media unit, which includes 30 dailies.
In the interview, conducted by former Forbes publisher and ASU journalism and business professor Jeff Cunningham, Buffett reiterated his prediction that newspaper circulation and earnings would continue to decline in the U.S.
He also explained why he divested about $1.1 billion of stock in Graham Holdings last year. The company changed its name from The Washington Post Co. after selling its flagship newspaper to Amazon.com Chief Executive Officer Jeff Bezos in 2013.
Buffett was a longtime Post board member and confidant of Katharine Graham, the company’s chairman and CEO who died in 2001. After leaving the publisher’s board in 2011, he said he intended to retain the stake, which was purchased for about $11 million in 1973.
“The Washington Post was selling the newspaper, basically, and that changed my forever commitment to it,” Buffett told Cunningham. “There was a very logical deal that could be worked out to redeem our shares that would be good for both the company and for Berkshire.”
In return for Berkshire handing over its Graham Holdings shares, Graham gave up its Berkshire stock, a Miami television station and cash. That structure helped both companies avoid paying capital gains taxes on their appreciated shares.
Buffett also said that he likes long-form journalism and considers the annual reports that companies file to the Securities and Exchange Commission “really longform journalism.” Still, he prefers brief writing when buying a company or making an investment.
“I like to deal with people where I feel a one-page contract would do the job,” he said. “If I have to have 50 pages to protect me against the guy I’m dealing with, I’ll always wonder if I needed 51.”