Buffett Buys Newspapers

Warren Buffett surprised investors when he said Berkshire Hathaway (NYSE: BRK-A) may buy more newspapers. It already owns the daily in Buffalo and recently bought the paper in Omaha, which is where his conglomerate is headquatered, for $200 million. Buffett may view newspaper ownership as an inexpensive hobby, at least inexpensive for a company the size of Berkshire.

It is just as likely that he sees a bottom in the industry. He has had a ring side view of newspapers for some time. He was an investor in the IPO of The Washington Post Company (NYSE: WPO), and sat on its board for years. Buffett can also see that revenue erosion in the industry as slowed, or at some chains, stopped. Cost cuts have made margins at least tolerable. Among the stocks of the largest newspaper chains, several appear to have stopped sliding. This is the case with The New York Times Company (NYSE: NYT), Gannett (NYSE: GCI), and even battered McClatchy (NYSE: MCI) which is heavily burdened with debt.

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