Buffett's Golden Touch Hits a Snag

Nov. 19, 2012 -- The news media industry is turning a new page. For residents of Prince William County, just outside Washington, D.C., this means they won't be turning pages at all. At least, not the pages of The News and Messenger, their 143-year-old local newspaper.

The life of the five-day-a-week, 10,000 circulation newspaper serving the county's more than 420,000 residents has met its fate. The last edition of the paper will be printed on December 30, at which point its 105 employees will be out of work.

Just last year, World Media Enterprises, a subsidiary of Warren Buffet's Berkshire Hathaway Company, purchased the Media General newspaper chain, giving many hope for the local paper's survival in the digital age. But unlike the paper, the hope was short-lived.

Buffett, one of the wealthiest people in the world and widely considered to be among the most successful investors of the 20th century, had relatively little to lose in this business venture. While newspapers may be a small portion of his empire, Buffett is no small player in the news business. Along with the 63 Media General papers Berkshire bought in May for $142 million, Berkshire Hathaway owns some major papers, including the Omaha World-Herald and the Buffalo News. The company also has a significant stake in The Washington Post and Lee Enterprises.

It may be his own philosophy that best explains his success: "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." No doubt, this business venture was starting to look like a number 1 rule-breaker.

In a letter to readers, World Media Enterprises President Doug Hiemstra said that "business conditions" drove them to their decision to close the paper. "Let me be clear," he said in closing. "World Media remains bullish on community newspapers and our ability to publish news and advertising content on a variety of platforms that is useful to our readers and the communities in which they live."

But for the business tycoon, whether a newspaper survives has much to do with the community residents themselves. "If a citizenry cares little about its community, it will eventually care little about its newspaper," says Buffett.

One of the country's highest-income counties, Manassas is no outsider in the changing times of the digital age. "If a local newspaper can't even make it in one that's as large, educated and wealthy as this one, it's hard to imagine how any local newspaper is going to survive anywhere eventually," said Corey Stewart (R-At Large), Prince William County's Board of Supervisors chairman.

The changing institution of journalism is an international reality, but for many, has personal and local consequences. "I'm frankly kind of disappointed in him," said Stewart, pointing to the contradiction of Buffet's business enterprise. "He certainly made some statements about the importance of local papers and here he is shutting one down."

For him, the disappearance of local papers is going to affect American politics more than one might think. "If candidates have enough money, they can send direct mail and advertise on television," said Stewart. Of course, that's always been true. What's different in his upcoming election is that the "candidates are going to have to get their own news out." With better financing, "You'll have a much bigger advantage than you had in the past," he said.