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Warren Buffett Loves Newspaper Paywalls

| May 21, 2012

He's still betting on newspapers.

On May 17 Media General agreed to sell most of its newspapers (63 of them anyway) to Warren Buffett, the superstar magnet and market bellwether whose Berkshire Hathaway stock is among the most valuable in the world. One exception: the Tampa Tribune, which is the only paper in the Media General group that lost money in the last quarter. But that’s not the reason Buffett is not buying it. The reason is Halifax Media, owner of the Daytona Beach News-Journal and 16 other newspapers freshly bought off the New York Times rack of regional broadsheets. Halifax Media is looking to buy the Tribune.

Buffett’s cost for those 63 papers: a ridiculous $142 million, which, not five years ago, was less than the price a federal judge ruled to be the value of the News-Journal alone (Halifax eventually bought it for around $20 million). Buffett, incidentally, is loaning money to Media General, which isn’t selling its 18 television stations.

Buffett’s suggested business model for newspapers: paywalls. “Newspapers,” he said in a CNBC interview, “have been giving away their product at the same time they are selling it and that is not a great model. You’re competing with yourself and that you are seeing throughout the industry a reaction to that problem and an answer to it and that’s important. (The answer is charging people online?, his interviewer asked.) Yeah. in other words, you shouldn’t — you shouldn’t be giving away a product you’re trying to sell. […] That’s key to the future of the newspaper. newspapers tell you a lot of things you can’t find out other places and most citizens are going to find them useful. you can’t give them away for nothing.” See the interview here.

Media General was heading in that direction anyway: From Media General’s 2011 annual report: In 2011, we made important advances toward being paid for our newspaper content on digital platforms. By the end of 2011, seven of our newspapers were charging for premium online content. By mid- April of 2012, we expect to have 11 more newspapers offering digital subscriptions and intend to add more digital subscription sites by the end of 2012 for both daily and weekly newspapers. We know that users are willing to pay a reasonable fee for premium local content and we are adding new digital-only subscribers. Fourteen of our newspapers offer an e-Edition, and eight offer an e-Edition iPad app. The e-Edition app became available for Android tablets in late 2011. We have more than 11,000 e-Edition subscribers, and these subscriptions count as paid circulation. We are also a founder of NewsRight, LLC, an entity created to capture revenue for digital rights licensing. We believe that over time the revenue potential could be significant.”

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4 Responses for “Warren Buffett Loves Newspaper Paywalls”

  1. palmcoaster says:

    I consider this a good news. Our newspapers with E- advertising addition can still make a profit and they employ plenty of our workers who’s jobs have to be preserved.. So lets give Buffet a big hand for his vision. I am also delighted and very appreciative to you Pierre that after working for the News Journal and for whatever reasons “maybe” you quit not being satisfied after so many years that I read your editorials on it, or “maybe” you were let go given the new ownership…you turned around and created Flagler Live!
    I think after all and now maybe you are better off than before, hope I am correct. I admire you for the same reasons that I admire the determination of Mrs Weeks our SOE as she was let go from her job in the court house and she did not stay long leaving of her unemployment check. She turned around and run for office successfully . These are the examples spirits of determination for success that we need, to bring America’s economy back on track.
    I see our fellow residents with economic distress in those 5,200 properties owing 2011 plus years taxes who’s certificates are in auctions held by our tax collector Mrs Suzanne Johnston, as we speak as our government needs to collect to continuo functioning..

    I see it in our old discarded appliances on the curves promptly being picked up for scraps or repairs like never before. In a way is a positive so they do not go to clutter our garbage collection sites. Every lawn mower, or appliance that we discarded lately was picked up for repairs or parts. This very morning I happily found out that before Waste Pro came an old A/C unit we discarded was neatly picked up by someone probably for parts, scrap or repairs. Whoever this person was, thank you! As a matter of fact we even respectfully help when we see those men in pick trucks doing “their work” gathering appliances etc. Hope this recycling will continuo after our economy recovers as we all need to change a bit our habits to protect our environment.

    I would like that County Manager Mr. Coffey will make himself aware of these realities and stop asking for more money to the cities and all officials stop raising taxes for capital projects…by now. I agree with some here that some of our restaurants are busy (while others closed 2 Dogs Grill and Kokoro’s for the fate of their many workers) and some new cars are seeing around….but that is not the majority of the county tax payers. Sorry I derailed from the original issue.

  2. elaygee says:

    So I stopped reading the NY Times when they started to charge and low and behold I lived and still read thier articles on other people’s web sites.

  3. ric says:

    Does this mean the news is going to more liberal? I didn’t think that was possible since (except for FOX) the medai is as left as you can get. I wonder which way they’ll sway after Romney is elected..

  4. Tom Brown says:

    I love that parting quote from Media General “We believe that over time the revenue potential (from paid digital) could be significant.” That was in 2011. I guess by 2012 they had run out of time and decided to get what money they could out of Warren Buffett. I hesitate to say pay walls will never work. After all, pay TV sounded preposterous 50 years ago, but now most of us routinely pay $50 a month or more for cable. But TV is primarily entertainment and emotional, whereas print media are more or less cerebral. Will the average middle class household pay $50 a month for newspaper content that rarely stirs the juices? Hard to imagine that. But if a general newspaper doesn’t get roughly that level of subscriber support — to offset the huge decline in classified and display advertising — how will it stay afloat?

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