Warren Buffett as Teacher

September 28, 2012 2:01 PM

Analog, Warren Buffett and Digital Media - Why Warren Buffett invests in newspapers: " You essentially have a business that will make a lot of money if you are terrific, it will make a lot of money if you're lousy," Buffett said, "...how good a newspaper is depends entirely on the wishes of its owner. There is no correlation between profits and excellence," Buffett added, "there's really nothing like that in American business." Enjoy nearly a full 60 minutes of Warren Buffet's (all too rare) public teaching style in this recently uploaded video from 1992.
posted by spock (15 comments total)

There is no correlation between profits and excellence, there's really nothing like that in American business.

Today I'd cite the NFL and several sectors of technology as being other examples of that.
posted by mcstayinskool at 2:29 PM on September 28, 2012 [2 favorites]

Haven't the face of print and electronic media changed in the past 20 years. He is teaching at the time when something like Google, Yahoo, About, Wikipedia, Ask, Mashable and MetaFi did not exist.

Mr. Buffet is the greatest but he should create one more lecture on the media of today's world.
posted by molisk at 2:33 PM on September 28, 2012

The moment we had a good alternative, though, man. Look how fast that happened.
posted by mhoye at 2:36 PM on September 28, 2012 [6 favorites]

Comparing newspapers to orchestras isn't bullish for newspapers or reporting.
posted by JPD at 2:59 PM on September 28, 2012 [1 favorite]

In defense of the author the first time I read the article I didn't think he understood how wrong Buffett's early 90's description of newspapers is today, but I actually think he gets that. I don't think he gets what journalism becoming "fine" arts implies for journalists and reporting.
posted by JPD at 3:02 PM on September 28, 2012 [1 favorite]

Uh, yeah, at the time most newspapers were making massive profits. In fact, profits in newspapers had been going up for years and was much more profitable at the time then in the past (perhaps due to other digital technology in the newsroom?)

Looking back, it actually looks like a bubble. Interesting that Buffett didn't see that, but the real collapse wouldn't be for another 10-15 years or so, I guess.

What's interesting is that all the newspaper people mewling about how the internet has DESTROYED their industry and thus journalism and the nation as a whole are actually looking at it from a perspective where they they were making way more money then they were historically, and took that to be the norm.
posted by delmoi at 6:01 PM on September 28, 2012

It wasn't a bubble by any definition. The world just changed.
posted by JPD at 6:28 PM on September 28, 2012 [1 favorite]

And yes the media is completely anchored to how much money they used to make and this creates a huge barrier to figuring out what's next.
posted by JPD at 6:30 PM on September 28, 2012

Buffett has always gone into industries that pretty much print money, by may not have the kind of trajectory Wall Street likes hasn't he. He does his PE stuff, buying up companies, not through LBOs but grabbing the float of Geico's premiums, he can bridge the whole thing himself. I wonder what he thinks of newspapers now. I bet he has some kind of idea,not something simple like going hyper local, that just makes sense. I think of him like if Einstein or Newton focused their genius on business.
posted by Ad hominem at 4:17 AM on September 29, 2012

Or he could just be wrong this time. It's a really small amount of capital he has allocated to the space so it's not a big deal if he is wrong.

There is actually a pretty long list of bad decisions he's made - as their should be given the tenor of his career. Hell arguably Berkshire it self was this sort of mistake. He just ended up sell the assets, taking a big tax loss and then used the shell as a holding company, which eventually allowed him to monetize said tax losses



The newspaper industry today looks nothing like the industry he used to invest in.
posted by JPD at 6:44 AM on September 29, 2012

At the time of the video, the Internet had already been well-established but I'm not even certain whether it had dropped its pure-research aegis yet that mandated restrictions on commercial content. Spamming as a marketing technique barely existed at the time.

So it's hard to say that newspaper media were an investment bubble in 1992. All the mechanisms necessary for the World Wide Web to take over all media had been invented, but it was still too early for any but the most stoned of Mondo 2000 readers to have a good sense of the consequences.
posted by ardgedee at 7:07 AM on September 29, 2012

Note the date, kids: http://www.omaha.com/article/20120517/NEWS01/120519629
posted by spock at 6:00 PM on September 29, 2012

I'm not sure what point you are trying to make?
posted by JPD at 8:25 PM on September 29, 2012

That is very clear from each of your comments in this thread.
posted by spock at 6:22 AM on October 1, 2012

well then tell me what your point is?
posted by JPD at 6:59 AM on October 1, 2012