Warren Buffet – A Romantic?

Not more than 24 hours ago, the ketchup company H.J Heinz Co. was bought out for a staggering 23.3 billion US dollars. This is the richest deal ever inked in the history of food industry. In my opinion, buying a ketchup company for $23.3 billion, at a premium of 20%, sounded more like a joke. But when I noticed the name Warren Buffett associated with the buy, I immediately acknowledged that it is my judgment that needs some serious recalibration. Through hours of awestruck stalking, I’ve come to terms with the fact that when it involves Warren, the Oracle of Omaha, there is always a meticulous plan to what might appear to the mortal’s eyes as randomness.

I’m talking about Buffett’s relentless investments in the newspaper industry, of course. Especially at a time when the entire world is going viral, it baffles me that he continues to pour money into the out-of-date, conventional newsprint. Warren Buffett calls himself a newspaper addict. His words, “I’ve loved newspapers all my life and always will”, are deeply rooted to the times he went around on a bicycle and delivered newspapers in his hometown, Omaha, as a kid.

For long I thought that he is just being human and is allowing his personal preferences and emotions influence his investment decisions. Each newspaper company he acquired went a step further in justifying this opinion of mine. For example, Berkshire Hathaway’s acquisition of Warren’s hometown newspaper, the Omaha World-Herald (the company was financially struggling then), was regarded merely as a charitable act by most, including yours truly. But I learnt later that he is as much a skeptic as he is a sentimentalist when it comes to investment decisions.

In his sincere efforts to save the newspaper industry as a whole, he invests tremendous amounts of time and thought into his investment decisions. Consider the numerous investments that Warren has made in the newspaper business so far, there is one phenomenon that is constant – profit! I realized that he is the perfect blend of a philanthropist and a business magnate.

Last year, Warren bought as many as 63 local newspapers from the financially troubled Media General Inc. of Richmond, Virginia. When most critics viewed it as an emotional move to play super-hero to newsprint media, he justified his investments saying, “The kind of earnings we’ll draw from our newspaper properties will be a very tiny fraction of, say, Burlington Railroad. But it’s not a dumb decision financially.” The records prove his justification. He has so far managed to turn most of those around financially and in terms of circulation.

Dig a little deeper and you find that he has a clear strategy to his investment decisions. He goes after newspapers that are in communities where there is a sense of belonging among its residents. He has stated that he would never buy a newspaper company based out of New York or Los Angeles for the lack of a sense of community there. He says that in a closely-knit community, the residents are very interested in local news, be it gossip or high school sports, these newspapers serve that purpose.

Having said that, it is also interesting to note that his love for such community newspapers rooted in heritage does not veto rationale. He made a statement last year when he shut down the 143-year old Manassas News and Messenger of Manassas newspapers in Virginia because he did not see economic value in them anymore.

The facts are clear and simple:

He loves newspapers. In the midst of all the billion dollar deals he inks, he is not the one to lose sight of relatively smaller investment opportunities in the newsprint industry. The newspaper industry, though in its decline, will last longer, thanks to this man. If it ever happens though, the newsprint apocalypse will coincide with Warren’s decisions to sell out his newspapers because in spite of being a romantic, he is also a rationalist!