No, that’s not Warren Buffett but the Buffalo News is his newspaper and Stanford Lipsey is the publisher. They do look a little alike. (photo: bbannon/NYT)
Just when you thought you had media figured out
Not only is Warren buying newspapers but he owns the Buffalo News – a ghost of its former self – in a city that has lost 10% of its population every year for the last 30 years. At one time Buffett said he would never invest in newspapers and yet, his company Berkshire Hathaway, bought the Buffalo News way back in 1977 and he now owns 63 papers and a 3% stake in Lee Enterprises, a chain of dailies based in Iowa.
Warren what are you thinking?
Wouldn’t we really like to know what’s on Warren’s mind? He says, “I have no secret sauce.” Yeah right. But how about “secret smarts?” The same thinking that got him buying up railroads when no one wanted them and investing $5 billion in Goldman Sachs when they were the bad boys and the firm’s stock was on the floor of the stock exchange during the financial debacle of 2008-2009. Does Warren see a trend in media? He’s not alone.
Elle Accessories is back
Hearst Magazines is bringing back Elle Accessories with a printing of 500,000 copies for a fall issue. It will be available in select retailers (i.e., Barnes & Noble) and published for e-readers (i.e., iPad and Nook). That’s not all. Hearst has also introduced Cosmopolitan for Latinas, Food Network Magazine, HGTV Magazine and Marie Claire@Work.
Elle makes some sense since it’s aimed at the high-end market where fashion and lifestyle products have been doing well, despite the downturn. David Carey, president of Hearst Magazines says, “The high end today is very strong at retail,” and he adds, “and as a result is very strong for the magazines.” BTW, a one-time, four-color ad page in Elle Accessories will cost about $28,000, compared with $148,270 in Elle.
Back to Warren
Buffett described himself as a newspaper “addict” and despite questions of how they can make a profit, he plans to buy more. His confidence seems to be anchored in a small-local market strategy. He says, “There are still 1,400 daily papers in the United States. Two or three years from now, you’ll see a much better-defined pattern of operations online and in print by papers.” Is that the pearl of wisdom: a continued merging of print and online without the demise of print?
In some cities, newspapers are still quite popular. According to Media Audit, the best penetration of US households read or viewed is the Des Moines Register, with 72.9%. The Buffalo News has the second-highest rating at 70.9%. It’s fair to assume that Warren knows something. Maybe it’s part of the “buy local” movement married with the migration of boomers to smaller towns? After all, the majority of boomers still prefer hard copy in-hand versus e-reading. But that too is changing so newspapers like the Buffalo News are not staying stuck in printville, they’re looking to improve their bottom line by providing online editions for Apple’s iPad and other tablets.
Digital and print: Marriage or divorce?
If Warren is right, perhaps the digital affair won’t mean an abandonment of print media and they will find a way to coexist happily ever after. Or not? There is no question that digital has changed the media business irrevocably and even though it feels like an avalanche, it has been more gradual than it appears. It has been half a dozen years or more since magazines were doing okay and the newspaper business is now half of what it used to be. The question is: What can we expect tomorrow? Can we keep up?
The Huffington Post is a good example. Their growth has been extraordinary and according to comScore, every month, more people access The Huffington Post online than the New York Times. And they recently introduced an online weekly, which is accessible on tablets. The list of digital media grows. Time is now available on the shelves of the world’s largest digital magazine seller, Apple; NBC announced that two of its comedies would debut next fall in an ad-free format; and Twitter is planning new media offerings. Of course, the behemoths, Amazon and Facebook have already altered the landscape forever.
So what to do?
The media business is like a high-speed train (perhaps a spacecraft would be a better metaphor since Jeff Bezo has already launched his, called Blue Origin). But let’s stick with the train (Warren likes trains). If you haven’t missed the “new media” train, you can still jump on board and try and find a comfortable place among the throngs scrambling to figure it out. Most are not good at it. To be out front, you have to push your way to the front of the train – knowledge is your ticket – and once there, you actually have a chance to see what’s coming – maybe. Because it is coming and the light at the end of the media tunnel is … who knows what? Scary? Maybe. Opportunity? For sure. But if you’re not there, you’re not in the game. And being small and saying, “we can’t afford it like the big guys” is no excuse.
Huffington Post was nothing but an small outpost idea a few years ago and many scoffed at its rationale that media was fast becoming an amalgam of news, editorial, ideology, advertising, blogging and a sea of consumer testimonials (witness Pinterest). Huffington saw that in the future content providers and consumers would often be one and the same. Now it’s reality. They anticipated and won.
Newspapers, magazines, digital … where will it end? No one knows. But as any good marketer knows, in the end the market belongs to the consumer and the consumer is not always a benevolent dictator.