Read more about Media General newspaper deal here.
If you're doubting Warren Buffett's decision to invest in newspapers, give Bill Reader a listen.
He's associate professor at the E.W. Scripps School of Journalism at Ohio University and co-author of “Foundations of Community Journalism” with John Hatcher, an assistant professor at the University of Minnesota-Duluth.
“The industry watchers, by and large, are foolishly myopic by focusing on the metro papers,” Reader said in an interview. “They look at the big papers as the canary in the coal mine for the industry. Nothing could be further from the truth.
“The community newspapers are much more common. They're stable. They're weathering the storm. They're going to come through it because they're a fixture in the community as much as the water system.”
Berkshire Hathaway Inc., of which Buffett is chairman and CEO, said last week it would pay $142 million for 63 newspapers, including 17 dailies, in the Southeast. Buffett said he may buy more and add them to a new Berkshire division called BH Media Group.
“I think he's fine if he invests in content,” Reader said. “You want to be providing content that people want to consume. You want to be providing a forum in which advertisers feel like they're justified in placing an ad because of the legitimacy of the local paper.”
But if Buffett plans to “cut, cut, cut” staff at the newspapers, Reader said, “then he's throwing his money away. If McDonald's stopped making hamburgers, would people still go there? When the newspaper stops producing local news, people are going to stop reading the local newspaper, and it takes people to produce the news.”
Newspapers that cover city hall, the county courthouse, local school boards and other everyday topics give readers what they want, he said. Reading police calls, court cases, divorces, weddings, deaths and other vital information becomes part of a daily ritual available only in local newspapers and their websites, creating an audience for advertisers.
“A community newspaper is the town square, the place where the local businesses can get their messages heard. They're looking for coverage of what's going on in their communities so they can make choices in their daily lives,” Reader said.
For newspapers, he said, “local is the future. People still need to live somewhere. People realize that there's only so much they can get from the virtual life. They still breathe the local air. They still drink the local water. They still drive on the local roads.
“As long as that's the case, they're going to need information about where they live, and that's why local media are critical.”
In between his meeting with Berkshire shareholders and buying 63 Southeastern newspapers, Warren Buffett attended a gathering of billionaires who have pledged to give away at least half of their wealth to charity.
It was the second such gathering of people who have signed the Giving Pledge, originated by Buffett and Bill Gates, co-founder of Microsoft Inc., to give philanthropists a chance to talk about giving.
The Economist reported that private jets zipped into Santa Barbara, Calif., on May 9 with 35 billionaires and about a score of spouses for the private meetings at the Bacara resort. They included Gates' wife, Melinda; Ted Turner; Elon Musk, a founder of PayPal; and Pierre Omidyar, the founder of eBay.
Facebook founder Mark Zuckerberg, whose company sold its first public shares of stock last week, has signed the pledge but didn't make the meeting.
The Economist said the Giving Pledge group has become a movement “focused on collectively achieving results.” Last year was a get-to-know-you gathering, but this year the conversations turned more serious.
David Rubenstein, a private-equity manager, discussed using public-private partnerships to tackle tough problems in society. Sessions also covered education, medical research, poverty, international giving and philanthropic collaboration.
Former AOL executive Stephen Case, who hosted the meeting, said the hottest topic was “impact investing,” or investing money that makes profit and does good at the same time.
Andrew Carnegie's philanthropy was driven in part by the belief that it could help protect capitalism from socialism, the Economist wrote. Said Buffett:
“I do not see any of the philanthropic activity I run into motivated by the idea that this is going to calm the masses.” He added: “It is amazing to me the degree of inequality that exists without people really getting upset.”
Islands seek advice
The economy of the Pitcairn Islands is sagging, so its residents are looking for help from — you guessed it — Warren Buffett, Guy Adams wrote for Independent News & Media.
The British-governed islands, as you may recall from history class, are famous as the home of men who mutinied on the Bounty, a British ship captained by William Bligh, in 1790.
Many of the 60 or so residents of the islands, located about halfway between New Zealand and Chile, are in poverty because of the global downturn in tourism and flagging sales of their main export, a gourmet honey. Shipping lines also have changed, cutting docking fees, and sales of the island's distinctive stamps are suffering as well.
The population includes only seven children.
Herbert Ford, director of the Pitcairn Islands Study Center at Pacific Union College in Napa Valley, Calif., said he's hoping that Buffett would help develop a business plan to turn the Pitcairn economy around.
“We are not asking for his money ... we're asking for something more valuable, his proven business acumen,” Ford said.
Bids to make aircraft
Brazilian aircraft manufacturer Embraer SA is bidding to supply planes for Berkshire's NetJets subsidiary, after NetJets invited manufacturers to propose making “anything from 25 aircraft upwards,” said Ernest Edwards, president of Embraer's Executive Jets unit.
Bloomberg reported that NetJets' European CEO, Eric Connor, said the company is negotiating for a “substantial” order of midsize aircraft to replace Hawker 800 and Falcon planes.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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