Buy Facebook? Not if you're Buffett

Berkshire Hathaway is purchasing Media General's newspaper chain in a bet on the print business.

By Kim Peterson May 17, 2012 12:30PM
© Mario Tama/Getty ImagesCount on Warren Buffett to do the unexpected.

In a week when everyone is buzzing about Facebook and the future of online communications, Buffett is going old school and buying dozens of newspapers from Media General (MEG).

For a mere $142 million -- chump change for Berkshire Hathaway (BRK.B) -- Buffett gets 63 newspapers in four states. Separately, Berkshire is giving $445 million in loans and credit to Media General in exchange for warrants that would ultimately give Berkshire almost 20% ownership in the company.

Shares of Media General soared 35% on the news Thursday to $4.25, while Berkshire's Class B shares were down less than 1% to $80.29.

In announcing the deal, Buffett voiced his faith in newspapers as the foundation of a community -- a sentiment you don't hear much nowadays. "In towns and cities where there is a strong sense of community, there is no more important institution than the local paper," he said.

Take that, Facebook. Buffett doesn't use Facebook and isn't buying into Thursday's IPO, by the way. He never buys new offerings -- but that may not stop him from buying Facebook in the future.

Buffett is practically a media mogul at this point, The New York Times notes. He recently bought The Omaha World-Herald, which publishes his hometown newspaper. He has long held stakes in The Buffalo News and The Washington Post.

The new buy from Media General will give Berkshire a number of newspapers in North and South Carolina, Alabama and Virginia, including The Richmond Times-Dispatch and the Winston-Salem Journal.

Buffett is well aware of the problems facing the declining print newspaper business. At one of Berkshire's investor meetings, Buffett said the newspaper industry must figure out how to get customers to pay for news content online, the Times reported. Most newspapers freely offered news on their websites in the past, but many are now looking into various online subscription models.

"I don’t know of any business plan that has sustained itself that charges in one version and offers the same version free," Buffett said, according to the Times.

The Media General announcement comes one day after news that Berkshire bought 10 million shares of General Motors (GM) in the first quarter.

More from Top Stocks


4Comments
May 18, 2012 9:55AM
avatar
Here's the deal:  The quality, and literally the size, of the newspaper I get keeps going down and the price keeps going up.  I'm debating whether to resubscribe or not.  I love drinking coffee and reading the paper in the morning, but not when I feel like I'm getting ripped off by doing it.
May 18, 2012 7:31AM
avatar
Obviously, it hasn't been revealed to investors like Mr. B that the public isn't interested in buying subscriptions to biased media. They can get it for free on the net and on the TV.
May 18, 2012 4:05AM
avatar
 Newspapers are on the way out, Buffet!  Especially The Herald Oboma one!!!!!!!!!!!  Your "Millions will not stop it ( you don't have enough!!)  Hey, you sounded a lot better when you sang "It's 5  o'clock somewhere!!!!!!!!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

115
115 rated 1
269
269 rated 2
445
445 rated 3
614
614 rated 4
684
684 rated 5
678
678 rated 6
608
608 rated 7
454
454 rated 8
310
310 rated 9
138
138 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ARCPAMERICAN REALTY CAPITAL PROPERTIES Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.