Buy Facebook? Not if you're Buffett
Berkshire Hathaway is purchasing Media General's newspaper chain in a bet on the print business.
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.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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