Warren Buffett’s newspapers deploy familiar playbook as fortunes dim

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LAST WEEK, JOURNALISTS AT SEVERAL local newspapers run by Berkshire Hathaway’s BH Media Group were met with news that their owner was slashing nearly 300 jobs companywide. Berkshire Hathaway CEO Warren Buffett was told about the cross-country layoffs, but “his opinion was not sought or offered,” according to reporter and “Warren Watch” columnist Steve Jordon at The Omaha World-Herald, a BH Media Group newspaper that did not sustain any cuts. Rather, BH Media left it to the papers to implement layoffs themselves.

At the The Richmond Times-Dispatch, the news was unexpected, and moved through the newsroom with the severity of a spinning blade. Throughout the day, reporters at the paper got word of who had ducked it, and who had been cut.

“As you are all well aware, we have been struggling with long-term declines in print revenue and lower-than-expected digital advertising results,” wrote Times-Dispatch publisher Thomas A. Silvestri in a memo to employees. In all, Silvestri wrote, company cuts “resulted in the layoff of 33 full-time employees, a reorganization of the printed newspaper and the implementation of other cost-saving measures.”

At BH Media papers, anxiety has perhaps replaced the optimism of five years earlier, when they were acquired. Berkshire Hathaway’s annual reports show a significant decline in daily circulation at each newspaper between 2012 and 2016. [See graphs, below.] While some BH Media papers reported the layoffs, more than a half dozen newsroom managers declined to discuss future plans for their news organizations with CJR or did not respond. Those who did emphasized the critical value of local news coverage, as well as the need for innovative new revenue streams and a greater digital transition.

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BH Media CEO Terry Kroeger touched on the latter point in a memo to employees. “As we make these cost reductions,” wrote Kroeger, “we will at the same time increase our investments in our digital future.”

But at what must feel like a tenuous moment for BH Media newspapers, the details of those investments—like the fates of the papers themselves—are unclear.

I will say this about Berkshire Hathaway: They have said from the very beginning that decisions were local and they’ve stayed with that.

 

IN 2012, BUFFETT SNAPPED UP NEWSPAPERS large and small (after acquiring his hometown paper, The Omaha World Herald*) as part of a $142 million deal with Media General. Through BH Media, Buffett then bought even more newspapers, bringing the company’s total to 31 dailies and 50 weeklies. Buffett’s reputation—as the Oracle of Omaha, a billionaire investment wizard whose buy-low-sell-high long-hold strategy is legendary—made the acquisition seem like a bright spot in a struggling industry. At the time, CJR asked, “Does Warren Buffett see something the rest of us don’t?”

When it comes to delivering local news, Buffett wrote to shareholders in his 2012 annual report, “Newspapers continue to reign supreme.” At the Times-Dispatch in Richmond, Silvestri described staffers at the time “smiling, because we have certainty, and they’re smiling because we have a company that believes in not just newspapers but also digital transformation.”

During the past four years, however, Buffett changed his tune. “Newspapers are going to go downhill,” he told Politico’s Playbook last summer. “Most newspapers, the transition to the internet so far hasn’t worked in digital.”

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In his memo to employees, BH Media’s Kroeger blamed the company’s layoffs on impacts of the Great Digital Disruption, now well into its second decade. Regional and national advertisers taking big hits from online retailers have cut back spending on print ads, Kroeger wrote. More and more readers are getting their news on online. Digital revenue has not closed the gap from declines in print advertising and circulation.

“Therefore, we need to cut our expenses,” Kroeger wrote:

“It is imperative that we take this action. Otherwise some of our operations will become unprofitable. And, like it or not, profitable news organizations are necessary to practice exceptional journalism.”

 

 

BETWEEN 2012 AND 2016, DAILY CIRCULATION declined at every BH Media Group newspaper, according to a comparison of BH Media’s annual reports. During that time, The Buffalo News saw a drop from 142,750 to 116,235, and The Omaha World Herald went from 130,001 to 99,104. The Richmond Times-Dispatch had a daily circulation of 107,226 in 2012; it has dropped by 17 percent, to 88,715, over the past four years. At the smaller Morning News in Florence, South Carolina, the drop during the same time period amounted to almost 36 percent, from 22,077 to 14,228.

 

 

During a time of declining print readership and ad revenue, how have these papers tried to ensure their own sustainability? I reached out to about a dozen newsroom managers from around the country. Many referred CJR to BH Media or did not respond. Kroeger, the company’s CEO, was out of town and unable to speak with CJR before publication.

A few BH Media properties, however, might provide some instructive examples.

Since becoming a Berkshire Hathaway property in 2013, The Press of Atlantic City acquired several weekly papers, shrank staff and has evolved into a more digital-centric newsroom. The paper launched mobile apps, created a digital news team, redesigned its website and grew its video offerings. It created a multimedia editor position, live-streamed events, launched podcasts and partnered with a local university to create a news TV show. By the end of 2013, total page views on the paper’s website were 48.8 million; by the end of last year, that number reached 75 million, editor Kris Worrell tells CJR.

And yet the paper was forced to lay off 12 employees as part of BH Media’s cuts. Worrell interprets that as an indication the paper is not immune from afflictions on the industry as a whole. Growing a digital audience hasn’t ensured sufficient digital revenue.

“Some of that is our fault in that we, as news operations, haven’t been quick to offer enough digital solutions to our customers,” she says. “But some of it is educating and transitioning our advertisers onto alternate platforms, so their messages can be seen by the most eyeballs. We have a greater audience here at The Press than we ever have before, and now we need to make sure the advertisers can benefit from that.”

The cuts last week were difficult for The Press of Atlantic City to make, but Worrell believes the paper has a strategy for transitioning its readers—and advertisers—to its digital platforms.

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In Oklahoma, the Tulsa World’s marketing department has led an effort that includes holding public events to bring in new revenue. The paper hosted a garage sale, a senior living expo, and a cooking show, and plans to hold a high school football awards event, says executive editor Susan Ellerbach. The paper also anticipates running more sponsored content.

Despite efforts at innovation, The World’s management team kept close tabs on budgets and crafted a contingency plan. When corporate announced the cutbacks, the paper implemented its plan and made 28 layoffs accordingly.

“I will say this about Berkshire Hathaway: They have said from the very beginning that decisions were local and they’ve stayed with that,” Ellerbach tells CJR. “Decisions are left up to the publisher and the publisher’s team. And I greatly appreciate that.” She says Tulsa World is a profitable paper and always has been, “but we want to make sure that we are going to maintain that level of profitability going forward.”

There will be sponsored content. Premium magazines. E-commerce. Paid events. Services. Severances—and, if things get better, offers to return to employment.

 

IN CHARLOTTESVILLE, VIRGINIA, The Daily Progress did not lay off anyone in its newsroom, though it also will not hire a reporter as it had planned, and will likely see departures of older journalists in the coming months and years. Publisher Rob Jiranek says he doesn’t believe local ad dollars have dried up; rather, it’s just a matter of getting advertisers to spend those dollars on the paper. Doing so means doubling down on doing the best local journalism The Daily Progress can.

“I would caution anyone from saying ‘what this means is,’ but there’s certainly a strong instinct and faith that we need to maintain the fundamental strength of our newsrooms and the core competency of great, local journalism,” says Jiranek. “And I underscore ‘local’ in the phrase like three times.”

About 70 miles away in Richmond, the Times-Dispatch will develop new revenue segments, according to the publisher’s memo. There will be sponsored content. Premium magazines. E-commerce. Paid events. Services. Severances—and, if things get better, offers to return to employment. In short, the trends shaping the industry will not spare BH Media’s papers.

According to Holly Prestidge, the president of the Times-Dispatch newsroom union and a writer in the features department, the union had urged BH Media Group to offer furloughs and voluntary buyouts. “We call on Warren Buffet and BH Media executives to live up to their stated commitment that The Times-Dispatch be indispensable to the community,” she wrote in an email to staff.

Editor in chief Paige Mudd, who declined to speak to CJR, wrote in a memo to staff that the paper’s 33 cuts included 13 newsroom positions. There will be other changes, too, she wrote. Cuts to pages. Sections combined. The standalone business section gone most days. There will be more focus on digital.

Wrote the editor in part: “It will take some time to adjust to our new normal.”

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*A previous version of this story misstated the sequence of an acquisition. 

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Corey Hutchins is CJR’s correspondent based in Colorado, where he is also a journalist for The Colorado Independent. A former alt-weekly reporter in South Carolina, he was twice named journalist of the year in the weekly division by the SC Press Association. Hutchins recently worked on the State Integrity In vestigation at the Center for Public Integrity and he has contributed to Slate, The Nation, The Washington Post, and others. Follow him on Twitter @coreyhutchins or email him at coreyhutchins@gmail.com.