Buffett: Newspaper investor

I’m watching Warren Buffett on Charlie Rose.

In 1973, Buffett started buying shares of the Washington Post Co. The stock started getting very cheap because the Nixon administration was challenging its television licenses. The stock went from $38 to $16 a share in a very short time. “When it got to around 20, we bought a few blocks and got about 10 percent of the company.” At $20, the company was worth about $100 million. They owned the Post, Newsweek and four big network stations, and had no debt. If you had taken those separate parts, you could have sold them for about $500 million, according to Buffet.

Good buy by Buffett, right? It gets better.

Rose: “How come 95 people didn’t see it?”

Buffett: “We were buying from big institutional investors, and they were bailing out of it, and if you asked any one of them what the pieces were worth, they would have said something close to what I would say. But they thought the stock was going to go down. So what?

“I’m looking at the stock, and I’m looking at the Graham family.”

Here’s the kicker: That $10 million investment in 1973 is worth $1.5 billion today.

Think about that: Newspaper circulation declines started in the 1920s, but really accelerated in the 1970s. For my entire life, I’ve heard about how the newspaper business is dying. That hasn’t stopped Warren Buffett from making a mint off a company that at its core is a newspaper company.

Buffett: “They have not struck oil. They have not invented a cure for cancer. They have
just taken those properties and kept doing reasonably intelligent things, and
sometimes very intelligent things, with the money generated by it. … They’ve been good stewards of the money, but there are no miracles involved.”

Buffett now owns 18 percent of the Post.

This entry was posted in Uncategorized and tagged by . Bookmark the permalink.

Leave a Reply