2007 May 06 Sunday
Warren Buffett Sees Desire For Power Behind Newspaper Bids
Warren Buffett thinks Rupert Murdoch's $5 billion News Corp bid for the Wall Street Journal is more about power than money.
Speaking after the annual meeting of his Berkshire Hathaway investment vehicle, Mr Buffett said several investors were prepared to pay more than newspapers’ instrinsic worth because of the power and exposure they confer. “I think you will see newspapers drift to owners that are motivated in part by non-economic factors.” Mr Buffett is thought unlikely to counter bid but said others might enter the fray.
The declining newspapers are going to all become mouthpieces for rich people? If so, I'm expecting an increase in the variety of editorial slants as each billionaire expresses their particular views through their editorial and front pages. Or will the billionaires have such similar views that the newspapers will become more consistent with each other?
If that trend accelerates, one motivation might be to use editorial policy as a protection
and a way to say to politicians, I can work big influence against you, so go after someone else.
If it were that way, one might expect liberal editorial policies to persist most often.
There is a real difference between power and influence which Buffett ought to understand, but doesn't speak as if he has it clear in his mind.
A newspaper can't issue a subpoena.
It has been forever thus, Murdoch a veteran newspaperman and the son and grandson of newspapermen is probably motivated more by ego and the 'stamp-collecting' mentality than his usually acute and shrewd business sense.
That's why he bought 'The Times' in the early 1980s (the World's oldest and greatest paper and the standard from which all other papers are judged), 'The Times' probably hasn't turned a penny's profit in all that time.
Fortunately the internet offers a counterbalst against editorial overbearing.
While Murdoch may be interested in prestige and power couldn't the same charge be made against the Bancroft family (and similar criticisms could be made against the family that owns the New York Times) that currently controls the paper while holding something close to only 5% of the stock? I infer this 5% number because they floated a proposal to the Dow Jones board last year that would allow them to continue to control the paper if their stock holdings dipped below the 5% threshold that current corporate guidelines impose. Since the Journal doesn't make much money, doesn't pay much in the way of dividends, how is a scion supposed to make a living by means other than selling inherited stock? They want to eat their cake and have it too.
Sheesh, these elitists think that they should be supported by the public, albeit through the private channel of corporate ownership, but a public, nonetheless. At least Murdoch's interest is undisguised. I wonder how this rejection, out of hand, of Murdoch's offer sits with the minor members of this far-flung Bancroft family. I bet that none of them are making a big impact in life and a few of them could really use the money.
Why does Murdoch bother? The days of the broadsheet are numbered. Is the brand worth 5 billion? I doubt it. Murdoch has been quite successful creating his own brand from scratch. 30 years ago, who could have even imagined a Fox network with its standard bearer, Fox news. If I were Murdoch, I would have a little fun at the Bancroft's expense. I would make another offer at a REDUCED price and say, "take it or leave it. You are going nowhere as it is." If the offer were rejected, next month I would unveil FOX FINANCIAL. Bang. I have no doubt within 10 years the Wall Street Journal would be as relevant as the Herald Tribune is today.