1995: How does Buffett feel about the newspaper industry?

AUDIENCE MEMBER: David Winters, Mountain Lakes, New Jersey. I’ll stand up.

David Winters, Mountain Lakes, New Jersey.

Years ago, you said you loved the newspaper business and then, over time, I guess, it — said it declined a bit in how much you loved it. And I’m kind of wondering how you feel about it now, and if you can prognosticate a little bit for us at all?

WARREN BUFFETT: Well, I used to love it in two respects. I loved the economics and I loved the activity, both. The activity — the love of the activity has not diminished.

The economics are still exceptionally good compared to virtually any business in the world. They aren’t quite as good as they were 15 years ago.

So, they have — I wrote about that a couple of years ago, whereas what was — seemed almost the most bulletproof of franchises is still an exceptionally good business, but it isn’t quite as bulletproof as might’ve been the case 10 or 20 years ago.

I still think it’s about as interesting a business as there is in the world I’m in. But if you’re talking pure economics, the — I can’t think of many other businesses that, if I just owned one asset over my life, that I would rather own than a newspaper in a single-newspaper town.

But I wouldn’t have quite the feeling of absolute certainty that I had — that I would’ve had 10 or 15 years ago.

Charlie?

CHARLIE MUNGER: Yeah, I think it’s obvious, I — the newspaper proprietors are getting a touch of paranoia for the first time.

I mean, they worry about the electronic revolution, they worry about the fact that young people, you know, don’t read. It’s not as much fun going to newspaper conventions as it used to be.

WARREN BUFFETT: They’re still making exceptional money. I mean, that’s the interesting thing.

CHARLIE MUNGER: Ah, but they — I’ve heard you say a dozen times, “People don’t seem to care what floor they’re at, just whether the elevator is going up or down.”

WARREN BUFFETT: That’s right, that is true. (Laughter)

People feel better when they’re on the second floor of an elevator that’s just come from one than they do when they’re on the 99th floor coming down from a hundred, there’s no question about that.

They have this projection. And of course, it’s particularly the case where they’ve been in a business where the money — the profits — were automatic, because they start thinking about, you know, questions of whether they really have the ability to make a lot of money, absent this favored position.

And that’s not something they’ve had to dwell on before. So, it can make them uncomfortable.

They’re all screaming about newsprint prices. We’d probably scream about them a little bit, too.

I mean, if you compare being in the newsprint business over time to being in the newspaper business, I mean, it’s a joke.

And newsprint prices, if you — you can graph them from any point, you know, 15 or 20 years ago, or 10 years ago, and the price of the newspaper, the price of advertising has gone up more.

I mean, it is interesting to hear them yelling foul, because they have moved a lot in the last 12 months and they’ll move some more in the next six months. But believe me, it’s better to be in the newspaper business than the newsprint business.