I was exasperated the other day at the latest entry in the “No, come on, what is Warren Buffet really up to?” genre of columns. There are two things these things seem to have in common: One, the writers all believe Buffett is a genius who can’t make a bad call; two, they think that he can’t possibly be telling the whole truth about why he is buying newspapers. I am not remotely qualified to judge the first, but I’m willing to bet he’s telling the truth about his newspaper plans, which is merely that he wants them run prudently and well, and he thinks that under the right conditions, considering the markets they are in, they will be profitable quite a while. That seems to meet with a lot of skepticism. I certainly was among the skeptics, but since going to work in January in the kind of market Buffett seems to favor, my perspective is changing, at least some.
There’s a saying in medicine, “When you hear hoofbeats, think horses, not zebras.” It’s the Occam’s Razor principle: When multiple explanations are available, the simplest version is preferred. In other words, I think too many people are overthinking this situation and skipping the simple answer. When people look at the papers Buffett has bought and notice that most of them are in North Carolina and Virginia, and deduce from that some kind of grand plan, I have to shake my head. When he bought Virginia-based Media General’s newspapers in 2012, that accounted for all but two of his current NC/Va papers, and those other two (Greensboro and Roanoke) came from one Virginia-based company, Landmark, this year. Essentially that’s two points (MG and Landmark) on a graph. But before buying MG he bought Omaha in 2011, and after buying the MG papers he bought two in Texas (Waco and College Station). And before he bought Omaha, he owned only Buffalo. Plot all those points on a graph and it’s not as tidy.
One argument that has been made is that with all of those papers in a relatively tight geographic area, there’s potential for pooling resources and eliminating duplicate costs. Indeed. Or, indeed there used to be. MG and Landmark each did quite a bit of that; putting the two groups together will allow a bit more, but I would bet not a huge amount. And on the news side, I can say as one of the two people who had been at MG in charge of encouraging the sharing of news resources and responsibilities, those who bet for moves on that front again are ignoring what Buffett has said. Editors are reluctant to give up control of their own resources, or to turn over traditional areas of coverage to other publications, even within the same company, or even just to stop doing things that duplicate what sister newspapers are doing if they view the topic being duplicated as important to them. It can be done — see what Digital First Media is doing — but to make that part of the company strategy would go against Buffett’s stated intention of letting editors run their newsrooms independently, without central direction of what their coverage should be.
With all of the above rolling around in my head, this morning Steve Buttry pointed to a column about a parallel situation of basic psychology. In the column Are you mad at me? Adam Bryant talks about how people are constantly reading their bosses, often reading too much into little things and misinterpreting the situation. I think that’s exactly the kind of thing going on in the news business with Buffett. He’s not the boss of most of us, but in a way — he has the money and he’s calling the shots, at a time when no one else seems willing to — he really is.
But I’m going to treat Buffett the way I wish my employees would treat me: I’m taking him at his word.
So, are you willing to say Warren Buffett is a big, fat liar?