“Buffett is famously the greatest investor alive, and almost as famous for plain-spoken observations about the market, so you’d assume his first public memo about Media General would offer insight into the current state of the newspaper business. The actual text, however, merely makes it clear that Buffett doesn’t understand that business.”
A lot of the rest is similar to what I said, though. I take no credit for influencing Shirky, I just wrote faster. But he has a line I wish I had thought of:
“Small-town residents of the sort Media General serves tend to adopt technology late, but the future eventually arrives, even in Opelika, Alabama.”
The CEO of Media General, in an interview with a Richmond-area business website, says something pointing in that very direction:
Publishing revenues are down about 50 percent over the past five years, Morton said, but much of the costs— printing presses, delivery drivers, etc. — have held steady.
“There was nowhere to hide from these revenue declines,” Morton said.
“Over the past five years, our first thought was that this was heavily due to the recession and, like many other recessions in the past, that this was a cycle. You tighten your belt, freeze hiring and even drop the number of people.
“So we went through a couple years thinking that was the way to handle it. But it kept going.”
It wasn’t until the second quarter of 2011, Morton says, “that we realized the world had changed.”
UPDATE: And from John Robinson, a briefer but better explanation than I gave of what these newspapers, unshackled from MG’s debt, ought to be doing:
“The real question is, what is the newspaper spending its profits on? And the follow ups: Is it investing in the future? Is it investing in its staff? Is it reducing the profit-taking so that more can be funneled back into the operation? Is it reducing its investment in the newsprint product so that it can increase an investment into digital news creation and distribution?”