Not a pretty picture, but Bezos is confident he can use his Internet genius to transform the Post into a more digital newspaper that brings old and new journalism together.
Meanwhile, the The Washington Post Company (NYSE:WPO) (name change pending) is left with a variety of assets, including cable systems, TV stations, and Kaplan Education. The Post got rid of one failing asset, but it still has Kaplan to worry about. The education segment is struggling along with many other textbook providers due to a shift away from print and into tablets and other digital media. Even without the bleeding newspaper, the Post is still a sell.
The Times takes a loss on the Globe
Recently, the New York Times (NYSE:NYT) announced that it would sell the Boston Globe to Red Sox principal owner John Henry. The move comes at a time when the Times is focusing on profitability and cutting off assets unrelated to its core. Henry paid just $70 million for the Globe, a stinging blow for the Times since it purchased the Globe for $1.1 billion back in 1993.
It is unclear as this point what Henry intends to do with the Globe, but at only $70 million it had to be a difficult offer to refuse. Along with the Globe, Henry also acquired various assets in Times Co’s New England Media Group, including Boston.com and the Worcester Telegram & Gazette.
I like what the Times is doing: focusing on their core publication. Immediate goals for the paper include increasing circulation revenue in its core market New York and opening subscription options at different price levels. The Times is moving in the right direction, but the newspaper market isn’t. As such, the Times is a sell.
Bottom line
The decisions of these three men don’t translate to the average investor for a couple of reasons.
First, Warren Buffett’s taste for local newspapers is much different from his negative view of big time public newspaper companies. Second, I think Bezos and Henry’s purchases largely came because of extremely low price tags, not because the buyers are incredibly excited about the prospects of the newspapers.
If you’re worth billions of dollars ($26 billion in Bezos’ case), you can afford to spend $250 or $70 million on a risky investment. For the rest of us, newspaper companies are sells.
The article Even Warren Buffett Is Buying Newspapers. Should You? originally appeared on Fool.com is written by Marie Palumbo.
This article was written by Randy Holcombe and edited by Chris Marasco and Marie Palumbo. Chris Marasco is HeadEditor of ADifferentAngle. None has a position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway.
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