I like to think I am well read. When\nLindsey and I started this journey of newspaper ownership over seven\nyears ago, we didn’t do it blind. \n<\/p>\n\n\n\n
We read \u201cThe E-Myth\u201d by Michael E.\nGerber and \u201cBrewing Up a Business: Adventures in Beer from the\nFounder of Dogfish Head Craft Brewery\u201d by Sam Calagione before we\never signed the dotted line for our first paper, The Clarion. \n<\/p>\n\n\n\n
Since then, I have read anything I can\nget my hands on about Mark Cuban and have read books like \u201cExtreme\nOwnership: How U.S. Navy SEALs Lead and Win\u201d by Jocko Willink and\nLeif Babin, \u201cShoe Dog: A Memoir by the Creator of Nike\u201d by Phil\nKnight, and even \u201cThe Snowball\u201d by Alice Schroeder, which is a\nvery intense biography of Warren Buffett. \n<\/p>\n\n\n\n
Those books above are just a few of the\nthings I have taken in over the years and some of my favorites, and\nthey are part of my effort to constantly be learning about business\nand leadership as we forge ahead in our entrepreneurial journey. \n<\/p>\n\n\n\n
\u201cThe Snowball\u201d gave great insight\ninto Warren Buffett. What made him tick, what sorts of investments he\nhas made and why, mistakes he has made throughout life, and genuinely\nshows why he is one of the true geniuses of our time. \n<\/p>\n\n\n\n
He just gets investing. On top of that,\nmy draw to Buffett was partially his overwhelming love for\nnewspapers. He is an avid reader of the Omaha World-Herald, one of\nhis later properties, and of the Wall-Street Journal, where he would\nget advance copies flown to him wherever he was so he would make sure\nhe could read it in the morning if there wasn’t a copy. \n<\/p>\n\n\n\n
Buffett, as a child, used to have a\nnewspaper route as one of his many hustles and managed to make pretty\ngood money doing that and several other brilliant things, including\nsetting up pinball machines in local barber shops as a way to bring\nin passive income. He did this before he was out of high school. \n<\/p>\n\n\n\n
The guy, for all of his flaws, is\nsomeone who has always known how to make money. \n<\/p>\n\n\n\n
So, with my obvious admiration, it\nwould be suitable for most to assume that I am nervous about my own\nfuture in the newspaper business now that Warren Buffett has thrown\nup his hands and moved on, selling his newspaper holdings to Lee\nEnterprises recently. \n<\/p>\n\n\n\n
While I had hopes that Buffett would\nfigure out how big public companies like Berkshire-Hathaway could\nmake national newspaper chains work in a public investment\nenvironment, I was dubious it would work when he got into the\nbusiness. Newspapers aren’t textile mills, Coke, or insurance\ncompanies. \n<\/p>\n\n\n\n
Everything I know about newspapers is\nthat when investors are involved at a national level, with no\nconnection to the communities the newspapers serve, there isn’t a lot\nof hope for success. \n<\/p>\n\n\n\n
Great companies like Knight, which used\nto own the Wichita Eagle, got overwhelmed by the pressures of being a\npublic company when they merged with Ridder and became Knight-Ridder\nand opened up the business to public investing. There is a great book\nabout this called \u201cKnightfall\u201d by Buzz Merritt. \n<\/p>\n\n\n\n
While public investing brings in plenty\nof cash in the short term, investors expect returns quarterly to keep\ntheir money in the company. That formula regularly doesn’t work with\na newspaper, which is more of an intimate thing with a community. \n<\/p>\n\n\n\n
While it’s nice to have scale for\nnational advertising and the purchase of paper and ink, national\nstrategies cooked up from thousands of miles away don’t always work\nin each market. What people in Omaha want out of their newspaper is\ndifferent from those who live in New York, for example. \n<\/p>\n\n\n\n
When our industry was rocked by the\ndigital disruption that is the Internet and now social media, the\nmarkets just couldn’t wait for companies to figure it out. They still\nwanted those fat returns. \n<\/p>\n\n\n\n
So, big public newspapers companies\n,with nowhere to turn for new revenue in the short term and many with\nhuge debt loads because they couldn’t see the digital disruption on\nthe horizon, did the only thing they knew how to do with the public\nbreathing down their necks for returns. \n<\/p>\n\n\n\n
They cut. \n<\/p>\n\n\n\n
Then the implemented strategies for\ncut-down staffs to still put out a newspaper\u2014just a more\ncookie-cutter and easy version. They made them look the same with\nnational design hubs. Some even went as far as outsourcing design\noverseas. \n<\/p>\n\n\n\n
They asked reporters to tweet, shoot\nvideo, and write a certain number of stories a day to stay employed. \n<\/p>\n\n\n\n
They pounded the very people who made\nthe local newspapers great into the ground and then asked for more,\nall so the investor would be happy. \n<\/p>\n\n\n\n
The thing is, while I hoped Buffett\nwouldn’t be like the other public chains, he ended up doing exactly\nwhat they did to make things work for his company. There was no\ncure-all for the publicly traded companies, at least not one Buffett\nand Berkshire-Hathaway would figure out. \n<\/p>\n\n\n\n
Through my observations, I have figured\nout that the secret sauce to owning and operating a newspaper is to\nhave a good handle on what is happening in the communities you serve,\nserve them, and cover government like a bulldog. \n<\/p>\n\n\n\n
We aren’t perfect at these things, even\nat our scale, which is regional at best. I have made plenty of\nmistakes that have cost our company thousands of dollars. We tried to\nstart a paper in Maize that fell hard on its face. \n<\/p>\n\n\n\n
If we were public, our overall company\nwouldn’t have survived any of that. We didn’t provide enough returns\nfor a few quarters, so we would have cut limbs off to make it happen,\ninstead of bootstrapping ourselves back into a profit. \n<\/p>\n\n\n\n
The thing is, the Knight group wasn’t\nreally wrong when they went public so long ago. They knew that they\ncould bring in a lot of capital easily without giving up control of\ntheir papers. What’s wrong with that? When they went public, it kind\nof made sense. \n<\/p>\n\n\n\n
Things change, though, and newspapers\ndon’t have the license to print money like they used to prior to the\ndigital disruption in the 1990s, and people investing still want\nreturns like they do. This requires change, and it requires things to\ngo back to the way they used to be when newspapers were held by\npeople who lived in the communities they served and were accountable\nto those who lived there.<\/p>\n\n\n\n
Why is that?<\/p>\n\n\n\n
Those are the papers that are still\nchurning a profit and making things work, that is why. They know that\na 30-percent return isn’t going to happen, so they ride out a few\nyears at an eight-percent return and work toward better days while\ntrying to pay down debt. \n<\/p>\n\n\n\n
Those publishers care about the\ncommunities they serve, so cutting to the bone just to eke out a few\ndollars isn’t smart business. It’s about the longterm vision. They\nhave to see those subscribers in the local store the next day, so it\nbetter be. \n<\/p>\n\n\n\n
So, am I worried that Warren Buffett\nsold his papers? Of course not. \n<\/p>\n\n\n\n
The big public chains, on the other\nhand, should be.<\/p>\n","protected":false},"excerpt":{"rendered":"
I like to think I am well read. When Lindsey and I started this journey of newspaper ownership over seven years ago, we didn’t do it blind. We read \u201cThe E-Myth\u201d by Michael E. Gerber and \u201cBrewing Up a Business: Adventures in Beer from the Founder of Dogfish Head Craft Brewery\u201d by Sam Calagione before we ever signed the dotted line for our first paper, The Clarion. Since then, I have read anything I can get my hands on about…<\/p>\n