The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [192]
By the late 1960s, however, the rising market had made investing in stocks less viable for the partnership. The advantage of a higher profile when trying to buy entire businesses began to outweigh the advantage of secrecy in buying stocks. And thus it was in the late 1960s that Buffett’s longtime interest in newspapers and publishing came together with his newly recast investing goals and his desire for personal attention in a way that would fundamentally change his world.
Before long, Buffett was immersed in the black-and-white world of journalism. Page by page, newspapers fell to cover the litter of financial reports from the publishers of newspapers and magazines that lay scattered on his desk. When he went to sleep, more newspapers—pulled from a bundle and folded into tidy packets—flew through his dreams. On his most restless nights, he dreamed of oversleeping his childhood paper route.7
Buffett’s fortune had grown large enough for him to afford the purchase of a newspaper or a magazine, or both. His dream was to be not just an investor but a publisher—to have the influence that went with owning the means through which the public learned the news. Around 1968, he and some friends tried to buy the entertainment newspaper Variety, but this came to naught.8 Then another acquaintanceship bore fruit. Stanford Lipsey was a friend of Susie’s who liked to go to clubs with her and listen to jazz. One day, he showed up in Warren’s office and said he wanted to sell the Omaha Sun Newspapers. Buffett was immediately interested; he had already tried to buy it once.
The Sun was a chain of weekly neighborhood newspapers that Stan and Jeannie Blacker Lipsey had inherited from her father. It published seven editions in the Omaha suburbs; its meat-and-potatoes stories were the police blotter, local society news, neighborhood business doings, high school sports—and gossip about who was going steady with whom, which made it a must-read for both parents and kids. Although the Sun was the underdog in Omaha, its editor, Paul Williams, specialized in investigative journalism, and competed by publishing stories that the leading paper, the Omaha World-Herald, missed, often stories that exposed the follies and misdeeds of city bigwigs, stories that would offend major advertisers of the World-Herald. Usually these advertisers shunned the Sun.
Despite his own elevation to the Omaha establishment, Buffett took a particular interest in the muckraking aspect of the Sun. Ever since collecting license-plate numbers to catch bank robbers, he had wanted to play the cop. And “he’d always had this huge admiration for newspapers,” Lipsey says. “I recognized intuitively that Warren understood the role of newspapers in our society. There was a new highway about to come through my plant, and I would have had to borrow a whole lot of money to buy a new press. I didn’t like the Sun’s business prospects, but I knew that Warren had enough money that the journalism wouldn’t suffer because of the economics. In twenty minutes, it was done.”
“I figured we’d pay a million and a quarter for it and take out a hundred thousand a year,” Buffett says. This return was eight percent, about as much as a bond would provide—less, far less, than he expected to earn on a business or a stock, and the long-term outlook suggested that return would decline, not increase. But the partnership’s money was lying fallow, and he really wanted to be a publisher. “Part of my deal,” Lipsey says, “was that, even though the partnership was closed, he had to take me in.” Buffett wanted the Sun so much that he agreed even though he knew he was beginning to consider shutting the partnership down.
Berkshire Hathaway became owner of the Omaha Sun Newspapers on January 1, 1969. But this little neighborhood newspaper was only a beginning; Buffett wanted to be a publisher on a national scale. Joe Rosenfield