The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [277]
Murray Light, the managing editor of the Evening News, quickly discussed a plan with Buffett to start a weekend edition, a plan that the imperious former owner, the aristocratic heiress Kate Robinson Butler, had never liked. The late Mrs. Butler, a diminutive tyrant with bouffant white hair, had growled at her employees, pounded her fist on the leather surface of her imported French desk, and seen no need to change with the times.18 She rode the few blocks to the office from her ornate mansion, a major Buffalo landmark, in the back of a Rolls-Royce limousine and was said to be less interested in the newsroom than in her trips to Europe in pursuit of a prince worthy of her daughter’s hand.19
The News’s publisher, Henry Urban, had gotten on well with Mrs. Butler, a large part of his job being to calm her on the many occasions when she took issue with the paper’s editorials. Mrs. Butler’s focus was not on profits, and neither was Urban’s. “You will not find a nicer man than Henry Urban. But the idea of negotiating with the newsprint producers just wouldn’t enter his head. As soon as I got there, the newsprint producers said, Does Mr. Buffett like to fish? And I told them, Well, Charlie likes to fish, but I buy the newsprint.” The News was paying ten percent more than other papers just across the bridge in Canada paid, and the same as publishers paid in Florida, California, and Dallas. Buffett wanted thirty bucks off to reflect lower shipping costs. “We were buying forty-thousand-plus tons a year. So thirty bucks was $1.2 million on a company that wasn’t making any money.” He Buffetted the newsprint producers. “I told all seven, we have contracts for various lengths of time at the wrong price. You’ve got the lowest freight cost of any American customer with us and you’re charging us the same. We will honor those contracts, but if you don’t renegotiate them, you will never have another newsprint contract with us again.” He won.
But lower shipping costs alone would not cure the Evening News’s blues. Buffalo’s newspapers existed in an odd sort of equilibrium. One controlled weekdays, another weekends.20 Buffett and Munger agreed with Murray Light that the News had no choice but to extend its weekday advantage by expanding.21 “We had to do what we did if we were going to compete effectively,” says Munger. “One side or the other was going to win.”
Two weeks before the Evening News launched its new Sunday edition, the Courier-Express filed suit on grounds of antitrust, saying the News’s plan to give away free papers on Sunday for five weeks, then to sell at a discount, amounted to an illegal monopoly that was trying to run it out of business.22 The Courier-Express’s lawyer, Frederick Furth, hit upon an ingenious strategy to spin Buffett’s views about no red ribbons into a story about monopolists from out of town stomping all over a local business.
Furth’s subpoenas produced a sheaf of documents suggesting that Buffett and Munger were well aware that vigorous competition would doom the Courier-Express. The Courier-Express launched an all-out public-relations war, starting with a page-one story, amply fleshed out inside, and days and weeks of follow-up coverage, all portraying itself as a tiny neighborhood David fighting ruthless Goliaths from out of state. This message found eager ears in Buffalo, where jobs fell like rust flakes from the once-proud city’s oxidizing employment rolls.
No sooner had Buffett been released from the hell of the Wesco investigation than he found himself embroiled in another bitter legal fight, one that would require his presence in the frigid, unfriendly locale of Buffalo, New York.
The News began to drain Blue Chip’s coffers. Buffett’s lawyer, Chuck Rickershauser, had by now left Munger, Tolles to become the head of the Pacific Coast Stock Exchange. His replacement, Ron Olson,