The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [280]
In the end, he decided to go along with them. “We had to appeal. I wasn’t going to give in to a set of conditions which were going to make us noncompetitive. So basically I had no choice. We don’t bluff. It’s not my style, anyway. Over a lifetime, you’ll get a reputation for either bluffing or not bluffing. And therefore, I want it to be understood that I don’t do it.”
The Buffalo Evening News was Buffett’s single largest investment, and by a wide margin. It was tying up a third of Blue Chip’s capital, losing money under Judge Brieant’s restrictions, and vulnerable to any strike that would weaken it further at a time when the stock market was falling and Buffett needed it to produce cash to buy stocks at the bargain-basement prices he always favored. The potential failure of the Buffalo Evening News risked more than setting him and Munger back their $35 million; for the man who begrudged spending $31,500 on a house because that money could ultimately turn into a million, the lost compounding potential of their investment in the newspaper made the situation much graver than it appeared superficially. So Buffett not only decided to appeal the decision, but he Tom Sawyered Stan Lipsey, who was thinking of moving to San Francisco, into trying to turn the paper around. “What would you think about going up to Buffalo?” Buffett asked. “My heart sank,” Lipsey says, “but I couldn’t turn Warren down on anything.”
Lipsey went to Buffalo to provide some temporary help and arrived in the aftermath of Buffalo’s worst blizzard in years, banks of snow plowed as high as the rooftops of buildings. He stayed in the hotel that Buffett recommended and ate at Buffett’s favorite steak house—and was baffled at how Buffett could stand either one of them. The next morning when he arrived at the office of the Evening News, he quickly saw why Buffett had sent him. The news product was excellent, but the business management was sloppy. He sat down at a secretarial desk and worked from a manual typewriter. A manager appeared at his side and asked, “What kind of liquor do you want?” Lipsey asked what he meant. Well, said the man, as a manager you’re entitled to two cases of booze.32
Lipsey started spending one week a month in Buffalo. On one of his weeks in Omaha, he joined Warren and Astrid to take the temperature of Buffett’s current life. Warren was clearly relaxed in his new relationship. He let Astrid take them all to a drag show.33
By 1979, Lipsey had straightened out the paper’s management, and victory was approaching in the battle of the legal briefs with the Courier-Express. In April 1979, nearly a year and a half after Brieant’s preliminary injunction, the Second Circuit Court of Appeals unanimously reversed him, saying his opinion was “infected with legal and factual error.” There was “simply no evidence that Mr. Buffett acquired the News with the idea of putting the Courier out of business…. All that the record supports is a finding that Mr. Buffett intended to do as well as he could with the News and was not lying awake thinking what the effect of its competition on the Courier would be…. Courts must be on guard against efforts of plaintiffs to use the antitrust laws to insulate themselves from the impact of competition.”34
But the reversal of Judge Brieant’s order was a victory that came almost too late. The Courier-Express immediately appealed the ruling, seeking to reinstate the injunction. The News’s lawyers wearily took up their swords to continue the ludicrous fight. Meanwhile, despite tighter management controls imposed by Lipsey, the battle had cost so much in legal fees and lost advertising lineage while the News operated under all the judge’s restrictions for the better part of two years that it was losing millions—a $5 million