NEW YORK Billionaire investor Warren Buffett buys newspapers every day, including his hometown daily, but on Wednesday he dispensed with the single-issue price and bought the whole company instead.
Buffett's conglomerate Berkshire Hathaway said it would buy the Omaha World-Herald Co, owner of the paper of the same name, six other dailies and a series of weekly papers in Nebraska and Iowa.
The World-Herald, which calls itself the last major employee-owned paper in the country, splashed the news across its website, with a picture of the paper's publisher introducing Buffett to the staff. It is 80 percent owned by employees and 20 percent by the Peter Kiewit Foundation.
The paper reported that Buffett would pay $150 million cash, or about $1,109 per subscriber, and assume $50 million in debt.
"I wouldn't do this if I thought this was doomed to some sort of extinction," the paper said Buffett told a gathering of employees. "It is a reasonable investment. There is no question it is affected by the fact that I am extremely bullish on Omaha, Nebraska."
The World-Herald's publisher, Terry Kroeger, told the paper the holding company would have needed a capital infusion at some point in the future, as older shareholders were selling stock back faster than younger reporters were buying it.
The news appears to have stunned the reporters, for whom Buffett was one of the biggest subjects of their business coverage. The paper's designated Buffett reporter even did a weekly online chat about Buffett called "Warren Watch."
"I don't think anyone's going to be covering anything today. Everyone seems to be too busy talking about the Buffett news," World-Herald reporter Roseann Moring said on her Twitter feed in response to a request for coverage of another item.
With average daily circulation of just over 135,000, it is one of the larger papers in the country. The World-Herald Co said in a statement that Buffett's ownership would make it easier for the paper to raise money while preserving local control.
One newsroom employee, who spoke under condition of anonymity, said Wednesday's announcement was positive.
"It's obviously good news for the paper because we were facing a pretty heavy load of debt to pay to older stockholders (as they retired).
"This is good news for the employees. I think it is good long-term news for the paper, which is in good shape, but was facing some pretty heavy bills down the road."
The holding company had already made some cuts in 2008 and 2009 to improve its finances, including nearly 100 layoffs. It also sold some smaller Iowa papers last year.
'NEARLY UNENDING LOSSES'
Berkshire is no stranger to the newspaper business. The company bought the Buffalo News in New York in 1977 and has operated it since, though Buffett said in 2009 his owning the paper was not entirely rational.
Buffett was also a long-time board member of the Washington Post Co and a confidante of legendary publisher Katharine Graham.
Buffett has said that U.S. newspapers face years of "nearly unending losses" because they lack a sustainable business model.
Advertising revenue and circulation at many U.S. papers have fallen in the past several years as people turned to the Internet for free news and advertising, forcing some newspapers out of business and some publishers into filing for bankruptcy protection or laying off thousands of employees.
But the 81-year-old "Oracle of Omaha" struck a more moderate tone on Wednesday as he addressed the paper's staff.
"I think newspapers ... have a decent future. It won't be like the past. But there are still a lot of things newspapers can do better than any other media. They not only can be sustained, but are important," he was quoted as saying.
The deal also adds to Buffett's stable of local businesses. Though his focus is usually national or global, he owns a number of large Omaha brands, including the sprawling Nebraska Furniture Mart and the jeweler Borsheim's.
(Reporting By Ben Berkowitz; Additional reporting by Michael Avok in Omaha)