Buffett: Newspapers not attractive ‘at any price’

There is no model for the newspaper business capable of stemming what may be ‘unending losses’, the chairman of Berkshire Hathaway said at its annual meeting. Despite the declining market, Platinum Equity recently acquired the San Diego Union-Tribune, and HM Capital is reportedly in negotiations to buy Blethen Maine Newspapers.

Newspapers have the potential for “unending losses”, Berkshire Hathaway chairman Warren Buffett said at the Berkshire Hathaway annual shareholders meeting, which drew a record 35,000 shareholders to Omaha, Nebraska.

Buffett, who owns the Buffalo News and a stake in the Washington Post Company, said there is absolutely no price at which he would consider investing in an additional US newspaper. However, he will hold the investments he has in accordance with Berkshire’s model of indefinite hold periods except under extreme circumstances.

Newspapers are essential to advertisers only as long as they are essential to readers, which was true 20 years ago, said Buffet. When newspapers lost their “essential nature“, the industry began eroding and has since accelerated. “I don’t see anything that causes the erosion to end,” he said.

Nobody has found a model that works for newspapers, said Buffett.

Despite plummeting sales and the shutdown of numerous newspapers nationwide, private equity firms have continued exploring investments in newspaper companies.

This has been the case even the Tribune Company, purchased by real estate investor Sam Zell for $8 billion in December 2007, filed for bankruptcy under a $13 billion debt load only a year later.

Avista Capital Partners-backed Start Tribune Company, which owns the Minneapolis Star Tribune newspaper also collapsed into bankruptcy under similar circumstances in January. Avista bought Star Tribune in March 2007 for $530 million from the McClatchy Company.

Despite these blow-ups, California-based private equity firm Platinum Equity agreed to purchase the San Diego Union Tribune for an undisclosed sum in March.

In addition, Dallas-based private equity firm HM Capital and Pennsylvania newspaper publisher Richard Connor are in negotiations to purchase Blethen Maine Newspapers, according to reports. The purchase would include the Portland Press Herald, Kennebec Journal, Morning Sentinel and MaineToday Web site as well as real estate in downtown Portland.