Buffett Newspaper Deal Nostalgic: Fitch
Berkshire Hathaway Inc.’s deal to acquire the Omaha World-Herald Co., publisher of the company’s hometown newspaper, was “more nostalgic than strategic” by Chairman Warren Buffett, Fitch Ratings said.
“Buffett appears to be showing a bit of sentiment,” the ratings firm said today in a statement on Omaha, Nebraska-based Berkshire.
Berkshire agreed to pay $150 million and assume debt, the paper reported last week. Buffett has said newspaper buyers may have motives other than profit, given declining readership and competition from other information sources.
“For a local resident, ownership of a city’s paper, like ownership of a sports team, still produces instant prominence,” Buffett wrote in a letter accompanying Berkshire’s 2006 annual report. “With it typically comes power and influence. These are ruboffs that appeal to many people with money. Beyond that, civic-minded, wealthy individuals may feel that local ownership will serve their community well. That’s why Peter Kiewit bought the Omaha paper more than 40 years ago.”
The newspaper deal is “very small” for Berkshire, Fitch said. Buffett spent almost $9 billion this year to buy Lubrizol Corp. and about $25.5 billion last year for the 77.5 percent of railroad Burlington Northern Santa Fe that Berkshire didn’t already own.
Berkshire is rated AA- by Fitch, the firm’s fourth highest of 10 investment-grade levels.
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