Mr. Buffett released his annual shareholder letter late last week in which he discussed the outlook for the economy (the US economy will "in shambles in 2009"), the mortgage crisis ("beware of geeks bearing formulas"), and the insurance business. Unlike past years, Buffett did not talk about the newspaper business and made no reference to The Buffalo News.
While the economy is difficult for nearly every industry, media companies in general and newspapers in particular have been hit especially hard as subscriptions have fallen and advertising dollars have dried up. In this context, both new and old media are trying to build new business models and revenue streams. Old media, however, has the unenviable task of also having to make substantial cuts to their cost structures.
Geoff Kelly at Artvoice has a piece on efforts at The News to make more cuts. As the News was unprofitable in November, December and January, management is eager to make cuts. Not surprisingly, it appears many News employees blame management for the current condition. From one staffer's letter:
As it is, our publisher is telling people the paper is going to close.
We called him on it. If he's not prepared to stop panicking, he needs to get out of the way. We need leadership, not just cuts.
The News is not going to be able to cut its way out of this to survive. It has to grow to survive. Now they're only in cut mode.
We mentioned to them today that Warren Buffett has made $550 million since he bought The News. This is the first time he's ran into turbulence.
Stan Lipsey's response is to start throwing women and children overboard. They need to recognize, that when this is done, there will still be a lot of people working for them, and those people have to feel like they're not next for the firing squad. The way they handle this is now affects the next chapter in how we handle this business.
We don't think (the problem) is Warren Buffett, and we don't think it is the department heads. We think a lot of this has to do with Stan Lipsey. We said (to management) you folks need to figure out how to deal with the publisher, because he's the most immediate problem we have. We have a bad recession, we have a bad industry, but we've got a publisher hitting the panic button like crazy.
We can't survive in a panic mode. Were prepared on our side to work through those panics.
Is it possible this one paper town could become a no paper (printed) town sometime soon?