Newspapers won’t continue to be called a dying industry if Berkshire Hathaway (NYSE:BRK.A, BRK.B) chairman Warren Buffett has anything to do with it. In May 2012, the beloved American investor made a $142 million investment toward their survival. Buffett’s appreciation for print news should come as no surprise. He spent 26 of the last 37 years on the board of The Washington Post Co. (NYSE:WPO) and was once quoted as saying:
“We’re going to keep every share of stock we have. I would never sell a share of the Post.”
So what has Buffett so keen on WPO? The Washington Post Co. publishes the nation’s sixth-largest newspaper, The Washington Post. Founded in 1877, the Post is one of the most iconic media outlets in America, with 47 Pulitzer Prize awards under its belt and a daily circulation of 507,615 in 2012.
As one of the top political news sources in the nation, The Washington Post is an institution in the nation’s capital. With that in mind, it’s fitting to choose this newspaper’s parent company as our Real America Index stock for the District of Columbia.
In addition to its newspaper operations, The Washington Post Co. owns six television broadcast stations, has a thriving online presence with its Slate media group and a very profitable education business. Kaplan Inc., which provides training, test preparation and standardized testing services, accounts for over half the Washington Post Co.’s annual revenue — more than all of its media operations combined.
From an investing perspective, WPO isn’t exactly a populist stock. It has a share price of over $360, a mere 7.62 million shares outstanding and an average daily volume of 41,400 units traded. Nearly 100% of the stock is held by institutional, mutual fund or insider owners. The biggest player in WPO stock is Warren Buffett’s Berkshire Hathaway, which holds 25% of the company.
As alluded to above, The Washington Post Co. is a case study in the struggles of American print media. As with newspaper powerhouse Gannett (NYSE:GCI), WPO stock topped out in 2004 as it has struggled to adapt to online media and declining newspaper readership. The Washington Post has stayed afloat in large part to its Kaplan education operations, but also a refocusing of its business. It sold Newsweek magazine in August 2010 after the magazine’s revenues plummeted nearly 40% from 2007 to 2009.
The newspaper’s history is closely entwined with the history of U.S. politics. Katherine Graham, publisher of the Post for two decades, led the newspaper during its most colorful period in the 1970s. The Washington Post’s investigative reports on the Watergate scandal later led to the resignation of President Richard Nixon in 1974.
From The Washington Post’s storied history to its profitable Kaplan education arm, WPO is our Real America Index pick for the nation’s capital.
Check out the complete list of Real America Index components, along with an interactive map of short-term and long-term returns.
As of this writing, Vicki Passmore did not hold a position in any of the aforementioned securities.