The Buffalo Evening News
Company Overview
The Buffalo News (originally the Buffalo Evening News) is a daily newspaper in Buffalo, New York. Berkshire acquired the Evening News in April 1977 for $32.5 million — one of its earliest media investments and the setting for one of the most competitive newspaper battles in American publishing history.
Investment Story
1977: Acquisition and immediate legal warfare. Buffett paid $32.5 million for the Buffalo Evening News, which at the time competed with the Courier-Express, a rival newspaper operating six days per week (not Sunday). When Berkshire launched a Sunday edition of the Evening News, the Courier-Express sued — alleging anticompetitive behavior. The legal battle lasted years, with the Evening News losing over $10 million in the interim as legal costs and competitive pricing pressure mounted.
1982: Courier-Express closes. The Courier-Express folded in September 1982, leaving the Buffalo News (by then renamed) as the dominant — virtually monopoly — daily newspaper in Buffalo. Immediately upon the Courier-Express's closure, the News's economics transformed from loss to substantial profit.
1983–2010: Exceptional profitability. For nearly 30 years, the Buffalo News generated returns on invested capital that Buffett used in letters as examples of exceptional media economics. Advertising rates were set with minimal competitive constraint; classified advertising generated enormous margins; subscription revenues were reliable and growing.
2008–present: Digital disruption. As online alternatives captured classified advertising (Craigslist, Indeed, Zillow) and news readers migrated to digital formats, the Buffalo News's economics deteriorated. By the 2010s, it was still profitable but generating a small fraction of its peak earnings. Berkshire eventually sold the Buffalo News to local operators.
Buffett's Own Words
Buffalo Evening News ....... (2,913) 751 (1,637) 389 (738) 158 Blue Chip Stamps - Parent .. 2,133 1,091 1,198 566 1,382 892 Illinois National Bank and Trust Company ....... 4,822 3,800 4,710 3,706 4,262 3,288 Wesco Financial Corporation - Parent .... 1,771 2,006 777 813 665 419 Mutual Savings and Loan Association ........ 10,556 6,779 4,638 2,747 3,042 1,946 Interest o
*Buffalo Evening News ...... (4,617) (2,913) (2,744) (1,637) (1,333) (738) Blue Chip Stamps - Parent 2,397 2,133 1,425 1,198 1,624 1,382 Illinois National Bank and Trust Company .......... 5,747 4,822 5,614 4,710 5,027 4,262 Wesco Financial Corporation - Parent ... 2,413 1,771 1,098 777 937 665 Mutual Savings and Loan Association ............ 10,447 10,556 4,751 4,638 3,261 3,042 *
Buffalo Evening News ...... (2,805) (4,617) (1,672) (2,744) (816) (1,333) Blue Chip Stamps - Parent 7,699 2,397 4,588 1,425 3,060 1,624 Illinois National Bank .... 5,324 5,747 5,200 5,614 4,731 5,027 Wesco Financial - Parent .. 2,916 2,413 1,392 1,098 1,044 937 Mutual Savings and Loan ... 5,814 10,447 2,775 4,751 1,974 3,261 Precision Steel ........... 2,833 3,254 1,352 1,480 6
Buffalo Evening News ...... 19,352 (1,215) 16,547 (724) 8,832 (226) Blue Chip Stamps(2) ....... (1,422) 4,182 (1,876) 2,492 (353) 2,472 Wesco Financial - Parent .. 7,493 6,156 4,844 2,937 3,448 2,210 Mutual Savings and Loan ... (798) (6) (467) (2) 1,917 1,524 Precision Steel ........... 3,241 1,035 2,102 493 1,136 265 Interest on Debt .......... (15,104) (14,996) (13,844) (12,977) (7,3
Income ... 68,903 43,810 68,903 43,810 62,059 39,114 Buffalo News .............. 27,328 19,352 27,328 16,547 13,317 8,832 Nebraska Furniture Mart(1) 14,511 3,812 11,609 3,049 5,917 1,521 See’s Candies ............. 26,644 27,411 26,644 24,526 13,380 12,212 Associated Retail Stores .. (1,072) 697 (1,072) 697 (579) 355 Blue Chip Stamps(2) (1,843) (1,422) (1,843) (1,876) (899) (353) Mu
Investment Lessons
Monopoly local newspapers had the best media economics in history. Once the Courier-Express folded, the Buffalo News set its own advertising rates in a market with no meaningful alternative for local coverage and classified advertising. This pricing power — the ability to raise rates annually without significant volume loss — produced economics approaching See's Candies in their capital-light, high-return characteristics.
Competitive battles require willingness to absorb losses. The five-year battle against the Courier-Express cost Berkshire significant losses — legal fees, below-market pricing to build circulation, operational investment. Buffett persisted because he understood the long-term economics of newspaper monopoly. Winning the competition required accepting years of losses to demonstrate market commitment.
Even great businesses can be destroyed by technology. The Buffalo News's franchise was genuine — local content that consumers valued and advertisers needed to reach. But the internet created free alternatives for classified advertising (Craigslist), local news (digital media), and targeted advertising (Google, Facebook) that made newspapers' value proposition to advertisers nearly obsolete. Technological moat destruction can occur even in businesses with decades of dominant competitive positions.