The Washington Post Company
Company Overview
The Washington Post Company was one of America's leading media companies, built around its flagship newspaper — one of the most prestigious and politically influential publications in the United States. For Buffett, the Post was not merely an investment but a relationship and an education: through CEO Katharine Graham, he developed one of his most important long-term business friendships and learned how exceptional executives think about the businesses they steward.
Beyond the Post newspaper itself, the company owned Newsweek magazine, several television stations (a powerful local broadcast franchise in the pre-cable era), and Kaplan, the education services company that would eventually become the company's most valuable asset as newspaper economics deteriorated.
Investment Story
1973: The Contrarian Purchase. Bear market conditions and media-specific anxieties had pushed The Washington Post Company's stock to roughly $6 per share in early 1973. Buffett began buying. By mid-year, Berkshire owned roughly 10% of the company for a total cost of approximately $10.6 million. His analysis was specific: he calculated that the total private market value of the Post's assets — the newspaper, Newsweek, the TV stations — was approximately $400 million. He was buying $400 million of value for $80 million — a genuine 80-cents-on-the-dollar transaction.
Management Reaction and Relationship. Initially, the Post's management viewed Buffett with suspicion — a large outside investor acquiring a meaningful stake was unusual and potentially threatening for a family-controlled media company. Katharine Graham called Buffett to ask his intentions. He told her he was a long-term investor with no interest in control or operational involvement. This began one of the most consequential relationships in Buffett's career.
1973–1985: The Education. Buffett served on the Post Company's board of directors, working alongside Katharine Graham and later her son Don Graham. He credits Katharine Graham with teaching him how truly exceptional executives think about their businesses — with a long-term orientation, deep concern for journalistic integrity, and genuine respect for both employees and readers. He helped her navigate the painful business decisions required to run the newspaper's printing unions.
1985: From 10% to Long-Term Holding. The Post Company had by this point generated enormous investment returns for Berkshire. The TV stations alone were worth multiples of the original purchase price. The original $10.6 million investment was worth over $200 million — nearly 20x returns in 12 years.
1985–2012: Long-Term Compounding. Berkshire held the position through the rise of cable television (which damaged the economic model for network affiliates), the internet era (which devastated newspaper economics), and Kaplan's rise as the company's primary growth engine. Eventually renamed Graham Holdings before the Post newspaper was sold to Jeff Bezos in 2013, the company retained its broadcast and education businesses.
The Sale. Don Graham sold the Washington Post newspaper itself to Jeff Bezos in 2013 for $250 million — a premium to what an arm's-length buyer might have paid, reflecting Bezos's personal commitment to the institution. Berkshire's position in Graham Holdings (the renamed parent), derived from the original $10.6 million investment, was worth over $1.1 billion when finally exited — more than 100x the original investment over 40+ years.
Buffett's Own Words
Washington Post “B” stock with a cost of $10.6 million, which we expect to hold permanently. With this approach, stock market fluctuations are of little importance to us—except as they may provide buying opportunities—but business performance is of major importance. On this score we have been delighted with progress made by practically all of the companies in which we now have significant investments. We have continued to maintain a strong liquid position in our insurance companies. In last year’s annual rep
Washington Post “B” stock with a cost of $10.6 million, which we expect to hold permanently. With this approach, stock market fluctuations are of little importance to us—except as they may provide buying opportunities—but business performance is of major importance. On this score we have been delighted with progress made by practically all of the companies in which we now have significant investments. We have continued to maintain a strong liquid position in our insurance companies. In last year’s annual report we
Inc. 1,689,896 170,800 Ogilvy & Mather International 2,762,433 934,300 The Washington Post Company Class B 10,627,604 Total $58,420,839 All other Holdings 16,974,375 Total Equities $75,395,214 You will notice that our major equity holdings are relatively few. We select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business: (1) favorable long-term economic characteristics; (2) competent and honest management; (3) purchase price attra
Mather International, Inc. ..... 2,762 6,960 934,300 The Washington Post Company Class B ..... 10,628 33,401 -------- -------- Total ................................... $ 71,893 $139,081 All Other Holdings ...................... 34,996 41,992 -------- -------- Total Equities .......................... $106,889 $181,073
SAFECO Corporation ...................... 23,867 26,467 934,300 The Washington Post Company ............. 10,628 43,445 ---------- ---------- Total ................................... $ 94,260 $163,889 All Other Holdings ...................... 39,506 57,040 ---------- ---------- Total Equities .......................... $133,766 $220,929
Investment Lessons
Intrinsic value calculation is the foundation of great investment decisions. Buffett's Washington Post purchase is his purest on-record example of the Graham-Dodd methodology applied to a specific, real-time situation. He calculated that the sum of the Post's parts — newspaper, magazine, TV stations — was worth roughly five times what the stock market valued it at. The stock market was offering $80 million for $400 million of assets. When the gap is that large, the investment is not speculative.
Exceptional CEOs create value beyond what balance sheets show. Katharine Graham's stewardship of the Post illustrates what great CEO adds to a business franchise. She maintained the newspaper's journalistic standards during the Nixon administration's hostile pressure. She successfully navigated the 1975 pressmen's strike, breaking union featherbedding that threatened the newspaper's economic viability. She allocated capital wisely, buying back shares at attractive prices rather than empire-building. The company's long-term returns reflect these decisions as much as the underlying business economics.
Personal relationships create irreplaceable investment advantages. Buffett's access to Katharine Graham and the Post's board gave him insight into the business that no outside analysis could replicate. He learned how management thought about competitive threats, capital allocation, and long-term business evolution. These relationships — which Buffett cultivated across his career with exceptional business owners — created an informational and judgmental edge that compounded over time.
Hold through deterioration when the core franchise survives. Newspaper economics deteriorated dramatically after 2000 as digital advertising migrated online. Buffett held his Post position despite the secular decline in print advertising because he believed the franchise — the brand, the journalistic reputation, the reader relationships — survived even as the economic model around it weakened. This patience was ultimately rewarded when Bezos paid a premium for the franchise itself.