Buffett bet on Dow Jones pays off
Andrew Clark in New York
Wednesday August 15, 2007
The Wall Street Journal on sale in New York. Photograph: Mark Lennihan/AP
The world's third-richest man, Warren Buffett, is making millions out of an opportunistic punt on Rupert Murdoch's takeover of the Wall Street Journal.
In a regulatory filing his Berkshire Hathaway investment empire has revealed it bought 2.78m shares in the Journal's publisher, Dow Jones, during the second quarter of the year.
The Sage of Omaha has made it clear he feels Mr Murdoch is paying a high price for Dow Jones - three months ago Mr Buffett described the $60-a-share offer as "non-economic". "I think Rupert would acknowledge that part of his interest in the Wall Street Journal goes beyond economics," he said in May, adding that the paper was second only to the New York Times in prestige value.
As the exact date of Berkshire Hathaway's share purchase has not been disclosed, it is not clear whether Mr Buffett dipped into the market before or after the price of News Corporation's offer became public on May 1. Either way, the investment was highly lucrative. In the days before Mr Murdoch showed his hand, Dow Jones shares cost about $36 (£18). Over the following weeks, the price hovered around the low to mid-50s before News Corp tied up the deal by persuading Dow Jones's controlling Bancroft family to sell for $60 at the end of July.
News of Mr Buffett's quiet profit is unlikely to thrill members of the Dow Jones union, the Independent Association of Publishing Employees, which spent part of the takeover battle trying to enlist Mr Buffett to launch a "white knight" bid.
His investment empire includes one newspaper, the Buffalo News in New York state. He is a newspaper addict, reading five a day, but he believes the future for print is bleak. In his 2007 letter to shareholders, he warned that the days of "lush profits" from newspapers were over.
"If cable and satellite broadcasting, as well as the internet, had come along first, newspapers as we know them probably would never have existed," he said.