It’s not that financial wizard Warren Buffett said that newspapers and broadcasters would run into trouble – it’s when he said it. He wrote it in a letter to shareholders of Berkshire Hathaway way back in 1992. His views were based on the difference between a franchise and a business.
Jack Shafer unearthed the comments in a recent article for internet magazine Slate.
Buffett said that to qualify as a franchise a business must be blessed with three things: something desired; something with no close substitute, and the absence of pricing regulation. The presence of the first two coupled with the absence of the third means the corporation will be able to set its price and customers will pay it.