While newspapers are still struggling with declining revenues, Warren Buffett sees an opportunity. He made clear that he's not investing based on personal interests, but sees them as undervalued assets. However, he is choosy about which newspapers are good long-term investments.
In a letter to his editors and publishers, Warren Buffett wrote:
In a very general way, strong interest in community affairs varies inversely with population size and directly with the number of years a community’s population has been in residence. Therefore, we will focus on small and mid-sized papers in long-established communities.
He also made clear that the business model of giving away content online to drive print subscription is unsustainable.
The original instinct of newspapers then was to offer free in digital form what they were charging for in print. This is an unsustainable model and certain of our papers are already making progress in moving to something that makes more sense.
He stopped short of offering solutions, such as paywalls or mobile apps, but rather urged his new employees to come up with new revenue models.
Lastly, paidContent points out that Berkshire is getting these newspapers on the cheap:
... Buffett got them for a steal, noting that they sold on average for about $2 million a pop — or the price of an expensive home in each of the towns where they’re printed.
So it appears the Buffett sees local papers hitting the bottom of the market, and has identified the ones that are poised to grow by digital subscription revenues.