Warren Buffett's name is synonymous with excellent investing. Many consider him to be the greatest investor of the modern era and as one of the richest men in the world, he has a proven track record of making investments that have paid off immensely.

This fantastic investor has a lot of money tied up in an industry that many see as a dying—media. Through his company Berkshire Hathaway, Buffett owns a significant amount of stock in a variety of media companies. At a time when print media is dying out, television is succumbing to the likes of  Netflix and radio is quickly being replaced with Sirius and Pandora, one would think these are lousy holdings. The Oracle from Omaha begs to differ.

Buffett’s Variety of Media Holdings

Media General: Media General operates a variety of television stations across the country. When Buffett bought into the company, they were also running more than 60 newspapers. They have since consolidated, merged, and sold off a good portion of the newspaper business to focus on broadcasting.

Liberty Media Corp.: Liberty Media owns a variety of media, communications, and entertainment businesses—one of their subsidiaries is Sirius XM. The company has significant stakes in many other media outlets including Barnes & Noble, Starz, and a variety of television stations.

Lee Enterprises: Lee Enterprises focuses on newspapers in mid-size markets. The company owns 54 daily newspapers, those papers' digital products, and nearly 300 specialty publications. Their reach spans 23 states and has a circulation of 1.5 million on Sundays alone. Daily, those papers reach more than four million people.

Twenty-First Century Fox: Most people recognize Twenty-First Century Fox from their intros to Hollywood movies, but the company goes far beyond the big screen. They own a variety of broadcasting companies including Fox Networks, Fox Business, Fox Sports, Fox News, National Geographic Channel, and a variety of broadcasting and satellite TV companies around the world.

Graham Holdings: Graham Holding Company owns a variety of businesses, which all involve the dissemination of information through some medium. The company owns Kaplan, an online educational service provider, five TV stations, Cable ONE (a cable provider), and more. Their biggest claim to fame, however, is that the company used to own The Washington Post. In 2013 though, The Washington Post was sold to Jeff Bezos, CEO of Amazon.com.

The list of companies in which Berkshire Hathaway has a significant stake is endless. With a portfolio exceeding $100 billion, they have an extensive and varied portfolio. This list gives a small sample of the diverse media companies Berkshire Hathaway holds in their portfolio. The real question, however, is: why does Berkshire Hathaway hold these companies?

Why is Buffett Banking on These Companies?

Buffett once told his shareholders, “whether we’re talking about socks or stocks, I like buying quality merchandise when it’s marked down.”  If we take a look at what Buffett did with Media General, we can see that he picked up a quality product when it was marked down.

Media may be changing, but it is far from dead, and Buffett understands that. When Media General was struggling a few years ago, he jumped at the opportunity to revive this company, increase its value, and subsequently make a lot of money for himself.

In May 2012, Buffett loaned Media General $400 million to solve liquidity issues and to help it focus on its broadcasting business. It also gave Buffett warrants to purchase a vast amount of stock in the company, giving him control of about 20%. That push was just what Media General needed to move forward. They plunged into the broadcasting sector and rebuilt their brand. Within two years, the stock was valued about five times what it was when Buffett got involved.Buffett saw a fantastic company that needed a little nudge to keep growing.

While Buffett was able to turn around a broadcasting business, you might still be wondering about his investments in print media. What is it about that sector of the media industry that Buffett sees as promising?

The answer lies not in the industry or sector itself, but in Buffett’s investment strategy. He looks for companies that have high earning potential. Even in a declining market, there will always be a company that is outperforming the competition. So instead of sitting by and watching this industry collapse, Buffett has strategically invested money in the companies that he sees will be the winners in the long run.

He doesn’t invest in the potential for quick growth, but rather focuses on organizations that are already profitable. He also loves reading the local daily paper.

 You can be sure that he ruffled some shareholder feathers, however, when Berkshire spent millions of dollars investing in what most people see as a dying form of getting the news—newspapers. In the 2012 letter to the shareholders, Buffett explained why saying: “Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s going on in your town… there is no substitute for a local newspaper that is doing its job.”

He then made sure to reinforce that his affinity for the local paper won’t affect his investment decisions when he stated that he “will not continue the operation of any business doomed to unending losses.”

The Bottom Line

Warren Buffett knows investing. He can understand if a company is struggling because it needs a cash boost or if a business is on its way out. For those still wondering why Buffett would invest so heavily in companies that seem to have no future, the answer is clear: he's been able to reap huge rewards on his investment in Media General, and he knows when it is time to get out. If the companies he has put money into die, then you can be assured Buffet has sold his stake long ago.

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